Common-pool resource
Encyclopedia
In economics
, a common-pool resource (CPR), also called a common property resource, is a type of good consisting of a natural
or human
-made resource system (e.g. an irrigation system or fishing grounds), whose size or characteristics makes it costly, but not impossible, to exclude potential beneficiaries from obtaining benefits from its use. Unlike pure public good
s, common pool resources face problems of congestion
or overuse, because they are subtractable. A common-pool resource typically consists of a core resource (e.g. water or fish), which defines the stock variable, while providing a limited quantity of extractable fringe units, which defines the flow variable. While the core resource is to be protected or entertained in order to allow for its continuous exploitation, the fringe units can be harvested or consumed.
A common property regime is a particular social
arrangement regulating
the preservation, maintenance, and consumption
of a common-pool resource. The use of the term "common property resource" to designate a type of good has been criticized, because common-pool resources are not necessarily governed by common property regimes.
Examples of common-pool resources include irrigation
systems, fishing
grounds, pasture
s, forest
s, water
or the atmosphere
. A pasture, for instance, allows for a certain amount of grazing
to occur each year without the core resource being harmed. In the case of excessive grazing, however, the pasture may become more prone to erosion and eventually yield less benefit to its users. Because their core resources are vulnerable, common-pool resources are generally subject to the problems of congestion
, overuse, pollution
, and potential destruction unless harvesting or use limits are devised and enforced.
The use of many common-pool resources, if managed carefully, can be extended because the resource system forms a positive feedback
loop, where the stock variable continually regenerates the fringe variable as long as the stock variable is not compromised, providing an optimum amount of consumption. However, consumption exceeding the fringe value reduces the stock variable, which in turn decreases the flow variable. If the stock variable is allowed to regenerate then the fringe and flow variables may also recover to initial levels, but in many cases the loss is irreparable.
Common-pool resources may be owned by national, regional or local governments as public good
s, by communal groups as common property resources
, or by private individuals or corporations as private good
s. When they are owned by no one, they are used as open access resources
. Having observed a number of common pool resources throughout the world, Elinor Ostrom
noticed that a number of them are governed by common property regimes
- arrangements different from private property or state administration - based on self-management by a local community. Her observations contradict claims that common-pool resources should be privatized or else face destruction in the long run due to collective action
problems leading to the overuse of the core resource (see: Tragedy of the commons
).
. Common property regimes typically protect the core resource and allocate the fringe through complex community
norms of consensus decision-making
. Common resource management has to face the difficult task of devising rules that limit the amount, timing, and technology
used to withdraw various resource units from the resource system. Setting the limits too high would lead to overuse and eventually to the destruction of the core resource, while setting the limits too low would unnecessarily reduce the benefits obtained by the users.
In common property regimes, access to the resource is not free, and common-pool resources are not public good
s. While there is relatively free but monitored access to the resource system for community members, there are mechanisms in place which allow the community to exclude outsiders from using its resource. Thus, in a common property regime, a common-pool resource appears as a private good
to an outsider and as a common good
to an insider of the community. The resource units withdrawn from the system are typically owned individually by the appropriators. A common property good is rivaled in consumption.
Analysing the design of long-enduring CPR institutions, Elinor Ostrom
identified eight design principles which are prerequisites for a stable CPR arrangement:
Common property regimes typically function at a local level to prevent the overexploitation
of a resource system from which fringe units can be extracted. There are no examples of common property regimes which solve problems of overuse on a larger scale, such as air pollution (ref?). In some cases, government regulations combined with tradable environmental allowances (TEAs) are used successfully to prevent excessive pollution, whereas in other cases — especially in the absence of a unique government being able to set limits and monitor economic activities — excessive use or pollution continue.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, a common-pool resource (CPR), also called a common property resource, is a type of good consisting of a natural
Natural resource
Natural resources occur naturally within environments that exist relatively undisturbed by mankind, in a natural form. A natural resource is often characterized by amounts of biodiversity and geodiversity existent in various ecosystems....
or human
Human
Humans are the only living species in the Homo genus...
-made resource system (e.g. an irrigation system or fishing grounds), whose size or characteristics makes it costly, but not impossible, to exclude potential beneficiaries from obtaining benefits from its use. Unlike pure public good
Public good
In economics, a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability means that no one can be effectively excluded from using the good...
s, common pool resources face problems of congestion
Congestion
Congestion generally means excessive crowding.Congestion may refer to:* congestion in heart failure, a term to describe low cardiac output seen in heart failure.* Nasal congestion, the blockage of nasal passages due to swollen membranes...
or overuse, because they are subtractable. A common-pool resource typically consists of a core resource (e.g. water or fish), which defines the stock variable, while providing a limited quantity of extractable fringe units, which defines the flow variable. While the core resource is to be protected or entertained in order to allow for its continuous exploitation, the fringe units can be harvested or consumed.
