The Tragedy of the Commons

The original scenario

A pasture is open to all herders in a village. Each herder asks: should I add one more animal? The benefit of the additional animal goes entirely to the herder who adds it. The cost, slightly more overgrazing, is distributed across all herders equally.

For each individual herder, the calculation always favors adding another animal. The benefit is concentrated; the cost is diffuse. This is true for every herder simultaneously. The result is that each herder, acting rationally in their own interest, adds animals until the pasture is destroyed.

No herder wanted the outcome. All contributed to it. This is the tragedy: not villainy but the structure of the situation. The logic that serves each individual destroys what they all depend on.

The applications

The structure appears wherever a shared resource is rivalrous (one person's use diminishes what's left for others) but non-excludable (no one can easily be prevented from using it).

Ocean fisheries: each fishing nation benefits from catching more fish while sharing the cost of stock depletion with all others. The result is predictable overfishing. Atlantic cod stocks collapsed in the early 1990s. Climate change follows the same structure at global scale: each country benefits from emitting greenhouse gases while sharing the costs of warming with the entire world, including future generations who cannot participate in the decision at all. Antibiotic resistance is a biological commons: each patient who takes an antibiotic benefits while contributing, a tiny fraction, to resistance that harms everyone.

Ostrom's challenge

Hardin concluded that commons must be either privatized or regulated by the state. This was widely accepted until Elinor Ostrom, who won the Nobel Prize in Economics in 2009, showed it was wrong.

Ostrom studied actual commons: Swiss mountain pastures, Japanese irrigation systems, Spanish huertas, New England lobster fisheries. She found that communities had developed their own governance systems, neither private property nor state regulation, that managed resources sustainably for centuries.

The key was collective governance: communities that could communicate, monitor each other, develop and enforce their own rules, and exclude or sanction defectors. The tragedy of the commons, Ostrom argued, is a tragedy of a specific kind of commons, one with no communication, no community norms, no monitoring, and no capacity for self-governance. That is not a description of most actual commons. It is a description of an open-access regime with no social structure at all.

Hardin had studied a theoretical commons. Ostrom studied the real ones and found that human communities are more inventive about solving collective action problems than the pure game theory suggests.