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Reformulating the Commons
The Western Hemisphere is richly endowed with a diversity of natural resource systems that are governed by complex local and national institutional arrangements. Until recently, these arrangements have been poorly understood. In Mexico, for example, nearly 30,000 ejidos and communidades serving about 3 million households govern 59 percent of the land area of Mexico and two-thirds of the rural production units. Within these institutional structures, "communities apply an incredible range of innovative, sustainable, locally adapted natural resource management systems in a wide variety of ecosystems, ranging from desert to rainforest" (Alcorn and Toledo 1998: 224). While many local communities that possess a high degree of autonomy to govern local resources have been highly successful over long periods of time, others fail to take action to prevent overuse and degradation of forests, inshore fisheries, and other natural resources (see Gibson and Becker 2000).
The conventional theory used to predict and explain how local users will relate to resources they share makes a uniform prediction that users themselves will be unable to reformulate the rules they face and extricate themselves from the tragedy of the commons (Hardin 1968). Using this theoretical view of the world, there is no variance in the performance of self-organized groups. In theory, there are no self-organized groups. Without externally imposed regulations, jointly used natural resource systems will all be grossly mismanaged. Empirical evidence tells us, however, that considerable variance in performance exists and many more local users self-organize and are successful than is consistent with the conventional theory. The beginnings of an alternative theory are presented in this chapter.
Most natural resource systems used by multiple individuals can be classified as common-pool resources. Common-pool resources generate finite quantities of resource units, and one person's use subtracts from the quantity of resource units available to others (Ostrom et al. 1994). Most common-pool resources are sufficiently large that multiple actors can simultaneously use the resource system, and efforts to exclude potential beneficiaries are costly. Examples of common- pool resources include both natural and human-made systems including groundwater basins, irrigation systems, forests, grazing lands, mainframe computers, government and corporate treasuries, and the Internet. Examples of the resource units derived from common-pool resources include water, timber, fodder, computer-processing units, information bits, and budget allocations (Blomquist and Ostrom 1985).
When the resource units are highly valued and many actors benefit from appropriating (harvesting) them for consumption, exchange, or as a factor in a production process, the appropriations made by one individual are likely to create negative externalities for others. Nonrenewable resources, such as oil, may be withdrawn in an uncoordinated race that reduces the quantity of the resource units that can be withdrawn and greatly increases the cost of appropriation. Renewable resources, such as fisheries, may suffer from congestion within one time period but may also be so overharvested that the stock generating a flow of resource units is destroyed. An unregulated, open-access common-pool resource generating highly valued resource units is likely to be overused and may even be destroyed if overuse destroys the stock or the facility generating the flow of resource units.
The Conventional Theory of Common-Pool Resources
Since the important early studies of open-access fisheries by Gordon (1954) and Scott (1955), most theoretical studies by political economists have analyzed simple common-pool resource systems using relatively similar assumptions (Feeny et al. 1996). In such systems, it is assumed that the resource generates a highly predictable, finite supply of one type of resource unit (one species, for example) in each relevant time period. Appropriators are assumed to be homogeneous in terms of their assets, skills, discount rates, and cultural views. They are also assumed to be short-term, profit-maximizing actors who possess complete information. In this theory, anyone can enter the resource and appropriate resource units. Appropriators gain property rights only to what they harvest, which they then sell in an open competitive market. The open-access condition is a given. The appropriators make no effort to change it. Appropriators act independently and do not communicate or coordinate their activities in any way.
In this setting, as the incisive analysis of Gordon and Scott demonstrates, each fisherman will take into account only his own marginal costs and revenues and ignores the fact that increases in his catch affect the returns to fishing effort for other fishermen as well as the health of future fish stocks.... [E]conomic rent is dissipated; economic overfishing, which may also lead to ecological overfishing, is the result. (Feeny et al. 1996: 189)
Many textbooks in resource economics and law and economics present this conventional theory of a simple common-pool resource as the only theory needed for understanding common-pool resources more generally (but, for a different approach, see Baland and Platteau 1996). With the growing use of game theory, appropriation from common-pool resources is frequently represented as a one-shot or finitely repeated Prisoner's Dilemma game (Dawes 1973; Dasgupta and Heal 1979). These models formalize the problem differently, but they do not change any of the basic theoretical assumptions about the finite and predictable supply of resource units or complete information, or about the homogeneity of users, their maximization of expected profits, and their lack of interaction with one another or capacity to change their institutions.
