Governing the Commons

Elinor Ostrom had a profound impact on research about institutions. She got the Nobel Prize in Economics for her work thinking about how social affairs could be governed. This goes much wider than corporate governance. It speaks how communities deal with the control of their valuable assets. Clearly this has a lot of relevance to issues around the sustainable use of natural resources, e.g., those that might be held in a common pool. “Common-pool resources include resources that are sufficiently large that excluding potential beneficiaries from using them for consumptive or non-consumptive purposes is non-trivial” (Ostrom, 2008, page 24). Classic examples might be fishing grounds or forests. It is challenging to stop those who don’t pay their fair share from using them (or even determining the fair share to pay).

Given she was interested in what worked there is a lot of common sense in the recommendations of Ostrom. Rather than argue exclusively for private, communal, or public ownership she takes a generally more nuanced approach. Noting that “Examples exist of both successful and unsuccessful efforts to rely on private property, government property and community property” (Ostrom, 2008, page 24).

She adds: “We cause harm, however, by recommending one-size fits-all institutional prescriptions based on overly simplified models of resources to solve problems of overharvesting” (Ostrom, 2008, page 28). Rules around private property, and enforcement of those rights can be challenging. Public ownership can sometimes work but it can also fail to protect shared resources. The effectiveness of communal ownership varies widely; not least depending on how robust the local communal institutions are.

Perhaps unsurprisingly with a challenging problem like protecting natural resources the solutions are often complex and depend a lot on the precise local circumstances.

Read: Ostrom, Elinor. “Institutions and the Environment.” Economic affairs 28.3 (2008): 24-31.