by From John Tomer Elinor Ostrom’s (1990; 2009) research focuses on common pool resources (CPR) and the dilemmas they have posed for their users and society. A CPR is a resource such as a fishing ground, an irrigation system, ground water, pasture land for grazing animals, etc. that jointly benefits a group of people (the users) but which provides diminished benefits to the users involved if each individual pursues his or her narrow self-interest without considering other users. The CPR has a definite capacity. The problem is that each individual user has an incentive to overuse the resource. As authors such as Garret Harden (1968) have pointed out, when each user single-mindedly and independently follows the incentives, that will cause depletion of the CPR’s capacity, possibly creating
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from John Tomer
Elinor Ostrom’s (1990; 2009) research focuses on common pool resources (CPR) and the dilemmas they have posed for their users and society. A CPR is a resource such as a fishing ground, an irrigation system, ground water, pasture land for grazing animals, etc. that jointly benefits a group of people (the users) but which provides diminished benefits to the users involved if each individual pursues his or her narrow self-interest without considering other users. The CPR has a definite capacity. The problem is that each individual user has an incentive to overuse the resource. As authors such as Garret Harden (1968) have pointed out, when each user single-mindedly and independently follows the incentives, that will cause depletion of the CPR’s capacity, possibly creating a tragic overuse of the resource.
In the view of conventional economic theory, there are only two ways to deal with this overuse problem. The first is to have government impose rules and/or taxes forcing the self-interested individuals to refrain from the destructive overuse of the CPR. The second is to privatize the CPR, making it a private, marketable, excludable good (Ostrom 2009, p. 409). Ostrom and her colleagues recognize that this standard dichotomous way of understanding the options for dealing with CPRs is not adequate. They studied many CPRs around the world (see Ostrom 1990). They learned that the overharvesting can be eliminated or reduced by, for example, encouraging communication among the people in the user group, developing trust among them, thereby fostering cooperation among the group’s members (Ostrom, 2009, p. 409). They further learned how CPR users can develop credible commitments among themselves in effect creating valuable social capital. What the researches came to appreciate was that the individuals and groups involved with a CPR are not hopelessly trapped; they can make fruitful efforts to organize and solve their social dilemmas (p. 416). It turns out that there are typically many elements of any CPR situation that can be modified. Ideas for such changes can come from individuals within the CPR who rely on self-reflection and creativity to develop novel patterns of interaction that restructure the interactions among the CPR’s users (p. 417). Further, Ostrom’s research found that groups that attempt to organize and effectively manage their CPR are most likely to succeed if they follow eight core design principles.
The eight core design principles are (Wilson, 2015, pp. 12-13; Ostrom, 2009, p. 422):
- Strong group identity and understanding of purpose. The identity of the group, the shared resources, and the need to manage the resource must be clearly delineated.
- Proportional benefits and costs. Members of the group must negotiate a system that rewards members for their contributions.
- Collective–choice arrangements. Decision making should be by consensus or another process recognized to be fair.
- Monitoring. To prevent free-riding and exploitation, monitoring should be used to detect violations.
- Graduated sanctions. Transgressions need not require heavy-handed punishment, at least initially. More severe punishment can be waiting in the wings.
- Conflict recognition mechanisms. Conflicts should be resolved quickly in ways perceived as fair.
- Minimal recognition of rights to organize. Groups must have the authority to conduct their own affairs.
- For groups that are part of larger social systems, there must be appropriate coordination among relevant groups.
Ostrom (2009, p. 419) found that “the capacity to overcome dilemmas and create effective governance occurred far more frequently than expected and depended upon the structure of the resource … and the rules-in-use developed by users.” Further, the success of these CPR collaborations depended on the capability of boundedly rational individuals to acquire fully reliable information in situations where dependable feedback was present (p.430).
The findings of Ostrom’s (2009) research leads to the following overall conclusion. Individuals in CPR groups who are faced with incentives to cheat at the expense of others can overcome these disincentives and learn to work together. They do this by talking face to face with each other, trusting each other, forging good cooperative human relations, and committing themselves to their common purposes. Further, they also need to face the facts and complexity of their situation and negotiate in good faith. What does this imply for public policy? The “core goal of public policy should be to facilitate the development of institutions that bring out the best in humans” (pp. 435-436). In Ostrom’s view, well designed institutions can nudge individuals to behave successfully in CPRs and other challenging social dilemma situations (p. 435).
At the heart of what Ostrom and her colleagues have discovered is that determined, cooperative, purposeful individuals can produce better socio-economic outcomes, ones involving better functioning, than capitalist economies ordinarily give rise to. Of course, it should be noted that Ostrom’s CPR research applies strictly to relatively small scale situations. However, there is reason to believe that similar favorable outcomes can be expected for much larger scale situations.