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A lesson in resources management from Elinor Ostrom

July 1, 2011

You don’t expect big tough fishermen to go around tying bows on baskets, or to get worried if they see a bow they didn’t tie themselves. But speaking at a seminar on her work organised by the OECD Directorate for Trade and Agriculture last week, Nobel laureate Elinor Ostrom explained why that happens.

Maine lobster fishermen use this system when another man sets his traps on their patch. It’s a warning to the poacher that he’s been found out. If he persists, he receives at visit at home. If that doesn’t convince him to mend his ways, he can expect a whole range of other sanctions, up to the destruction of his boat.

This is an example of a self-organising system to manage common pool resources.

These are resources such as fish stocks or forests to which more than one individual has access, but where each person’s consumption reduces availability of the resource to others.

One of the most well-known treatments of the question is Garrett Hardin’s 1968 book The Tragedy of the Commons, which describes how overexploitation of common pools was rapidly increasing worldwide. Traditional economists proposed two responses to overexploitation.

The first is privatisation with adequate means of measurement and control. This depends on having the necessary technical and financial means to exercise adequate control and may only be feasible if ownership is restricted to a few participants.

The second is government ownership and a tax on using the resource.

Ostrom proposed a third solution: retain the resource as common property and let the users create their own system of governance. In Governing the Commons: The Evolution of Institutions for Collective Action, Ostrom argues that common property governance doesn’t have to be tragic, and that users themselves can devise rules and enforcement mechanisms that may be better than restrictions imposed by outsiders with little knowledge or understanding of local conditions.

One of the more surprising conclusions of her research is that users should take care of monitoring and sanctions themselves (or entrust this to someone accountable to them). As the Nobel committee points out, this “challenges conventional notions whereby enforcement should be left to impartial outsiders”.

Monitoring and sanctioning can be costly, if only in the time spent doing them, yet Ostrom’s case studies show that many people are prepared to carry out governance duties.

Her research raises questions as to exactly why individuals are willing to bear the burden of these often thankless tasks that benefit others.

Useful links

OECD Insights: Fisheries

OECD work on fisheries

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