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Revision of the Tragedy of the Commons

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REVISITING THE
”TRAGEDY OF THE COMMONS”

University Sciences Po Paris Semester: Fall 2011/2012 Student: Sönke-Timo Kisker Student – ID: 100033186 Course: Thinking and Acting the Environment Course-ID: 23811 Course Coordinaton: Florence Faucher-King; Thomas Léon Assignment: Mid-term paper Word-count: 2746 Date: 18.10.2011 |
Agenda

I. Introduction 2 II. Specifying a framework 2 a. Defining ‘global public good’ 2 b. Defining the “Tragedy,”within Game theory 3 III. Revisiting Hardin's main assumptions and argumentations 4 c. Variables influencing rational choices of Individuals 4 d. The concept value and ethics in decisionmaking 5 IV. Practical examples of dealing with the commons 6 e. Mc Evoy's findings of assigning responsibility 6 f. Co-Management 6 g. Ostrom contradicting the call to redefine property rights 7 V. Collective Action in the Ecological Crisis: How to make politics work 7 VI. Conclusion 7
VII. References 8

I. Introduction
In 1968, Garrett Hardin first introduced a new framework to specify situations in which consumption of goods increases short-term utility of individuals while creating a long-term dead-weight loss in total welfare at the same time. He defines these situation in the following way: “The tragedy of the commons is a dilemma arising from the situation in which multiple individuals, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource, even when it is clear that it is not in anyone's long-term interest for this to happen (Hardin, 1968).” Hardin proposes enclosure of these commons, a redefinition of property rights. Either a person owns his own land or someone is given ownership to the whole to manage the resource and distribute usage against compensation. The tragedy of the commons is related mainly to the acquaintance of Global public goods, which leads to the question how these can be defined in context to the framework of ecological crisis in todays world. Since 1968, there is an increasing number of academic research about how to deal with the commons, some agreeing to Hardin, others deviating from his standpoint. The question arises whether the key-arguments and assumptions within Hardins “the tragedy of the commons” are correct and in what way Hardin's work restricts options when dealing with the ecological crisis.

In order to specify situations, in which the “tragedy of the commons” or alternative frameworks dealing with the commons can be applied, the paper first defines global public goods and introduces different kinds of commons. Secondly, Hardin's argumentation is summarized in a practical example via game theory. By revealing the primary motivations in decision-making as well as the final payoff-structure of individuals and society, Hardins assumption and hypothesis become much clearer. These arguments are then individually revisited and complemented by approaches taken from other research results. Finally, real-life examples will paint a picture about which approaches actually work in practice and what assumptions and conditions must be met in order to successfully implement these in order to solve the 'tragedy'.

II. Specifying a framework

II.a Defining the Commons
The tragedy of the commons related to ecological crisis applies mainly when there are Global public goods involved. Traditionally, the definition of these goods focuses on the fact that they are characterized as non-excludable (can someone be excluded from consumption?) and non-rival (Can a specific good be consumed by one person only at a time?). Furthermore another restriction is that theses goods cannot be distributed on a market.
Nevertheless there are some problems with this distinction. Firstly, the distinction between the private and the public spheres is increasingly blurred and the market no longer belongs exclusively to the ‘private’ or the government to the ‘public’ sphere. Secondly, the failure to take into account the ‘actual’, i. e. Socially-constructed, properties of a good. For example the fact that the atmosphere is non-excludable and therefore public in nature, but can be made excludable and therefore private through pollution emission permits. Kaul and Mendoza define a public good in the following way: “goods are de facto public if they are nonexclusive and available for all to consume” (2004). Based on this definition, the determination of property of a good is done on the basis of its excludability (rather than rivalry), and this property can be temporary. A further distinction can be made for goods that can become exclusive (through difficult and expensive means) in terms of excluding third parties from using and therefore abstracting benefits from the so called common pool resource (CPR). These resource are either naturally or man made. Examples for these goods are forests, water, atmosphere or simply fishing grounds. According to Elinor Ostrom (1993), public goods and common pool resources share the attribute of the difficulty and costliness of exclusion (fencing, parceling etc.) whereas the problem of overuse is due to subtractability is shared with pure private goods. (Ostrom, 1993)

II.b Defining the “Tragedy,” Hardin's payoff structure within Game theory
In order to explain Hardin's main findings, his concept is adapted on a Game-theoretical payoff structure representing the tragedy of the commons. Hardin's goal is to change the properties of Global public goods from public to private in order to achieve the payoff of a cooperative outcome.

