Common Goods Essay ⋆ Political Science Essay Examples ⋆ EssayEmpire

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The term common good, or the term commons, both refer to resources as well as to property rights institutions that govern the appropriation, alienation, and management of the resource. Analytically, however, it is important to differentiate between the two concepts. A common-pool resource (natural or human constructed) is available for appropriation to multiple users. When one consumer uses a unit of these goods, this unit is no longer available to other users—a characteristic commonly referred to as jointers or rivalry in consumption. At the same time, it is difficult (or costly) to prevent other users from appropriating these goods—a characteristic commonly referred to as nonexcludability. Given its rivalry in use coupled with nonexcludability, these resources are often overused and degraded. In contrast, common-property institutions are rules regarding how members of a community may access a resource, how much they may appropriate or alienate the jointly owned resource, and how they can devise new rules regulating its use. Common-pool resources and their physical characteristics influence institutions devised to govern and manage them. Subsequently, common-property institutions have been devised to successfully protect many common-pool resources.

Common-Pool Resources

While some may view common-pool resources as small scale, local resource systems and common-property institutions as archaic arrangements, the truth cannot be further from this notion. Though common-pool resources include prototypic local, natural resources such as village pastures and fish harvesting areas, large-scale resources such as the oceans, the gene pool, and the atmosphere all exhibit the characteristics of common-pool resources as well. Further, humans create new types of common-pool resources. Many urban families reside in condominiums—a combination of private and common property. Internet servers, with a finite storage capacity, exhibit the characteristics of common-pool resources because it is costly to prevent users from using a server, while, at the same time, an excessive number of users at a given time can result in the collapse of the server. Airport landing slots can be viewed as common-pool resources: The challenges faced by the U.S. Federal Aviation Administration in allocating these slots illustrate the complexities in managing common-pool resources, given that the demand for slots tends to exceed their availability.

Analytically, common-pool resources can be viewed as goods that exhibit rivalry in appropriation, akin to private goods, but low excludability in appropriation, akin to public goods. Several consumers can appropriate a given unit of a nonrival good (e.g., national defense), whereas only a single actor can appropriate a unit of a rival good. The loads of fish or mass of water withdrawn by one user are no longer available to others, hence rivalry in appropriation, or consumption. Similarly, the absorptive capacities of air sheds and watersheds decrease when one user emits pollutants into the air or water. Scholar Garrett Hardin suggested the race to appropriate first will lead to resource degradation, therefore the tragedy of the commons.

The second analytical characteristic of common-pool resources is their low levels of excludability. This implies that it is physically, institutionally, or economically difficult or costly to exclude users from appropriating the benefits of the good. The challenge is to devise and enforce institutions that assure resource users that others will not appropriate the resource first (i.e., they will not suffer the “sucker’s payoff ”). When institutions enforce excludability and limit access to the resource, the race to appropriate first can be thwarted. Consequently, the resource can be exploited in a sustainable manner. Indeed, overconsumption of a common-pool resource or the tragedy of the commons is not inevitable. In many ways, Hardin incorrectly equated open access resources, which do not have institutions to enforce excludability, with common-pool resources. Indeed, Hardin’s famous pastures often have intricate institutions—often invisible to observers not familiar with the local culture—to govern resource appropriation.

While sharing the analytical attributes of rivalry and nonexcludability, common-pool resources differ on other attributes such as their size, boundary stability, negative externalities, complexity of the system in which the resource is located, uniformity in resource flows, and levels of resource use. Thus, any analysis of the governance of common-pool goods needs to take into account their analytical similarities and their differences. Some characteristics tend to be conducive to their successful governance. These characteristics are small-sized, stable, and well-delineated resource boundaries; small levels of negative externalities resulting from resource use; moderate levels of complexity so that the resource users can monitor resource stocks and flows at low cost; and resource users’ solid understanding of the dynamics of the resource.

Common-pool resources of smaller size tend to support the establishment and maintenance of resource governance institutions. Researchers usually group common-pool resources into local, regional, and global resources. It is not clear, however, how the size alone affects institutional evolution and design. Rather, size may interact with other variables. Even though it is more difficult to design and enforce institutions to manage regional and global resources, several have been managed and protected. At this point, there are about two hundred international regimes addressing global common-pool resources. While some have been effective in curbing resource overuse— for example, the Montreal Protocol to protect the stratospheric ozone—the jury is out on others, such as the protection of biodiversity or the global atmosphere. The size of the resource tends to correlate with heterogeneity of resource users. Arguably, higher levels of heterogeneity impede the successful governance and management of common-pool resources as in the case of the global atmosphere, which is used as a sink for greenhouse gases.

Common-pool resources with well-delineated and stable boundaries are more conducive to the emergence and sustenance of institutions for managing these resources. If boundaries of the resource are understood and do not change over time, then it is easier to determine the users of the resource and the extent of their resource withdrawal. Inability to determine these characteristics is a fundamental problem that has led to overuse and degradation of many resources, including fisheries, watersheds, and airsheds. This problem is especially challenging when the common-pool resource is not extracted, but used as a sink for pollutants, leading to problems like acid rain, ozone hole, poor local air quality, low oxygen levels in watersheds, and others.