A sufficient number of empirical examples have existed wherein the absence of property rights and the independence of actors captures the essence of the problem facing appropriators that the broad empirical applicability of the theory was not challenged until the mid-1980s. The massive deforestation in tropical countries and the collapse of the California sardine fishery and other ocean fisheries confirmed the worst predictions to be derived from this theory for many scholars. Garrett Hardin's (1968) dramatic article in Science convinced many noneconomists that this theory captures the essence of the problem facing most common-pool resources in the world. Since appropriators are viewed as being trapped in these dilemmas, repeated recommendations were made that external authorities impose a different set of institutions on such settings. In some, private property is affirmed as the most efficient form of ownership (Demsetz 1967; Posner 1977; Simmons et al. 1996). Other recommendations are for government ownership and control (Ophuls 1973). Implicitly, theorists assume that regulators will act in the public interest and understand how ecological systems work and how to change institutions so as to induce socially optimal behavior (Feeny et al. 1996: 195).
Until recently, the possibility that the appropriators would find ways to organize themselves has not been seriously considered in much of the economics literature. Organizing to create rules that specify rights and duties of participants creates a public good for those involved. Anyone included in the community of users benefits from this public good, whether he or she contributes or not. Thus, getting "out of the trap" is itself a second-level dilemma. Investing in monitoring and sanctioning activities to increase the likelihood that participants will follow the agreements they have made also generates a public good. Thus, these investments represent a third-level dilemma. Since much of the initial problem exists because the individuals are stuck in a setting where they generate negative externalities on one another, it is not consistent with the conventional theory that they solve a second- and third-level dilemma in order to address the first-level dilemma under analysis.
Until the work of the National Academy of Sciences' Panel on Common Property (National Research Council 1986), however, the basic theory discussed above was applied to all common-pool resources regardless of the capacity of appropriators to communicate and coordinate their activities. The growing evidence from many studies of common-pool resources in the field called for a serious rethinking of the theoretical foundations for the analysis of common-pool resources (see Berkes 1986, 1989; Berkes et al. 1989; Bromley et al. 1992; McCay and Acheson 1987). The consequence of these empirical studies is not to challenge the empirical validity of the conventional theory where it is relevant but rather its generalizability.
Self-organized Resource Governance Systems in the Field
Most common-pool resources are more complex than the base theory of homogeneous appropriators taking one type of resource unit from a resource system that generates a predictable flow of units. The rich case-study literature illustrates a wide diversity of settings in which appropriators dependent on common-pool resources have organized themselves to achieve much higher outcomes than is predicted by the conventional theory (Cordell 1989; Wade 1994; Ruddle and Johannes 1985; Sengupta 1991).
Small- to medium-sized irrigation systems come closer than many biological resources to approximating these conditions and are, thus, an appropriate setting in which to examine these patterns of relationships quantitatively. One resource unit—water—is the focus of efforts to organize and coordinate activities. Recent research on small- to medium-sized irrigation systems in Nepal has found a very substantial difference in performance between systems owned and governed by the farmers themselves and those owned and operated (but in some cases, not governed) by a national governmental agency.
While most farmers own land in Nepal, most own very small parcels of less than 1 hectare. They are relatively homogeneous with similar preferences in obtaining water for rice production during the monsoon and winter seasons and various crops during the spring. Farmers in Nepal have long had the authority to create their own water associations, construct and maintain their own systems, and monitor and enforce conformance to their rules (see Benjamin et al. 1994; Lam et al. 1997). The irrigation systems constructed and maintained by farmers tend to rely on low-tech construction techniques including building nonpermanent headworks from mud, trees, and stones. International aid agencies have provided considerable funding to government agencies in an effort to upgrade the engineering standards.