Imagine 2 fishermen living on one Island. Close to this Island, the only fishing-ground close enough to reach represents the only source of Income to these fishermen. At the carrying capacity of a commons, the fishing ground, each fisherman earns zero economic profits. Each fish sells for $ 5. Each fisher incurs one-half of the marginal cost of abstracting one fish and thereby decreasing discounted future costs due to decreasing population birthrates of fish. Marginal costs (MC) are increasing, being MC = -5 if the common fish-ground gets fished ones more above capacity and MC = -7.5 if the common fish-ground gets fished a second time above capacity and so on. Taking Garretts viewpoint, the dominant strategy for each fisherman is to choose the noncooperative outcome: If Fisher B “cooperates”, “Not cooperating” is the dominant strategy for Fisher A, since 2,5 is preferred to 0. If Fisher B “Not cooperates”, “not cooperate” is the still dominant strategy for Fisher A, since -0.25 is preferred to -0.5. If Fisher A cooperates, not cooperate is the dominant strategy for Fisher B, since 0.5 is preferred to 0. If Fisher A defects, not cooperate is the still dominant strategy for Fisher B, since -0.25 is preferred to -0.5. While the social optimum only occurs when both parties choose cooperation (0,0), both fishermen will end up at the sub-optimal Nash equilibrium (-1.25,-1.25). Fisher B Fisher A | Cooperate | Not cooperate | Cooperate | (0,0) | 0-2.5=-2.5, 5 - 2.5 = 2.5) | Not cooperate | (5 - 2.5 = 2.5, 0-2.5=-2.5) | (5 -2.5 – 3,75 = -1.25, 5 - 2.5 - 3.75 = -1.25) |

III. Revisiting Hardin's main assumptions and argumentation

III.a Variables influencing rational choices of Individuals
The payoff structure of the game from above is based on a number of Hypothesis set by Hardin and lead to the following Assumption: In Hardin's payoff-structure, the cooperative outcome is inferior to the non-cooperative outcome because people derive higher personal value from the latter. Accordingly, the main reason for the Ecological crisis lies within this dilemma.

Hardin's argumentation is based on a branch of Rational choice theory, called social choice theory. According to this theory, individuals act rational, only if they seek to maximize their gain or marginal utility from the next layer of generated income or “caddle” (Hardin, 1968). Ceteris Paribus, an individuals happiness or utility is exclusively a function of income (Connelly, 2003). These results are not in line with Richard Easterlin's (2003) findings of a diminishing marginal rate of happiness in relation to increases in income. Complementing this result with Maslow's pyramid of needs could lead to the conclusion that, by the time physiological and safety needs are taken care of, other factors increase utility and therefore influence decision-making (Maslow, 1943).

Research has shown that high income has a positive effect on an individuals life satisfaction, which can be described as the thought people have about their life as a whole. Nevertheless, emotions an individual experiences in daily life (anger, sadness, joy etc.) are rather related to factors like health, care giving and social belonging (Kahnemann. 2010). It is further reported that a marginal increase of income above $ 75.000 does not add any additional emotional well-being (Kahnemann). Further contributions in the field of Psychological Science were done by Ronald Inglehart (2008). By comparing similar income-structures of East-European, ex-communistic countries with Latin-American countries, he finds that tolerance and freedom of choice increase an individuals happiness. His “Regression analysis suggest that that the extent to which a society allows free choice has a major impact on happiness.” (Inglehart) Within this regression, freedom of choice explained 30 % of an individuals subjective-wellbeing!

The findings from above reveal that freedom of choice, social-belonging and care giving are also factors that contribute to a persons happiness and wellbeing, not exclusively income. Involving individuals (in decision-making of environmental protection of the Global commons and active participation in monitoring and compliance of agreed upon guidelines) can therefore lead to higher individual well-being than Hardin expects

III.b The concept value and ethics in decision making
Hardin views individuals as rational, only if they seek to maximize their gain or marginal utility from the next layer of generated income (“caddle”). (Hardin, 1968) His conception is therefore mainly based on an Anthropocentristic viewpoint that any good, tree or animal on earth can only obtain value if a human being assigns value to it. In todays world, the ecocentric viewpoint of a natural intrinsic value, “imparted by their having been created by natural processes rather than by artificial human ones” (Dobson, 2000), has become an increasingly important alternative credo. In case an individual believes in the latter, he will derive just as much value from a healthy environment, for example by observing nature, as he would from an increase in relative Income.

The findings from above paint a different picture of individuals motivations in decision-making, their ethical perspectives and how contribution and involvement can benefit participants. Still it is questionable how many people within the decision making group have an ecocentric viewpoint and how large the correlation between happiness and factors other than income is for each individual.

