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UNIVERSITA' DEGLI STUDI DI BRESCIA

DIPARTIMENTO DI ECONOMIA E MANAGEMENT

CORSO DI LAUREA IN ECONOMIA E GESTIONE AZIENDALE

RELAZIONE FINALE:

REVIEW TO ELINOR OSTROM’s BOOK: “GOVERNING THE COMMONS”

SUPERVISORE:

CHIAR.MO PROFESSOR FRANCESCO MENONCIN

CHIAR.MA PROFESSORESSA ANNALISA ZANOLA

LAUREANDO:

LUCA BISIGHINI

MATRICOLA N° 76388

ANNO ACCADEMICO 2012/2013

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TABEL OF CONTENTS:

An overview of the Commons 4

Notes 6

CHAPTER 1 – Considerations about the Commons 7

1.1 – Distinction between Commons and Common Pool Resources (7) 1.2 – Beyond Private And Public System (7) 1.3 – How the goods are divided in the Commons’ Theory (8) 1.4 – A historic Overview of the Commons (12) 1.5 – “The Tragedy of the Commons” (14) 1.6 – Possible solutions for the “Tragedy of the Commons” (18) 1.6.1 – The Prisoner’s Dilemma (18) 1.6.2 – The logic of the Collective Action (20) 1.6.3 – Alternative solutions (21) 1.6.3.1 – Solutions and the dominant models of the Economy (24)

1.6.3.2 – Ronald Coase and the Property Rights (26)

1.6.3.3 – Oliver Williamson’s Optimal Governance (28)

Notes 29

CHAPTER 2 – The Third Way of Elinor Ostrom 33 2.1 – The Role of the Communities (33) 2.2 – Global Cases: principles and reasons behind success or failure (34) 2.2.1 – The IAD Framework (36) 2.2.2 – Design principles behind the Self-Governments (39) 2.2.3 – Brief analysis of the global CPRs (42) 2.2.3.1 – Long Enduring, Self-Organized and Self-Governed CPRs (43) 2.2.3.2 – Institutional Failures and Fragilities (55) Notes 62 CHAPTER 3 – Final Conclusions and Critiques 63 3.1 – Final Conclusions (63) 3.2 – Limits arising from the Analysis (70) 3.2.1 – Problems of scale (70) 3.2.2 – Leaving out politics (72) 3.2.3 – Limited choice of examples (72) Notes 73 Webography 74 Bibliography 76 Acknowledgements/Ringraziamenti 78

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An overview of the Commons

The Common Pool Resources have been a widely discussed topic all over the world

(recall the Italian Referendum for the privatization of water, in June 12th/13th, 2011

[Overview.1]) and for a very long period of time (actually, since the Middle Age).

Over the past 45 years, researchers in many fields showed that common property

can work, if a suitable institutional design is followed. Elinor Ostrom[Overview.2] (the

first and only woman who has been awarded with a Nobel Memorial Prize for

Economics in 2009 - together with Oliver E. Williamson[Overview.3]) gave a first

overview of the characteristics of such a "design" in her seminal work Governing

the commons (1990).

The debate about Common-Properties started in the 1970s as a reaction to Hardin’s

(1968) [Overview.4] "Tragedy of the commons" and focused only on the management of

natural resources. During the 1990s the debate has also broadened to the so-called

Global commons (water, air, etc.) and on the virtual commons (which will not be

treated in this dissertation). Ostrom (1990) can be considered as an example of

heterodoxy, for taking into account heterogeneous fields like anthropology and

sociology, and collecting many cases studies all around the world, such as

irrigation systems in the Philippines/Spain/Nepal and Sri Lanka;

Canadian/Turkish and Sinhalese fishermen’s communities;

breeding systems in a Nepalese and Swiss villages;

groundwater basins in California.

In this dissertation, the first chapter will explain the definitions of Commons

and Common Pool Resources (CPRs), then it will focus on the overcoming of the

traditional private and public systems, the distinction between the existing type

of goods, A historic overview of the subject of Commons and finally, the debate

which dates back to Hardin (1968).

In the second chapter will the so-called Third Way of Ostrom will be presented,

starting from the role Communities should play, proceeding with the explanation of

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the IAD (Institutional Analyzing and Developmental) Framework and the Design

Principles and concluding with the analysis of all the cases included in the book.

