Governing the Commons (with success)

In this step we will present the main results of Ostrom’s research about managing Common-Pool Resources and by that we will start investigating how best to design solutions to the problems related to shared resources.

Let’s organise the knowledge from the previous video a bit. Ostrom concentrated on common-pool resources (CPR). These are resources made available to all through consumption and are hard to exclude somebody from using them, like fisheries, forests, underwater basins, and irrigation systems. As we already know, such resources are vulnerable to overuse and they are susceptible to the free riding problem (see Week 2).

When Elinor Ostrom started her research endeavour in this field the interpreters of literature that dealt with the Prisoner’s Dilemma, free-riding and the Tragedy of the Commons had been rather pessimistic. You could say that they used to perceive people as passive prisoners, who are doomed to be trapped in the Prisoner’s dilemma. Before Ostrom, there had been two main trends of solutions for them:

1. Top-down: people need somebody who will organise them in using resources. They need a central agency, which, for example, could be a person of authority, government, or a boss, who will organise them, use sanctions and decide by whom and how a resource will be used.
2. Privatisation: we need to divide a good into smaller parts. Here, the answer is theoretically simple. If we divide a good or resource between people, we should not have a problem with common goods anymore, which, in turn, abolishes the risk of a tragedy of the commons.

However, both types of solutions have limitations. In the case of top-down solutions, the most important limitation is a lack of knowledge of the external agencies. The “boss” does not really know what is going on, whereas the representatives in the organisation often do know what they really need, how they could use a resource and, what is important, they may not want to follow orders given by this external authority. It means that this external authority may have to use a whole system of sanctions to force people to obey, which is costly.

In the case of privatisation dividing itself is often already very problematic. People may not accept a division and not all goods are so easy to divide. Even for a pasture it might be problematic. And how to do this in practice in a dirty kitchen? Or with a lake?

As you could see in the video in the previous step, Elinor Ostrom proposed a third way! She was sure that:

groups are capable of avoiding the tragedy of the commons without requiring top-down regulation, at least if certain conditions are met (Ostrom 1990, 2010).

After years of studying communities who succeeded or failed in governing the commons, she made several observations. Above all, systems which are designed bottom-up and monitored work better.

Ostrom’s design principles

In the video you had a list of Ostrom’s design principles:

1. Clearly defined boundaries
2. Proportional equivalence of costs and benefits
3. Participation
4. Monitoring
5. Graduated sanctions
6. Conflict resolution
7. Recognition of rights
8. Nested enterprises

They are covered in a fairly thorough manner in the video.

Let’s imagine a common yard in the middle of a housing estate, consisting of 3 buildings – one with 16 apartments and two smaller ones, 5 apartments each. There is a community garden in the yard that needs to be watered. The garden is not privatized (e.g. divided into 3 parts) and is not managed by external authorities. Please start thinking about what disadvantages this would have.

Let’s consider how the design principles proposed by Elinor Ostrom could work here. If it is clearly defined for which part of the yard the inhabitants of which building are responsible, it will be much easier to take care of the plants (principle 1: clearly defined boundaries). Similarly, if the total of the inhabitants of building 1 will use the garden more, they should make a proportionally larger contribution to its maintenance (principle 2: proportional equivalence of costs and benefits).

If the residents have an influence on what the yard looks like and collectively settle the rules, the users will take care of it much more and will be connected with it (principle 3: participation). According to principle 4 (monitoring), it would be good to introduce a yard monitoring system, where, for instance, representatives of the three buildings would check its condition once a month and check whether, for example, the plants are watered by the right people and the yard is regularly cleaned.

If, however, there is a problem with this, a previously agreed system of sanctions (principle 5: graduated sanctions), proportional to the offense, should be activated, such as as specific reminder for the first failure to water the flowers, but if it is repeating offense, the penalty may be more severe (e.g. buying new seedlings). Of course, there is a risk of a conflict – it is worth preventing this by establishing easy-to-apply rules for settling disputes (principle 6: conflict resolution). If there are doubts about the development of the yard, you can refer to the jointly developed regulations.

The entire initiative related to the yard is formally approved by the owner of the area with the garden, which may be the local council (principle 7: recognition of rights). The history of the garden is very simple. We are not dealing with nested goods, so principle 8 (nested enterprises) does not apply here. But let’s imagine that we have 20 of these gardens, each one is looked after by several buildings, they belong to different districts. In that case we could use several management levels.

If you are interested in Ostrom’s works, we heartily recommend the book Governing the Commons: The Evolution of Institutions for Collective Action.