A common property regime is a particular social
Society
A society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations...
arrangement regulating
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...
the preservation, maintenance, and consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...
of a common-pool resource. The use of the term "common property resource" to designate a type of good has been criticized, because common-pool resources are not necessarily governed by common property regimes.
Examples of common-pool resources include irrigation
Irrigation
Irrigation may be defined as the science of artificial application of water to the land or soil. It is used to assist in the growing of agricultural crops, maintenance of landscapes, and revegetation of disturbed soils in dry areas and during periods of inadequate rainfall...
systems, fishing
Fishing
Fishing is the activity of trying to catch wild fish. Fish are normally caught in the wild. Techniques for catching fish include hand gathering, spearing, netting, angling and trapping....
grounds, pasture
Pasture
Pasture is land used for grazing. Pasture lands in the narrow sense are enclosed tracts of farmland, grazed by domesticated livestock, such as horses, cattle, sheep or swine. The vegetation of tended pasture, forage, consists mainly of grasses, with an interspersion of legumes and other forbs...
s, forest
Forest
A forest, also referred to as a wood or the woods, is an area with a high density of trees. As with cities, depending where you are in the world, what is considered a forest may vary significantly in size and have various classification according to how and what of the forest is composed...
s, water
Water
Water is a chemical substance with the chemical formula H2O. A water molecule contains one oxygen and two hydrogen atoms connected by covalent bonds. Water is a liquid at ambient conditions, but it often co-exists on Earth with its solid state, ice, and gaseous state . Water also exists in a...
or the atmosphere
Atmosphere
An atmosphere is a layer of gases that may surround a material body of sufficient mass, and that is held in place by the gravity of the body. An atmosphere may be retained for a longer duration, if the gravity is high and the atmosphere's temperature is low...
. A pasture, for instance, allows for a certain amount of grazing
Grazing
Grazing generally describes a type of feeding, in which a herbivore feeds on plants , and also on other multicellular autotrophs...
to occur each year without the core resource being harmed. In the case of excessive grazing, however, the pasture may become more prone to erosion and eventually yield less benefit to its users. Because their core resources are vulnerable, common-pool resources are generally subject to the problems of congestion
Congestion
Congestion generally means excessive crowding.Congestion may refer to:* congestion in heart failure, a term to describe low cardiac output seen in heart failure.* Nasal congestion, the blockage of nasal passages due to swollen membranes...
, overuse, pollution
Pollution
Pollution is the introduction of contaminants into a natural environment that causes instability, disorder, harm or discomfort to the ecosystem i.e. physical systems or living organisms. Pollution can take the form of chemical substances or energy, such as noise, heat or light...
, and potential destruction unless harvesting or use limits are devised and enforced.
The use of many common-pool resources, if managed carefully, can be extended because the resource system forms a positive feedback
Positive feedback
Positive feedback is a process in which the effects of a small disturbance on a system include an increase in the magnitude of the perturbation. That is, A produces more of B which in turn produces more of A. In contrast, a system that responds to a perturbation in a way that reduces its effect is...
loop, where the stock variable continually regenerates the fringe variable as long as the stock variable is not compromised, providing an optimum amount of consumption. However, consumption exceeding the fringe value reduces the stock variable, which in turn decreases the flow variable. If the stock variable is allowed to regenerate then the fringe and flow variables may also recover to initial levels, but in many cases the loss is irreparable.
Common-pool resources may be owned by national, regional or local governments as public good
Public good
In economics, a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability means that no one can be effectively excluded from using the good...
s, by communal groups as common property resources
Common ownership
Common ownership is a principle according to which the assets of an enterprise or other organization are held indivisibly rather than in the names of the individual members or by a public institution such as a governmental body. It is therefore in contrast to public ownership...
, or by private individuals or corporations as private good
Private good
A private good is defined in economics as "an item that yields positive benefits to people” that is excludable, i.e. its owners can exercise private property rights, preventing those who have not paid for it from using the good or consuming its benefits; and rivalrous, i.e. consumption by one...
s. When they are owned by no one, they are used as open access resources
Open Access (Infrastructure)
In the context of infrastructure, open access involves physical infrastructure such as railways and physical telecommunications network plant being made available to clients other than the owners, for a fee....
