06 tragedy of the commons

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Garrett Hardin discusses the role of open access resources that lead to their over use and exploitation. Environmental goods are in the nature of open access, common property resources so that there is no limit to their use. This results in over exploitation and destruction.

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06 tragedy of the commons

  1. 1. TRAGEDY OF THE COMMONS GARRETT HARDIN Prof. Prabha Panth Osmania University
  2. 2. COMMON PROPERTY RESOURCES • According to Hardin, environmental problems are caused by overuse of common property resources. • All have equal rights to use these resources, because they are public goods: • No ownership of common property such as meadows, seas, rivers, mountains. • Non-exclusion, not possible to exclude others from using common property. Expensive to stop others. • Rival: one person’s use reduces availability to others, e.g. grassland, fishing in a lake, the resources are limited. Prabha Panth 2
  3. 3. Self adjustment in Economic theory • Micro theory assumes that price and cost will control the number of producers and consumers. • In PC, new firms can join the industry, as long as profits > 0. • After this point, when loss occurs, the loss making firms will leave the industry. • This will regulate automatically, the number of firms in the market. • There is equilibrium in the PC market. Prabha Panth 3
  4. 4. OPEN ACCESS AND DISEQUILIBRIUM • But in Open Access system there are no self adjusting, controlling mechanisms. • The use continues without constraints, leading to over exploitation. • Each independent user, wants to maximise his own benefit. • The total users will over use and exploit the common property. • Hardin says, “Freedom in the Commons brings Tragedy to all.” Prabha Panth 4
  5. 5. Example: • Assume an open access, common property such as a grassland. • No payment for grazing. • 10 cowherds who use the grassland for grazing their cows. • Each cow herd has 10 cows, total 100 cows. • All cowherds act independently. • All want to maximise profits. Prabha Panth 5
  6. 6. • Now one cowherd X decides to increase his herd by1 cow. • Free land, so MC = 0 • All the benefits of extra cow come to him, MR =1. • MC of over grazing is [1/(n+1)] = 1/101, which is very small. • This MC is distributed over all 10 cowherds. • MR from extra cow to individual = 1. • Since MR > MC for the individual cowherd, he increases his herd. • This goes on as long as MR > MC. Prabha Panth 6
  7. 7. • Other cowherds will also decide to increase the size of their herds. • They will independently decide to add to their herd, as long as MC < MR. • If each decides to increase his herd by 1, then total 10 cows will be added, and so on • This will result in overcrowding, over grazing, and finally destroy the common field. • Finally everybody pays the price of overgrazing. • This is the Tragedy of the Commons: • “Freedom in the commons, brings ruin to all” Hardin Prabha Panth 7
  8. 8. • Same situation applies in • • • • Fishing, Forestry, Pollution and solid wastes, Global pollution problems such as CO2 emissions. • Since there is Free access, the commons are like a Public Good. • Private and overuse destroys Public Goods. Prabha Panth 8
  9. 9. Solution by Hardin: 1. Joint ownership is needed to control overuse. 2. Membership and fees should be paid to reduce usage, 3. Restrict number of users/members. 4. Payment for use, will increase individual costs, prevent overuse. 5. Fines and penalties for over-using the commons. Prabha Panth 9

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