IV. Practical examples of dealing with the commons

IV.a Mc Evoy's findings of assigning responsibility
Within the economy, where according to economic theory value is exclusively derived by income and wealth, coercion and forced actions can lead to an inferior result in terms of cost-efficiency and participation. According to Mc Evoy (2007): “A voluntary emission control agreement with an industry can be a more efficient way to achieve an environmental quality objective than an emission tax!” He finds that, under a certain set of rules, if monitoring and compliance is passed on to the actors (firms), voluntary Environmental Regulation leads to greater participation and superior outcomes than coercive regulation (emissions tax) by states (Mc Evoy). In economical terms, cooperative outcomes on a voluntary but publicly framed basis therefore lead to greater total welfare than coercive enforcement via third parties (i.e. States) if monitoring arrangements are taken care of in an informal manner and property rights aren't specific as in the case of allowances assigned to participants. The direct involvement of the limited number of Industry participants led to superior results than coercive regulation. This appears to be mainly due to the fact that industry-participants know each other, are able to monitor actions on the bounded markets and are given the necessary flexibility to deal with the complex alignment of interests of different groups. Relating these findings to the game-theoretical payoff-structure of the fishermen, cooperative outcomes are now superior to the non-cooperative outcome.

IV.b Co-Management
Another contradictory example can be found within the “Conservation and Co-Management in Brazilian Artisanal Coastal Fisheries.” Alpina Begossi (2006) discovered a spacial arrangement between fishermen that was stable over time. This informal division of fishery-spots gives proof to the fact that “local management in the form of co-management does not necessarily apply in complex institutional reorganizations as long as there are customary rules in place. (Begossi)

IV.c Ostrom contradicting the call to redefine property rights
According Elina Ostrom (1990), there are some local communities that manage common pool resources without stumbling over collective action discrepancies and exhaustion of CPR’s in the long-run. These communities arise from situations where the community members that appropriate value from a CPR independently act together and coordinate their actions via consensus-decision making in order to avoid the exhaustion of a common good in the long run. The CPR thereby becomes common property while remaining exclusive for third parties. Common property regimes indirectly change the properties of goods, making them appear private for nonmembers and common for members. In short, Ostroms approach is to prefer Micro-regulated over Macro-regulated approaches, because collective action problems are positively correlated to increases in the number of attendants. This in turn increases the complexity and likelyness of free-ryding, decreases the effectiveness of reciprocal monitoring and creates less awareness for the interdependencies between members. Management of CPR’s should therefore closely to actions and actors that are involved (Vedeld, 2010). After all, these regimes are only efficient if they manage to interact in a way that neutralizes their motivation to strive for short-term benefits. Ostrom analyzed different CPR–entities that successfully managed common pool resource over a longer time horizon, she found 8 principles (Ostrom) that enhanced the stability and efficiency of these common property regimes: 1. Clearly defined boundaries 2. Congruence between appropriation and provision rules and local conditions 3. Collective-choice arrangements allowing for the participation of most of the appropriators in the decision making process 4. Effective monitoring by monitors who are part of or accountable to the appropriators 5. Graduated sanctions for appropriators who do not respect community rules 6. Conflict-resolution mechanisms which are cheap and easy to access 7. Minimal recognition of rights to organize (e.g., by the government) 8. In case of larger CPRs: Organization in the form of multiple layers of nested enterprises, with small, local CPRs at their bases.

V. Collective Action in the Ecological Crisis: How to make politics work
No matter where individuals derive their personal value from or to what kind of ethical concept they apply the creation and presence of incremental value, when the number of particpants increases, the problem of collective action arises. As mentioned above, collective action problems are positively correlated to increases in the number of attendants. This in turn increases the complexity and likelyness of free-ryding as well as the diversity of members. It further decreases the effectiveness of reciprocal monitoring and creates less awareness for the interdependencies between members. Still, some decision must be taken by a larger amount of people, for example those that allow communities to fence CPR’s by creating legal boundaries. Nevertheless, todays world, especially in politics, is characterized by a large amount of competing pressures and interests, where “cunning is fought with cunning, power with power, knowledge with knowledge and self-interest by rival self interest (Connelly, 2003). A modern societies political decisions are then mainly an outcome of the competition between these factors. According to Connelly, good policies are not those that maximize the decision makers value but those that takes into account all different interests that are involved. It is therefore worthwhile to adapt policies at the margin with only incremental movement from the status quo It is rather the repetitive and gradual adjustment of policies that aligns all interest in one decision. People are still maximizers of their own well being but if brought together in a public space where each individual is forced to justify their solely self-interested standpoints, there is no persuasive power in those arguments and cooperative? beneficial outcomes can be achieved. (Connelly)

