Governing the Commons: The Evolution of Institutions for Collective Action

Neither the state nor the market has been consistently successful in limiting the use of natural resources to ensure their long-term economic viability. However, some communities of individuals have relied on other institutions to do so with some success. Ostrom criticizes the foundations of policy analysis when applied to natural resource management. She wishes to present case studies of successful and unsuccessful efforts to govern these resources in order to attempt to develop better intellectual tools to understand the governance of natural resources.

Academics have often relied on three models to explain why individuals themselves cannot govern natural resources. The first is called the “tragedy of the commons.” When people rely on public land to graze their animals, they are incentivized to overgraze. Each individual wants to get as much food as possible before the resource runs out. Unfortunately, those individual incentives lead to the destruction of the resource. Associated with the phrase “everybody’s property is nobody’s property” (3), the tragedy of the commons applies to many of the world’s resources. 

The second model is “the prisoner’s dilemma.” If two people are arrested for a crime and separated, the best option for each would be to say nothing. If that were to occur, both would go free. However, if one confesses and incriminates the other, that person would get a reduced sentence and the other a lengthy one. Thus, each confesses and therefore adopts a strategy that leads to an irrational outcome. 

Third is “the logic of collective action.” According to this theory, a large group of people are unlikely to organize to protect a collective resource. For example, most people are unlikely to campaign for clean air, while automakers, a small group, are likely to organize to prevent costly legislation regarding emissions. Those in the small group can calculate the benefits of their actions and will get a substantial reward limited to themselves. In the larger group, those who campaign, even if successful, get the same reward as those who did not. A good such as clean air is subject to this “free rider” problem, which suggests that someone will not contribute time and money if they can obtain the benefits from the actions of others. Ostrom argues that all these models have dangers in assuming that constraints are fixed in empirical settings, which is not necessarily the case.

To address the collective action problem, experts usually recommend one of two options. Some call for the central government to control natural resources. In this case, the government decides who uses the resources, when users can access them, and how much can be taken. Additionally, the government monitors compliance. Ostrom notes that this approach has been used in developing countries with problems. Little attention is given to its costs, decisions are often based on inaccurate information, and monitoring and sanctioning are not consistent. 

The other policy recommendation is privatization, with the resource assigned to one person or divided among two people. This approach requires the assigned person to maintain the resource. It erroneously assumes that the resource is equally valuable across space and time. What is more, such an approach does not apply to some natural resources, such as fisheries. Experts tend to claim that one of these approaches is “the only way” to deal with a collective resource (12).

Both approaches prescribe an external actor to impose rules upon participants, or those who use the resource. Claiming that these approaches are too sweeping, Ostrom argues that the participants can sometimes solve collective action problems themselves. Relying on case studies, she seeks to understand why participants are sometimes successful and sometimes not. Success is defined as the establishment of “institutions that enable individuals to achieve productive outcomes in situations where temptations to free-ride and shirk are ever present” (15). In these successful cases, the institutions are typically private-public hybrids.

The possibility of the participants contracting themselves to a cooperative strategy is often ignored in the literature. However, when the participants agree, they are not dependent on inaccurate information from a government. They have options to monitor one another and/or rely on private enforcers. Ostrom observes that there is a wide diversity in the agreements to manage common pool resources (CPRs). She cites one example of successful management of a fishery in Alanya, Turkey, where the system was designed by the participants. The resultant system retained the sustainability of the resource and ensured that all fishing boats had “equal chances to fish at the best spots” (19).

Little academic attention has been given to such diverse arrangements. Instead, academics have offered oversimplified polices that are “no more than metaphors” (22). As a result, such policy recommendations have caused harm, such as causing the expropriation of forests in developing countries. There is a need for a theory grounded in a “realistic assessment of human capabilities and limitations” (23). Missing from the literature on CPRs is a theory of collective action where a group of participants organizes themselves voluntarily. 

Combining the approach of new institutionalism with biology’s reliance on empirical data, Ostrom seeks to develop such a theory. New institutionalism pays attention to the details of organizational rules, assuming that minor rule changes can have an impact. The “organism” of her study is a CPR situation (26). She limits her study to small-scale CPRs, or those with between 50 and 15,000 people all economically dependent on the CPR and contained within one country. In all cases, the resource is renewable and subject to scarcity, and the participants could harm one another but not outsiders. She compares institutions used in successful and unsuccessful cases, asking what internal and external factors can help or impede success. All the efforts to organize must cope with the problem of “free-riding, solving commitment problems, arranging for the supply of new institutions, and monitoring individual compliance with sets of rules” (27).