In a detailed analysis of data from 150 farmer-governed and national government irrigation systems in Nepal, W. F. Lam (1998) developed three performance measures: (1) the physical condition of irrigation systems, (2) the quantity of water available to farmers at different seasons of the year, and (3) the agricultural productivity of the systems. Using multiple regression analysis techniques to control for environmental differences among systems, Lam found several variables strongly related to these dependent variables. One is the form of governance of the system. Holding other variables constant, irrigation systems governed by the farmers themselves perform significantly better on all three performance measures. This variable has the largest explanatory power of any variable in Lam's analysis, including the physical size of the system, terrain characteristics, and the number of farmers.
Thus, farmers with long-term ownership claims, who can communicate, develop their own agreements, establish the positions of monitors, and sanction those who do not conform to their own rules, are more likely to grow more rice, distribute water more equitably, and keep their systems in better repair than is done under government operation. While there is variance in the performance of these Nepali systems, and also among the forty-seven farmer-governed systems in the Philippines described by de los Reyes (1980), few perform as poorly as government systems assuming other relevant variables are constant. Since many of the government systems rely on high-tech engineering, the capability of farmers to increase agricultural production within their "primitive systems," while also providing the labor to maintain and operate the systems, is particularly noteworthy.
On the Origin of Self-governed Common-Pool Resources
Evidence from field research thus challenges the generalizability of the conventional theory. While it is generally successful in predicting outcomes in settings where appropriators are alienated from one another or cannot communicate effectively, it does not provide an explanation for settings where appropriators are able to create and sustain agreements to avoid serious problems of overappropriation. Nor does it predict well when government ownership will perform appropriately or how privatization will improve outcomes. A fully articulated, reformulated theory encompassing the conventional theory as a special case does not yet exist. On the other hand, scholars familiar with the results of field research substantially agree on a set of variables that enhance the likelihood of appropriators organizing themselves to avoid the social losses associated with open-access, common-pool resources (McKean 2000; Wade 1994; Schlager 1990; Tang 1992; Ostrom 1990, 1992a, 1992b; Baland and Platteau 1996; Ostrom et al. 1994). Drawing heavily on Ostrom (1992b: 298–99) and Baland and Platteau (1996: 286–89), considerable consensus exists that the following attributes of resources and appropriators increase the likelihood that self-governing associations will form.
Attributes of the Resource
R1. Feasible improvement: Resource conditions are not at a point of deterioration such that it is useless to organize or so underutilized that little advantage results from organizing.
R2. Indicators: Reliable and valid indicators of the condition of the resource system are frequently available at a relatively low cost.
R3. Predictability: The flow of resource units is relatively predictable.
R4. Spatial extent: The resource system is sufficiently small, given the transportation and communication technology in use, that appropriators can develop accurate knowledge of external boundaries and internal microenvironments.
Attributes of the Appropriators
A1. Salience: Appropriators are dependent on the resource system for a major portion of their livelihood or other important activity.
A2. Common understanding: Appropriators have a shared image of how the resource system operates (attributes R1, 2, 3, and 4 above) and how their actions affect each other and the resource system.
A3. Low discount rate: Appropriators use a sufficiently low discount rate in relation to future benefits to be achieved from the resource.
A4. Trust and reciprocity: Appropriators trust one another to keep promises and relate to one another with reciprocity.
A5. Autonomy: Appropriators are able to determine access and harvesting rules without external authorities countermanding them.
A6. Prior organizational experience and local leadership: Appropriators have learned at least minimal skills of organization and leadership through participation in other local associations or learning about ways that neighboring groups have organized.
Excerpted from Protecting the Commons by Joanna Burger, Elinor Ostrom, Richard B. Norgaard, David Policansky, Bernard D. Goldstein. Copyright © 2001 Island Press. Excerpted by permission of ISLAND PRESS.
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