In the third and last chapter, several conclusions and critiques to the model will be

held.

Notes

[Overview.1] – On June 12th / 13th 2011, a national popular referendum was held in Italy. It concerned 4 different questions,

and two were about THE PRIVATISATION OF THE WATER The Italian population reacted well, in fact the referendum

overcame the quorum’s edge - 56,9% of the population went to vote – and over the 90% of majority who have rights to vote,

rejected all of those questions.

[Overview.2] – ELINOR “LIN” OSTROM, born ELINOR CLAIRE AWAN, is the first ever (and actually, even the only) woman

who has been awarded with the Nobel Memorial Prize for Economic Sciences in 2009 along with OLIVER EATON

WILLIAMSON, for “for her analysis of economic governance, especially the commons”. She was born in Los Angeles on August

7th, 1933. She was Ph. D of Political Sciences at the Indiana University (she operated in Bloomington), she also was the

President of the American Political Science Association during the 1996/97 period and the former director of the Center for

the Study of Institutional Diversity, an institution founded by herself in 2006 at the University of Arizona. She was married to

VINCENT OSTROM for over 49 years (1963-2012) and met him during her Ph. D’s Studies: they began soon colleagues, more

than just husband and wife. During their careers, the Ostroms championed a transdisciplinary, multi-method approach to

address fundamental questions using different types of empirical data. In 1973, Lin and Vincent Ostrom started the

Workshop In Political Theory And Policy Analysis at Indiana University, which is a model of transdisciplinary scholarship. They

both died in Bloomington, Indiana in June 2012, in a 17 days period: Lin on June 12th, Vincent on June 29th.

[Overview.3] = OLIVER E. WILLIAMSON is the 2009 Nobel Memorial Prize for Economic Sciences in 2009 together with

ELINOR OSTROM. Born on September 27th, 1932 in Superior, Michigan, he was awarded for “his analysis of economic

governance, especially the boundaries of the firm”. He was a A student of RONALD COASE (1991’s Nobel Memorial Prize

Winner for Economic Sciencies), HERBERT A. SIMON (1978’s Nobel Memorial Prize Winner for Economic Sciences) and

Richard Cyert. He held professorships all over the United States, from University of Pennsylvania (during the period 1965 to

1983), to Yale University (from 1983 to 1988) to the University of California (from 1988 to 2004). He is currently retired

from teaching but he is still active in research. He is also an Emeritus Professor at the Haas School of Business. He is best

known for the provision of theories about economical transactions which take place within companies and other similar

transactions between firm in the market. His theory allow us how to manage some of the basic choices in human

organization, inside firms due to internal decisions or outside the firms, when the decisions should be left to the market.

[Overview.4] = GARRETT JAMES HARDIN was an American Ecologist who is best known for the exposition of a paper called

“the damage that innocent actions by individuals can inflict the environment”, more famous with the name of “TRAGEDY OF

THE COMMONS” (published in 1968). He was also famous for his “First law of Human Ecology” which is “You cannot do only

one thing”, the expression of all the inter-connections between every action. He received his Ph. D in Microbiology at the

Stanford University in 1941 and he served as Professor of Human Ecology from 1963 to 1978, year when he decided to retire

from the teaching, while remaining in the field of the research.

He received a lot of attention in 1963 for his opinions about justification of genocide and famines, also replicated in 1968 for

The Tragedy of the Commons who explained the issue of human over-population and increasing unsustainability of the

environment. He has been criticized for his ambiguous and protested opinions about other themes, like Eugenetics. He was

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born in Dallas, Texas on April 21st, 1915 and he committed suicide with his wife Jane Swanson on September 14th, 2003 at the

ages of 88 and 81, respectively.

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CHAPTER 1- Considerations about the Commons

1.1 – Distinction between commons and common pool resources

Ostrom (1990) uses the term Common Pool Resources (or CPRs) to denote

natural resources used by many individuals in common, such as fisheries,

groundwater basins, and irrigation systems. CPRs are natural or human-made

resources where one person's use subtracts from another's use and where it is

often necessary, even if difficult and costly, to exclude other users outside the group

from using the resource.. The majority of the CPR research has historically been on

fisheries, forests, grazing systems, wildlife, water resources, irrigation systems,

agriculture, land tenure and use, social organization, theory (social dilemmas,

game theory, experimental economics, etc.), and global commons (climate change,

air pollution, trans-boundary disputes, etc.), but CPR's can also include a broader

spectrum.