Externalities are the negative or positive effects of actions experienced by those not involved in the transaction. As a result, the social costs and benefits of a transaction differ from its private costs and benefits. For example, in fisheries, withdrawals by one user create negative externalities for other users. Withdrawing one unit of a resource reduces the number of resource units available to other resource users, thereby increasing the withdrawal costs. Resources with negative externalities tend to be overproduced or overappropriated, and those with positive externalities tend to be underproduced or underappropriated. Appropriation of common-pool resources associated with small levels of negative externalities is easier to manage.

The complexity of the system in which the resource is located creates challenges for devising institutions to manage the resource. Complexity may manifest in various ways such as levels of interconnectedness among various resources within a system, or the time lag after which the affects of resource appropriation can be observed, akin to information asymmetries in postexperience goods leading to market failures. For example, a harvest level of one fish species may affect levels of harvest of other species. Reducing the number of predator species may increase the stock of a given species; reducing the amount of species that constitute an important link in the food chain of the given species may reduce the stocks of this species. Further, the quality of the water may affect fish stock levels, and this is a function of the use of water as a pollution sink. In this case, multiple institutions must be devised, linked or nested, regulating multiple species or even ecosystems.

Resources that have nonuniform impacts of flows on the stocks are difficult to manage. For example, the impact of air pollutant emissions on pollution concentration is frequently nonuniform, dependent on airflows and topography. A unit of deposited air pollutant in one area may have more detrimental effects on the resource stocks than a unit deposited in other areas. Research on use of the atmosphere as a sink for air pollutants suggests this was a major problem in devising rules for maintaining air quality, especially for pollutants that remain in the close proximity of the emission point (e.g., nitrous oxides or lead).

Common-pool resources tend to be better managed when resource users can understand the dynamics of the resource flow and availability. Resources with time-dependent stocks are more difficult to manage than the resources that exhibit small levels of time dependence. Empirical research suggests that users of renewable resources pay close attention to the withdrawal rate and replacement rate. They are more likely to devise institutions to manage common-pool resources if they estimate that such institutions are necessary (i.e., replacement rate is not much higher than the resource withdrawal rate) and that they will be productive (i.e., the withdrawal rate is not much higher than the replacement rate). These relationships, however, are not stable. Replacement rates may change due to factors external to the institutional design. For example, replacement of a fish stock may drastically decline due to water pollution, or an introduction of a new predator or deposition of an air pollutant may skyrocket with a new technology (e.g., depletion of the ozone layer and global warming). If those changes are not monitored, the common-pool resource may be over consumed. For resources that exhibit high uncertainty in these environmental factors, institutions have to be accordingly flexible.

Institutions Governing Common-Pool Resources

Common-pool resources have the analytical attribute of nonexcludability. If users cannot be excluded, they have little incentives to defray the cost of maintaining and governing the resource. As economist and social scientist Mancur Olson pointed out, free riding impedes the supply of collective action. When nonexcludability couples with rivalry (e.g., “if I get the resource, you cannot”), it creates incentives to overharvest rapidly—a type of race to the overappropriation. For example, why would countries unilaterally incur costs to protect a global common-pool resource, the global atmosphere, from being overused as a sink for greenhouse gasses? Given its physical characteristics, users in other jurisdictions cannot be prevented from appropriating the benefits of this global pollution sink, a condition ripe for free riding. Thus, to manage common-pool resources, institutions (e.g., the Kyoto Protocol to mitigate global climate change) must be put in place to enforce exclusion. Indeed, as the rich literature on this subject attests, resource users at various scales, local to global, have sought to create institutions with varying levels of success to enforce excludability (i.e., regulate resource use), and thereby support resource governance.

As carefully documented by Nobel Prize-winning economist Elinor Ostrom in her book Governing the Commons as well as in several other volumes surveying common-pool resources, such as The Questions of the Commons edited by Bonnie McCay and James Acheson or in the Drama of the Commons, a volume edited by Elinor Ostrom and colleagues appropriate institutions can and have altered actors’ incentives in the ways that they practice forbearance and appropriate resources sustainably. Communities across the world have devised rule systems to sustainably use communal pastures and forests for hundred of years; just because some these local institutions might have less visible, nontraditional features—such as a reliance on informal norms or cultural practices to encourage forbearance and regulate resource exploitation—external observers should not view them as open access resources.

Crafted institutions can increase the efficiency and sustainability of common-pool resource use over time. They can be thought of as the dos and don’ts that are commonly understood in regard to the entry, harvesting, and management of a resource, and how individuals acquire or transfer rights to use a resource. Three broad forms of ownership could be used to govern common-pool resources: government-, private-, or common-property ownership. There is no consistent evidence that any one of these ownership types is best suited for all types of common-pool resources, even though considerable debate about the relative advantages exists in the academic literature.