. Having observed a number of common pool resources throughout the world, Elinor Ostrom
Elinor Ostrom
Elinor Ostrom is an American political economist. She was awarded the 2009 Nobel Memorial Prize in Economic Sciences, which she shared with Oliver E. Williamson, for "her analysis of economic governance, especially the commons." She was the first, and to date, the only woman to win the prize in...
noticed that a number of them are governed by common property regimes
Common ownership
Common ownership is a principle according to which the assets of an enterprise or other organization are held indivisibly rather than in the names of the individual members or by a public institution such as a governmental body. It is therefore in contrast to public ownership...
- arrangements different from private property or state administration - based on self-management by a local community. Her observations contradict claims that common-pool resources should be privatized or else face destruction in the long run due to collective action
Collective action
Collective action is the pursuit of a goal or set of goals by more than one person. It is a term which has formulations and theories in many areas of the social sciences.-In sociology:...
problems leading to the overuse of the core resource (see: Tragedy of the commons
Tragedy of the commons
The tragedy of the commons is a dilemma arising from the situation in which multiple individuals, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource, even when it is clear that it is not in anyone's long-term interest for this...
).
Common property regime
Common property regimes arise in situations where appropriators acting independently in relationship to a common-pool resource generating scarce resource units would obtain a lower total net benefit than what is achieved if they coordinate their strategies in some way, maintaining the resource system as common property instead of dividing it up into bits of private propertyPrivate property
Private property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other forms of property. Private property is distinguishable from public property, which refers to assets owned by a state, community or government rather than by...
. Common property regimes typically protect the core resource and allocate the fringe through complex community
Community
The term community has two distinct meanings:*a group of interacting people, possibly living in close proximity, and often refers to a group that shares some common values, and is attributed with social cohesion within a shared geographical location, generally in social units larger than a household...
norms of consensus decision-making
Consensus decision-making
Consensus decision-making is a group decision making process that seeks the consent, not necessarily the agreement, of participants and the resolution of objections. Consensus is defined by Merriam-Webster as, first, general agreement, and second, group solidarity of belief or sentiment. It has its...
. Common resource management has to face the difficult task of devising rules that limit the amount, timing, and technology
Technology
Technology is the making, usage, and knowledge of tools, machines, techniques, crafts, systems or methods of organization in order to solve a problem or perform a specific function. It can also refer to the collection of such tools, machinery, and procedures. The word technology comes ;...
used to withdraw various resource units from the resource system. Setting the limits too high would lead to overuse and eventually to the destruction of the core resource, while setting the limits too low would unnecessarily reduce the benefits obtained by the users.
In common property regimes, access to the resource is not free, and common-pool resources are not public good
Public good
In economics, a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability means that no one can be effectively excluded from using the good...
s. While there is relatively free but monitored access to the resource system for community members, there are mechanisms in place which allow the community to exclude outsiders from using its resource. Thus, in a common property regime, a common-pool resource appears as a private good
Private good
A private good is defined in economics as "an item that yields positive benefits to people” that is excludable, i.e. its owners can exercise private property rights, preventing those who have not paid for it from using the good or consuming its benefits; and rivalrous, i.e. consumption by one...
to an outsider and as a common good
Common good
The common good is a term that can refer to several different concepts. In the popular meaning, the common good describes a specific "good" that is shared and beneficial for all members of a given community...
to an insider of the community. The resource units withdrawn from the system are typically owned individually by the appropriators. A common property good is rivaled in consumption.
Analysing the design of long-enduring CPR institutions, Elinor Ostrom
Elinor Ostrom
Elinor Ostrom is an American political economist. She was awarded the 2009 Nobel Memorial Prize in Economic Sciences, which she shared with Oliver E. Williamson, for "her analysis of economic governance, especially the commons." She was the first, and to date, the only woman to win the prize in...
identified eight design principles which are prerequisites for a stable CPR arrangement:
- Clearly defined boundaries
- Congruence between appropriation and provision rules and local conditions
- Collective-choice arrangements allowing for the participation of most of the appropriators in the decision making process
- Effective monitoring by monitors who are part of or accountable to the appropriators
- Graduated sanctions for appropriators who do not respect community rules
- Conflict-resolution mechanisms which are cheap and easy of access
- Minimal recognition of rights to organize (e.g., by the government)
- In case of larger CPRs: Organisation in the form of multiple layers of nested enterprises, with small, local CPRs at their bases.
Common property regimes typically function at a local level to prevent the overexploitation
Overexploitation
Overexploitation, also called overharvesting, refers to harvesting a renewable resource to the point of diminishing returns. Sustained overexploitation can lead to the destruction of the resource...
of a resource system from which fringe units can be extracted. There are no examples of common property regimes which solve problems of overuse on a larger scale, such as air pollution (ref?). In some cases, government regulations combined with tradable environmental allowances (TEAs) are used successfully to prevent excessive pollution, whereas in other cases — especially in the absence of a unique government being able to set limits and monitor economic activities — excessive use or pollution continue.