Commons is a general term for shared resources which each stakeholder has an

equal interest in. Studies on the commons include the information commons with

issues about public knowledge, the public domain, open science, and the free

exchange of ideas all issues at the core of a direct democracy.

Such resources have long been subject to overexploitation and misuse by

individuals acting in their own best interests. Conventional solutions typically

involve either centralized governmental regulation or privatization of the resource.

But, according to Ostrom, there is a third approach to resolving the problem of the

commons: the design of durable cooperative institutions that are organized and

governed by the resource users themselves.

1.2 - Beyond private and public system

The last decades have been characterized by frequent fights of local committees

and associations of citizens against entrepreneurs who wanted to privatize some

common (mainly environmental) goods [1.1] .

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In the very same period, over-exploitation and environmental deterioration, widely

occurred all over the world, without any timely intervention of institutions or

national/supranational authorities.

Common Goods are commonly regarded as a third group, beyond the usual

dichotomy of Public and Private, but this is not a shared opinion yet, due to

different socio-economical thoughts made during the centuries (and explained in

the section 1.3).

The theoretical disagreements have decelerated the processes of creating new self-

governed and self-organized institutions that could stop these problems and

implement sustainable solutions for these resources.

Social Dilemmas of multiple dimensions (like Tragedy of the Commons and

Prisoners’ Dilemma) are obstacles on the path to create institutions for collective

action; these dilemmas must be overcome if institutions want to succeed or exist at

all. The potential lack of information of the system, can be an obstacle to agreement

among the individuals who make up the system. Another obstacle, free-riding[1.2],

creates the second order social dilemma concerning who will bear the cost of

policing the rules once they are agreed upon. Although the overall formula is

simple - social dilemmas can be solved through institutions for collective action

that are built by overcoming known obstacles - in practice, each group that

struggles to build an institution works under the handicap of being largely

unaware of knowledge about how such institutions succeed and fail. Ostrom found

that groups that are able to organize and govern their behavior successfully are

marked by the some basic design principles, which will explained in the chapter

2.2.2.

1.3 – How the goods are divided due to the commons’ theory

Paul Samuelson, James M. Buchanan and Elinor Ostrom (all Nobel Memorial Prize

Winners for Economic Sciences respectively in 1970, 1986 and 2009) have given

their contribution to the study and definition of Public Goods, Toll/Club Goods and

Common Pool Resources.

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A classification of the goods (see table 1.1) is possible thanks to the use of two

parameters: the subtractability of use and the difficulty of excluding potential

beneficiaries. The subtractability of use is another explanation of the economical

term for “rivalry”

Table 1.1 – Classification of Goods due to Subtractability

RIVAL GOOD (Subtractable) NON-RIVAL GOOD (Non-Subtractable)

A good is rival (subtractable) when the

consumption of it by a consumer

proscribes the simultaneous consumption

by someone else.

The marginal production cost is 0. Very few goods are

completely non-rival, because rivalry or congestions

emerge at certain levels. Such goods can be

used/consumed simultaneously by many

people/consumers.

Source: Investopedia

Subtractability or rivalry in consumption happen when one person consuming an

unit of good (or service) excludes others people from the use of the same unit of

good (or service)

High level of subtractability is the meaning of exclusive consume, because if one

person is going to use/consume a good, another cannot use/consume the same

good. Low level of subtractability is the meaning of non-exclusive consume, because

if one person will use a good (or service), the good (or service) itself could be

used by other people.

Most tangible goods are rivals, almost all private goods are rivals and even some

non-tangible goods are rivals (domain names of Internet, etc). On the other

side, most of the intellectual properties are non-rivals.

The other peculiarity that must be considered is the Difficulty of Excluding Potential

Beneficiaries, referred as Excludability.

Table 1.2 - Classification of Goods due to Excludability

EXCLUDABLE GOOD NON-EXCLUDABLE GOOD

Paying Consumers can be proscribed from

the access to a good

Non-paying consumers cannot be proscribed

from the access to a good.

