Governing the Commons: The Evolution of Institutions for Collective Action, Elinor Ostrom, 1990

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The book is in the public domain.

Elinor Ostrom won the Nobel Prize in Economics in 2009

The governance of natural resources used by many individuals in common is an issue of increasing concern to policy analysts. Both state control and privatization of resources have been advocated, but neither the state nor the market have been uniformly successful in solving common pool resource problems. After critiquing the foundations of policy analysis as applied to natural resources, Elinor Ostrom here provides a unique body of empirical data to explore conditions under which common pool resource problems have been satisfactorily or unsatisfactorily solved. Dr. Ostrom first describes three models most frequently used as the foundation for recommending state or market solutions. She then outlines theoretical and empirical alternatives to these models in order to illustrate the diversity of possible solutions. In the following chapters she uses institutional analysis to examine different ways–both successful and unsuccessful–of governing the commons. In contrast to the proposition of the tragedy of the commons argument, common pool problems sometimes are solved by voluntary organizations rather than by a coercive state. Among the cases considered are communal tenure in meadows and forests, irrigation communities and other water rights, and fisheries.

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The tragedy of the commons is often mentioned in relation to Ostrom’s work, but in fact, her work talks about solving the tragedy of the commons.

Elinor Ostrom and the solution to the tragedy of the commons | American Enterprise Institute - AEI

Her research concerned the governance of common resources (also known as commons). The commons are natural resources, like land for grazing, fishing areas, forests for timber, water for the irrigation of farmland, and also more intangible resources, like knowledge, for which it is very expensive to control and fence in “user” consumption. The problem with these types of resources, as shown in 1968 by Garrett Hardin (but Aristotle had already observed a similar phenomenon) is that they are over-exploited, or at least their care and sustainability is overlooked by users. The reason is that people behave opportunistically (like free-riders) and consider the resource they are accessing, without the possibility of being excluded, as a free resource, and they therefore maximize their private benefits but neglect, or collectivize, the costs.

Hardin coined the phrase “tragedy of the commons” to describe this phenomenon and gave social sciences one of the most evocative metaphors after Adam Smith’s “invisible hand”. These two metaphors are effective because they capture two essential social situations in marked contrast to one another. When social interactions are guided by an invisible hand, they reconcile individual choice and socially desirable results, whereas in the tragedy of the commons, individuals pursuing their private objectives cause disastrous consequences for themselves and others. The solution to the tragedy of the commons, before the contribution of Ostrom and her studies, was to privatize resources or, in a diametrically opposite view, to form a Leviathan state in order to manage them.

Instead, Ostrom demonstrated that, within communities, rules and institutions of non-market and not resulting from public planning can emerge from the bottom up to ensure a sustainable, shared management of resources, as well as one that is efficient from an economical point of view.

(emphasis mine)