Adaptive governance
The management of common-pool resources is highly dependent upon the type of resource involved. An effective strategy at one location, or of one particular resource, may not be necessarily appropriate for another. In The Challenge of Common-Pool Resources, Ostrom makes the case for adaptive governance as a method for the management of common-pool resources. Adaptive governance is suited to dealing with problems that are complex, uncertain and fragmented , as is the management of common-pool resources. Ostrom outlines five basic requirements for achieving adaptive governance. These include:- Achieving accurate and relevant information, by focusing on the creation and use of timely scientific knowledge on the part of both the managers and the users of the resource
- Dealing with conflict, acknowledging the fact that conflicts will occur, and having systems in place to discover and resolve them as quickly as possible
- Enhancing rule compliance, through creating responsibility for the users of a resource to monitor usage
- Providing infrastructure, that is flexible over time, both to aid internal operations and create links to other regimes
- Encouraging adaption and change, to address errors and cope with new developments
Criticisms
A common pool resource is defined above by a set of characteristics, but a common property regime is an institution. The implicit idea is that certain resources may have a propensity to be governed by common property institutions. This concept has limited usefulness because it suppresses the co-evolution of resource scarcity and institutional governance. The most that economists have been able to show, according to Copeland and Taylor 2009, is that resource characteristics may be identified that lead an institution being eventually governed by one institution or another. Three forces determine success or failure in resource management: the regulator's enforcement power, the extent of harvesting capacity, and the ability of the resource to generate competitive returns without being extinguished. The transition of resource governance from open access to common property to regulated private property is less well understood.See also
- Carrying capacityCarrying capacityThe carrying capacity of a biological species in an environment is the maximum population size of the species that the environment can sustain indefinitely, given the food, habitat, water and other necessities available in the environment...
- Commons
- DeforestationDeforestationDeforestation is the removal of a forest or stand of trees where the land is thereafter converted to a nonforest use. Examples of deforestation include conversion of forestland to farms, ranches, or urban use....
- EnclosureEnclosureEnclosure or inclosure is the process which ends traditional rights such as mowing meadows for hay, or grazing livestock on common land. Once enclosed, these uses of the land become restricted to the owner, and it ceases to be common land. In England and Wales the term is also used for the...
- Exploitation of natural resourcesExploitation of natural resourcesMain article: OverexploitationSome exploitation of natural resources is an essential condition of the human existence. This refers primarily to food production and necessities...
- Occupancy-abundance relationshipOccupancy-abundance relationshipIn macroecology, the occupancy-abundance relationship is the relationship between the abundance of species and the size of their ranges within a region. This relationship is perhaps one of the most well-documented relationships in macroecology, and applies both intra- and interspecifically . In...
- OverexploitationOverexploitationOverexploitation, also called overharvesting, refers to harvesting a renewable resource to the point of diminishing returns. Sustained overexploitation can lead to the destruction of the resource...
- OverfishingOverfishingOverfishing occurs when fishing activities reduce fish stocks below an acceptable level. This can occur in any body of water from a pond to the oceans....
- OvergrazingOvergrazingOvergrazing occurs when plants are exposed to intensive grazing for extended periods of time, or without sufficient recovery periods. It can be caused by either livestock in poorly managed agricultural applications, or by overpopulations of native or non-native wild animals.Overgrazing reduces the...
- Social dilemmaSocial dilemmaSocial dilemmas are situations in which collective interests are at odds with private interests. Such situations arise when faced with prioritizing either short-term selfish interests or the long-term interests of a group, organization, or society. Many of the most challenging issues, from the...
- Social trapSocial trapSocial trap is a term used by psychologists to describe a situation in which a group of people act to obtain short-term individual gains, which in the long run leads to a loss for the group as a whole...
- Race to the bottomRace to the bottomA race to the bottom is a socio-economic concept that is argued to occur between countries as an outcome of regulatory competition, progressive taxation policies and social welfare spending...
- Tragedy of the commonsTragedy of the commonsThe tragedy of the commons is a dilemma arising from the situation in which multiple individuals, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource, even when it is clear that it is not in anyone's long-term interest for this...
- Tyranny of small decisionsTyranny of small decisionsThe tyranny of small decisions refers to a phenomenon explored in an essay by that name, published in 1966 by the American economist Alfred E. Kahn. The article describes a situation where a number of decisions, individually small in size and time perspective, cumulatively result in an outcome...
- Digital Library of the Commons