Common Pool Resources

Common pool resources (CPRs) are resources for which the exclusion of prospective users is difficult and whose utilization by one person affects the availability or quality of the resource for others (a property known in the literature as subtractability). Examples of CPRs include pastures, fishing grounds, irrigation systems, groundwater basins, forests, atmosphere, wildlife, and, more recently, biodiversity and the “digital commons.” CPRs contrast with private goods, where exclusion is feasible, and public goods, which do not exhibit subtractability. The management challenge of CPRs derives from the resultant user incentives. The benefits of exploitation tend to accrue to individual users, but the costs of use, in terms of a reduced resource base or higher extraction costs, are spread among all users. At the same time, the cost of investment in the resource (e.g., groundwater recharge structures) is with the individual investors, but the benefits can often be garnered by all users, creating a “free rider” problem. The dual result is often assumed to be an overexploited and degraded system.

This assumption led to the formulation of Garrett Hardin's famous but now somewhat discredited “Tragedy of the Commons” thesis. Hardin put forward the view that rational users of the commons would continue making demands on the resource as long as the expected benefits of their action equaled or exceeded the expected costs. Moreover, since the self-interested individual user ignores the costs imposed on others, rational individual decisions would, in the long run, lead to destruction of the commons. However, later work, in particular by Elinor Ostrom and her associates, showed that such pessimistic outcomes were not universal. The large consensus that emerged over the past two decades is that the tragedy of the commons that Hardin referred to was indeed the tragedy of open-access resources (res nullius, or no property) and not that of common property resources (res communes). The confusion, it became apparent, was that CPRs could be either ungoverned under an open-access regime—this is what Hardin referred to as tragedy of the commons—or managed as a private or government property, or as common property.