The tragedy of the commons
Drastic economic changes for solving environmental problems were required, meaning that a deeper and more practical analysis of resources and the environment was called for. Yet, it seems that a response from orthodox economists was delayed, partly owing to their trust in the market mechanism, and partly owing to their ignorance of the seriousness of the problems.
Rather, unorthodox economists such as Marxists or noneconomists responded to the problems in a timely manner. Among them, Garret Hardin became the symbolic figure of an environmental study: his paper entitled “The tragedy of the commons” (Hardin 1968) attracted the attention of many researchers in various fields, and had a deep and lasting impact on them.Hardin’s explanation is extremely simple: suppose there is pastureland which is open to every herdsman. A herdsman may possibly consider that he or she would be able to get more profits by increasing the number of his or her cattle. Yet every herdsman will think in the same way, so that the total number of cattle will increase. As far as herdsmen can have free-access to the pastureland, overgrazing of pastureland cannot be avoided. This is how the tragedy of the commons occurs.
He insists that the same logic can be applied to overuse of the atmosphere such as in air pollution: factories consider that they can use freely the atmosphere (commons) as a disposal place for smoke and soot, paying no attention to the behaviour of others. Although the profits of each factory may be maximized by that behaviour, the social benefits will not be due to the deterioration of air quality. Again, the tragedy of the commons makes an appearance.
The tragedy of the commons says that a shared resource, like pastureland, fishing grounds, the atmosphere, or whatever it may be, will be depleted by the myopic behaviour of independent individuals even though the depletion of the resource and the inefficient utilization of the resource in the long-run are clear to all individuals. To stop it, Hardin proposes the allocation of property rights to those resources with coercive measures by the authorities.
Despite the simplicity of his logic, it is dubious whether the nature of common resources is the real cause of the tragedy. We can find many examples in which common pool resources are utilized and controlled well by communities without any tragedy in history (Ostrom 2008). A typical example is Japan’s iriaichi (communal land), which are commons of local communities. With rather strict rules implemented, those commons are considered to have been utilized in a sustainable way by members of the communities, particularly in the Edo period (1603-1868).
Then, what is the real reason for the tragedy? Notice that the logical structure of Hardin’s argument is almost the same as that explained in an open-access problem of a fishery (see above). Recall why common resources of fish are overexploited in fishing grounds. It is clear that the overexploitation is caused by open access to fishermen. If entry to fishing grounds is regulated somehow, rent does not disappear and the stock of fish may not vanish. The same argument applies to the use of the atmosphere as a disposal place for smoke and soot.
Consequently, the tragedy that Hardin described may correctly be called the tragedy of open access, instead of the tragedy of commons.
There is an important point here: even if property rights are assigned to common resources, and even if coercive measures are adopted for proper use of those resources, as Hardin suggested, there is still the possibility of running out of them in a dynamic process. If a high discount rate is adopted, the optimal planning of the resource use may imply exhaustive use in a short period, leaving nothing for future generations. To solve this intergenerational problem, another institutional consideration is required, as shown in the sustainability argument presented below.