Governing the Commons: The Evolution of Institutions for Collective Action

In the successful cases, a mix of “private and public instrumentalities” were used to solve CPR issues (182). This fact upends the prevailing academic assumption that the only way to solve CPR problems is via either privatization or central authority. Since the dominant academic theories make assumptions about the lack of communication among appropriators and their inability to change rules, these theories are not applicable to smaller CPRs. Further study of smaller-scale CPRs is thus needed.

The current theories of collective action are problematic for small CPRs for three reasons. First, they do not reflect the incremental nature of institutional change. Second, they ignore the impact of external political regimes. Third, they do not account for information and transaction costs. The use of nested enterprises is critical to success. In other words, small organizations are formed first, and then larger ones follow. 

Individuals are likely to make commitments to abide by rules under certain conditions: if there are clear definitions of who can use the resource, the rules relate to the specifics of the local resource, the rules are designed at least in part by the appropriators themselves, the rules are monitored by the appropriators or those answerable to them, and there are graduated sanctions for violations. 

Instead of building a model, Ostrom develops a framework for understanding why some efforts to solve small-scale CPR problems were successful and others were not. A framework enables her to avoid precise predictions. In developing her framework, Ostrom uses a “conception of rational action involving four internal variables—expected benefits, expected costs, internalized norms, and discount rates” (193). For institutional choices, individuals choose between keeping the status quo or changing it. An individual’s choice will be dependent on expected costs, benefits, shared norms, and opportunities. However, it is impossible to predict these precisely because there is often a cost to obtaining this information. Therefore, Ostrom goes beyond these summary variables to situational variables that impact them.

The difficulty of evaluating benefits depends on the number of appropriators, the size of the resource, the variability of resource units over time and space, the current condition of the resource, market conditions, availability of data, amount of past conflict, and knowledge of past and proposed rules. Only the number of appropriators is typically considered, yet information about benefits must be obtained. It is more likely to be obtained if the appropriators have organized into small associations. Information about costs is also impacted by situational variables. Transformation costs are lower and more likely to be accepted if change is done incrementally. If there is local autonomy, these costs are likely to be lower as well. If regional and national authorities must approve them, there is more unpredictability and higher costs. Current institutional choices are affected by past ones. Thus, an incremental change can make a later change possible or not. 

Appropriators must also consider monitoring and enforcement costs for new rules. These costs tend to be lower if the appropriators can observe one another naturally when engaged in the use of the resource. Rules that make violations obvious are also cheaper. For example, set dates for the use of a resource are cheaper to enforce than a defined quantity of the resource to be taken. External authorities can hinder enforcement and drive up costs if, for example, they allow others to use the resource. The assessment of costs and benefits will depend on shared norms and expected discount rates. Appropriators who live near one another and interact in other settings are likely to develop “strong norms of acceptable behavior” (206). Those who are entirely dependent on the CPR and expect their children to be so as well are likely to have a lower discount rate than those with other economic opportunities.

There is much uncertainty in the selection of new rules. As a result, CPR situations do not lead necessarily to efficiency. Informed judgments must be made. In such cases, individuals are likely to weigh potential losses more heavily than potential gains. Additionally, individuals are more likely to opt for change if the CPR is in a threatened state. Change is likely to come after years of bad yields versus good ones. People are also likely to pay more attention to immediate costs than long-term ones. As they did in California, appropriators are more likely to support change if there has been a precedent of proposed rules working in similar cases. Communication among appropriators thus facilitates change. If proposed rules are likely to benefit some more than others, there is likely to be a difference of opinion.

Ostrom argues that with an indifferent political regime, appropriators will be likely to adopt institutional changes incrementally, depending on the following six variables listed in order of importance. First, the appropriators believe that they will be harmed without changes. Second, the appropriators are similarly impacted by the rules. Third, the appropriators have low discount rates or highly value the use of the resource. Fourth, appropriators have fairly low transformation, information, and enforcement costs. Fifth, the appropriators share norms. Sixth, and least important, the appropriators are small and stable in membership. Local and regional governments can assist by providing facilities for appropriators to come together. In contrast, when a central regime presumes that it must solve the CPR problem via uniform rules, enforcement is costly, and there is likely to be failure.

It is imperative that academics recognize that one model cannot predict the resolution of all CPR problems. In fact, the models currently in use have the “perverse effect of supporting increased centralization of authority” (216), which is unlikely to work.