VI. Conclusion
In conclusion one can say that Hardin’s “tragedy of the commons” is a useful framework to identify or at least increase individual awareness of decision making that decreases total well-being in the long run. Nevertheless various assumptions nd conclusionhe makes Human beings do not only care about maximizing their wellbeing via income, but also through greater freedom of choice or care taking of others. Furthermore, Hardin’s Anthropocentric ethical viewpoints do not represent those of every individual. Comparing this standpoint to Ecocentrism leads to the conclusion that the latter will lead to different decisionmaking. If the Global commons (nature) contain natural intrinsic value, it is quite likely that people following this belief adress more value to sustainable decisions than to individual short term benefits.

This and the conclusion from McEvoys industry example also gives some proof to the fact that Individual and groups are aware of short term payoff changes. If an industries participants voluntarily cooperate, they must be aware of the fact that discounted future costs of not cooperating derogate the originally higher profit.
This in turn can lead to cooperative outcomes without subordinate coercion!

Overall the successful practical examples and empirical results of alternative actions and behaviors in dealing with the Global commons (IV) have a number of similarities in common. The fact that the variable freedom of choice increases wellbeing is in line with industries and local communities striving for successful self regulation. The more exclusive, local or smaller the group of participants that appropriate value, the more successful they decide and execute sustainable solutions. The more interdependent the participants are, the easier and cheaper the monitoring and compliance of boundaries. These boundaries in turn are important in terms of fencing or excluding third parties from appropriating value. If for example Common property regimes are not able to set these fences, the government should intervene. Overall, the stated examples and theories are powerful alternatives to the assignment of private property or official state administration.The main concepts of the tragedy of the Commons are therefore as much in doubt as the consequential courses of action. If future policymakers main goal is to take into account all interest groups and these must officially justify their interest, the creation of more sustainable CPR’s might improve the overall outcome for mother nature.

VII. References
Begossi, A. 2006. Temporal stability in fishing spots: conservation and co-management in Brazilian artisanal coastal fisheries. Ecology and Society 11(1): 5. [online] URL: http://www.ecologyandsociety.org/vol11/iss1/art5/

Connelly, J. & Smith, G. (2003). Politics and the Environment, Routledge, chapter 4

David M. McEvoy & John K. Stranlund, 2007. "Costly Enforcement of Voluntary Environmental Agreements with Industries," Working Papers 2007-11, University of Massachusetts Amherst, Department of Resource Economics.

Dobson, A. (2000). Green Political Thought. 3rd edition, Routlege; Chapter 2

Easterlyn, R. (2004). Feedong the illusion of growth and happiness: A replyto hagerty and Veenhoven. Retrieved on Oct. 18th, 2011 from:http://www-bcf.usc.edu/~easterl/papers/HVcomment.pdf

Hardin, G. (1968). Tragedy of the Commons, ?”, in Ken Conca and Geoffrey Dabelko (eds), Green Planet Blues. Environmental Polics from Stockholm to Kyoto, Westview, pp 40-48.

Hardin, G. (1968). "The Tragedy of the Commons". Science 162 (3859): 1243–1248. 1968. doi:10.1126/science.162.3859.1243. PMID 5699198

Inglehart, R. et al. 2008. “Development, Freedom and Rising Happiness: a global perspective. Perspectives on Psychological Science, 3(4), 264-285.
Kahnemann, D. & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Center for Health and Well-being, Princeton University, Princeton, NJ 08544 Kaul, U. & Mendoza, R. (2004). Advancing the Concept of Public Goods, GLOBAL PUBLIC GOODS II
Kaul, Grunberg & Stern, (1999). Global Public Goods: International Cooperation in the 21st Century. New York: OUP USA.

Maslow, A. (1943). A Theory of Human Motivation, Psychological Review 50(4) :370-96.

Ostrom, Elinor (1990). Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press. ISBN 0-521-40599-8.

Seabright, P. (1993). Managing Local Commons: Theoretical Issues in Incentive Design. The Journal of Economic Perspectives, Vol. 7, No. 4 (Autumn, 1993), pp. 113-134

Taylor, M., 2009. Environmental Crises: Past, Present and Future. Retrieved on Oct. 11Th 2011 from: http://www.wto.org/english/res_e/reser_e/gtdw_e/wkshop09_e/taylor_e.pdf

Vedeld, Trond (2010). A New Global Game - And How Best to Play It. The NIBR International Blog

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