Governing the Commons: The Evolution of Institutions for Collective Action

Appropriators are those that withdraw resource units from the system. It can refer to “herders, fishers, irrigators” (31), and others. Ostrom argues that appropriators have the ability to work together to ensure that a resource is not overused and depleted in the right conditions, which she details.

Collective-choice rules are those “used by appropriators, their officials, or external authorities in making policies—the operational rules—about how a CPR should be managed” (52). Ostrom argues that it is possible for appropriators to organize and change these rules. The key to doing so is to make the process of change incremental.

A CPR is a “natural or man-made resource system that is sufficiently large as to make it costly (but not impossible) to exclude potential beneficiaries from obtaining benefits for its use” (30). The management of small-scale CPRs, which have between 50 to 15,000 people dependent on it economically, is the subject of Ostrom’s book.

Constitutional-choice rules determine who is eligible to make changes to collective-choice rules and the procedures for changing collective-choice rules. They are the most challenging to change, but it is not impossible to do so. They indirectly affect operational rules.

Contingent strategies refer to planned actions that are dependent on “conditions in the world” (36). Unlike traditional theories of collective action, which are simplistic, Ostrom uses a broad definition of rational action. She examines situational variables in various combinations to develop her frameworks.

The discount rate is one of the internal variables that can impact a person’s strategy toward a CPR. It refers to the extent to which individuals place less value on future benefits and more on immediate benefits. A high discount rate could cause individuals not to comply with rules for long-term sustainability. Low discount rates are often found in stable communities where appropriators expect their children to use the CPR someday.

Institutions are the rules that “determine who is eligible to make decisions in some arena, what actions are allowed or constrained, what aggregation rules will be used, what procedures must be followed, what information must or must not be provided, and what payoffs will be assigned to individuals dependent on their actions” (51). Ostrom argues that small changes in institutions can change the incentive structure for appropriators. Contrary to traditional theories of collective action, she maintains that appropriators can initiate changes to institutions, and she develops a framework for understanding how and when they will do so.

Nested enterprises organize appropriation, provision, monitoring, enforcement, conflict resolution, and governance in layers. Local users of a CPR have input in some matters and elect representatives at a regional level. That level might also elect leaders for an even larger area. Power flows upward from the grassroots, ensuring that appropriators participate in these activities. The existence of nested enterprises is critical to the success of larger CPRs or those on the bigger end of her study.

New institutionalism is a method of study that pays close attention to the details of institutional structures. All institutional arrangements “can be thought of as games in extensive form” (23). For example, changing the sequence of how decisions are made can change incentives and behavior. Ostrom pays close attention in every case study to how the rules impact appropriators, as well as to how changes in those rules have consequences.

Operational rules are the rules about when, where, and how appropriators can withdraw from the resource, monitoring responsibilities, sanctions, and what information must be withheld or provided. Most often, people develop strategies based on these rules. Ostrom studies cases where these rules have existed for a long time and are successful in protecting the CPR. She develops a blueprint for understanding what about these rules makes them successful.

Polycentric management occurs when multiple private organizations and governmental agencies participate in the management of a CPR. There is no central authority, and each governmental agency has limits on its purpose. Ostrom argues that this is an effective way to manage a CPR and that it yields more successful results than centralized authority.

Providers “arrange for the provision of a CPR,” and a producer is “anyone who actually constructs, repairs, or takes action” that ensures the long-term sustenance of the CPR (31). For some of the CPRs studied, such as the irrigation systems and groundwater basins, the appropriators had to agree to assign a certain amount of time and funding to working on the resource. Ostrom observes what systems work best for this chore.