06 tragedy of the commons

06 tragedy of the commons

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  TRAGEDY OF THE COMMONS GARRETTHARDIN Prof. Prabha Panth Osmania University
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  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
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  Self adjustment inEconomic 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
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  OPEN ACCESS ANDDISEQUILIBRIUM • 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
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  Example: • Assume anopen 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
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  • Now onecowherd 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
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  • Other cowherdswill 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
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  • Same situationapplies 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
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  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