National governments have established a variety of institutions using government and private property ownership. Governments can decide to manage the resource on behalf of citizens in their jurisdictions. In the United States, federal, state, and city governments have established national parks, national forests, state forests, and city forests. Further, governments have regulated the use of common-pool resources by prescribing technologies users must employ either to withdraw the resource from the pool (e.g., fishing) or to deposit pollution in commons (e.g., emission filters and scrubbers to clean up exhausts). In addition, governments have adopted other instruments to influence responsible resource use. For example, governments have required for-profit organizations to provide information to consumers regarding the impact of their production processes and products on common-pool resources. Various labeling initiatives as well as pollution registries, such as the Toxics Release Inventory Program established by the U.S. Environmental Protection Agency, are examples of such initiatives. The idea behind such information-based regulation is that informed consumers will vote with their dollars and informed stakeholders will bestow goodwill benefits on firms that minimize use of environmental common-pool resources. Finally, governments have developed market incentives, such as taxes and fees to increase the cost of common-pool resource withdrawal. For some common-pool resources—such as fisheries, water bodies, and the air—governments have sought to partition the resource use and impose an upper limit to each user’s overall appropriation by devising and allocating quantified rights to the use of this resource. The latter approach has drawn much attention, especially in the context of the ongoing global climate change debate.

One frequently recommended solution to the tragedy of the commons is to privatize the resource, as stated in John Dales’s 1968 Pollution, Property, and Prices: “If it is feasible to establish a market to implement a policy, no policy maker can afford to do without one. Unless I am very much mistaken, markets can be used to implement any anti-pollution policy that you or I can dream up” (100). However, empirical analyses of individual common-pool resources suggest that this broad endorsement of privatization is somewhat optimistic. Tradable permit markets have been found to be thin and with high transaction costs. Data problems have impeded monitoring and enforcement of trading rules. Scholars question whether tradable permit systems stimulate innovation and have the ability to respond to sudden and substantial changes in the market. About thirty years after the implementation of the first tradable permit market in the United States, researchers are more careful in endorsing the tradable permit markets as a universal approach to solve the commons problem. As noted by A. Denny Ellerman and colleagues in Markets for Clean Air, “All of our analysis suggests one final observation: Experience with and lessons learned from the Acid Rain Program must be applied with care to other environmental objectives” (321). Instead of a one-size-fits-all approach across common-pool resources, the challenge is to devise institutional designs that ensure sustainability and efficiency in managing resources with specific characteristics located in given external legal and regulatory environments. The transfer of institutional designs across resources, regions, or scales must be undertaken with caution.

Globalization processes create additional challenges in devising institutions for common-pool resources. Globalization—the increased connectedness of markets and the increased levels of flows of goods, services, and factors of production across borders—can influence appropriation levels of common-pool resources. A local resource user might seek to appropriate a common-pool resource not only for individual use but to sell it to the world market. Farmers may shift from cultivation of traditional species, which are not, for instance, water intensive, to cash crops, which might be water intensive. This thereby potentially increases the pressure on the water table. The consequence of globalization is that the resource institutions that encouraged forbearance in resource use come under pressure. The opportunity and cost of complying with local norms seems to increase, sometimes dominate, in relation to the gains from violating the norms. Further, increased, low-cost access to world markets increases differentiation between those who have the resources (e.g., labor) to produce products and those who do not. This might put strain on traditional relationships, which were predicated on wealth and income equality and also sustained the resource use norms.

On the other hand, access to world markets can strengthen resource institutions by providing resource users the access to new technologies and providing them financial capital to regenerate common-pool resources. Also, globalization is not only about trade and investment; it is also associated with the global spread of common norms and ideas. With the diffusion of environmental and post material values, globalization may provide users of common-pool resources in developing countries with a market for a sustainably harvested resource, if appropriately certified. For example, markets may develop for nuts from a tropical rainforest or for shade-grown coffee. Thus, globalization is both a blessing and a curse for the management of common-pool resources. Much depends on how actors can disrupt the traditional modes of social organization by making use of the opportunities and devising new ways to protect their institutions from the challenges of globalization.

With globalization, international donor agencies have become more involved in developing countries’ resource use. Common-property institutions in developing countries can benefit from funds available from national and international donor agencies. In some cases, common-property institutions are even initiated by these donors. This brings a set of important new actors and dynamics that all pose challenges for the governance of common-pool resources. In particular, external funders might follow different time frames and operate on a much shorter cycle than required for the adaptive development of successful institutions. When common-property regimes are initiated with external donors’ funding, a danger exists that the devised rules will not correspond to the social customs, norms, and value orientations. Further, the community may not be given authority to change the rules governing the resource; rather, this authority may be vested in the donor or national government of the country hosting the project. On the other hand, involvement of powerful international donors may bring legitimacy to communities that would otherwise, due to the local power structure, not be given the authority to govern the resource.

Finally, the subject of institutional change is particularly challenging for traditional common-pool resources. What if a particular institution is failing to stem resource overuse? How easily can a new one replace the former institution? One can seldom begin with an empty slate, since most traditional common-pool resources are likely to already have institutions in place. The challenge is to devise more effective institutions without becoming unduly distracted by path dependencies, while also responding to distributional consequences. Eventually, like any other governance systems, common-pool regimes need to have an economic and political logic to create incentive from their resource users.

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