The Tragedy of The Commons


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The Tragedy of The Commons

  1. 1. The Tragedy of the Commons Wali Memon1 Wali Memon
  2. 2. Once upon a time, there was a lovely village2 Wali Memon
  3. 3. With a lovely commons where the sheep grazed . . .3 Wali Memon
  4. 4. Happily . . . and produced happy wool. And the village was happy.4 Wali Memon
  5. 5. And happy sheep made great wool.5 Wali Memon
  6. 6. But as more and more sheep joined the commons6 Wali Memon
  7. 7. The Commons was overused.7 Wali Memon
  8. 8. The grass ran out.8 Wali Memon
  9. 9. and tragedy ensued.9 Wali Memon
  10. 10. The sheep suffered.10 Wali Memon
  11. 11. And eventually the sheep produced no wool at all. Brrrr.11 Wali Memon
  12. 12. Understanding the problem . . . Say 10 owners each turned out 10 sheep to graze in a commons that has a carrying capacity of 100 sheep. (CC provides maximum sheep quality/price.) As long as the owners don’t exceed the carrying capacity, each sheep fleece will bring $100 in the market, or $10,000 total. But if one owner decides to add 1 extra sheep, the value of each sheep drops to $95. For the owner of 11 sheep, his revenue will be 11 x $95, or $1045. That single owner gains. However, the total value of the sheep for all owners 12 Wali Memon will fall to $9,595.00. The whole group loses.
  13. 13. Common vs. individual lossWhen the 11th sheep is added to the Commons, itreduces the total value of the sheep for allowners in total (to $9595.00), but the overusingowner gains in total (to $1045).If that owner had only 1/10th of the Commons tograze his sheep, the impact and cost to him ofadding a sheep would be 10x as great. No ownerwould absorb that kind of loss individually.13 Wali Memon
  14. 14. What did the villagers miss?The villagers should have known that the“Commons” was a common resource.As such, it was a rival good, meaning that oneperson’s (or sheep’s) use diminished another’senjoyment of it. A negative sum game.Common resources are always subject tooveruse--people (and sheep) are, after all, MAXIMIZERS.14 Wali Memon
  15. 15. Common resource solutions Private property rights: the right of owners to exclude nonowners. People respond to incentives; when they own property, they have an incentive to maintain its profit producing value. Property ownership converts negative sum games to positive sum games. John Locke: Approbation is the key to leaving “enough and as good for others.”15 Wali Memon
  16. 16. The Lockean Proviso Can it be done? (Leave “enough and as good for others.”) Only if the first to appropriate seeks to expand the resource for his own gain. What about communal efforts? The Jamestown story16 Wali Memon
  17. 17. Other tragedies of the commons: Ocean fishing17 Wali Memon
  18. 18. Not excludable, but definitely rival18 Wali Memon
  19. 19. Bluefin Tuna Decline 1995 – 2012 (projected)19 Wali Memon
  20. 20. Buffalo nearly became extinct by 1900. What prevented their extinction? More importantly, why have cattle never been threatened with extinction?Other common resource tragedies: African elephants and other large game Blast fishing in the Tongan Islands The Amazon rainforests Green turtles in the Cayman Islands 20 Wali Memon