Source: Investopedia

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Excludability is the rate to which consumption of a good (or service) is limited to

paying customers. High excludability in reality means that the consumer should pay

to consume the goods (or service) itself. Low excludability in reality is the meaning

of no-charge good (or service).

By mixing Excludability and subtractability of use into a nested matrix, Table 1.3 is

obtained.

Table 1.3 – Types of goods

TYPES OF GOODS

SUBTRACTABILITY OF USE

HIGH LOW

DIFFICULTY OF

EXCLUDING

POTENTIAL

BENEFICIARIES

HIGH COMMON POOL

RESOURCES PUBLIC GOODS

LOW PRIVATE GOODS TOLL/CLUB GOODS

Source: Elinor Ostrom Nobel Awarding’s Speech [1.3]

A brief definition of all of these goods follows.

1) Private goods are goods which are held by one owner (or more owners)

that can carry out private property rights, to exclude people who have not

paid for it . They are subject to the scarcity, a phenomenon which leads

them to competition, their demand curve is represented by the summation

of all the demands available in the market and are less likely to suffer the

Free-Rider problem.

2) Toll or club goods are goods that exhibit high excludability but low rivalry in

consumption. They are characterized by zero marginal cost and generally

coincides with natural monopolies.

3) Public goods are goods neither excludable nor rival. Their marginal cost is 0,

therefore privates do not have any incentive to produce or provide them.

Many of them can be subject to negative externalities or they can suffer the

free-rider problem.

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4) Common pool resources (also known by CPRs) are natural or human-made

goods which are excludable but rival. It’s difficult and costly to exclude other

consuming them. Because of the excludability they are subject to the free-

rider problem and due to the rivalry they suffer the Tragedy of the Commons.

Within the Common Pool Resources, there are the Limited Common Pool

Resources, due to scarcity and to limitations. These limitations are often

usability thresholds, set to reduce the number of consumers or the quantity

they want to consume from the CPRs, in order to prevent the complete

depletion of the good itself.

It is unavoidable to talk about the Individuality (also called as Individual Action).

This is the main reason why The Tragedy of the Commons happen and influence

different and complex systems. Therefore, individual action must be primarily

fought, in order to reduce inefficiencies that later could become a Tragedy.

A similar inefficiency could be represented by the concept of Externality, which is

the positive /negative influence (arising from a production activity or a consume)

made by a factory/person not involved in the influenced activity. It influences

other-people’s (or other-producers’) well-being, without a reimbursement (in

case of Negative Externality) or without the payment of the fee (in case of Positive

Externality).

Externalities, like the Tragedy of the Commons, are third effects. They can be:

Market Failure[1.4] or an enhancement of the Social Costs[1.5]. They are also

characterized by potential escaping solutions, like Selling them to a private or a

Maintenance of a public property while granting a private exploitation (that could

be both institutional or just private).

All the Commons are often divided into different groups. Their partition is not easy

to be specified, owing to various utilizations made by local communities or local

institutions. Worldwide Commons can be divided into three groups:

1) Biodiversity and Goods for Subsistence: class of Common goods including:

inland Waters, Land, Forests, Fisheries. These are goods which guarantee

the individuals, their own subsistence and life. Around this category we can

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also include: local knowledge, biodiversity, genetic heritage conserved for

animals, plants and seeds. The main characteristic related to these goods is

the use, the management and the property, exclusively part of the

community itself. Due to this reason, they are also called as Local Common

Goods.

2) Global Common Goods: class of Common goods including: Atmosphere,

Climate, Oceans, peace among nations, licenses, Internet and all other goods

which are the result of a collective creation while covering up a Global

importance, because of the global admittance. Admittance after some

period, lead to an invasion and then an over-exploitation of the goods.

3) Public services: class of Common goods representing: services given by

Public Authorities (either national or local) in order to fulfill all the citizen

needs, during the time. These needs can change during the time, due to the

people’s necessities. They are: water provision, electric provision, health

system, social security, justice administration and many more. This services

could be threatened by Privatization Processes.

1.4 – A historic overview of the commons

During the centuries, different populations all over the globe, tried to manage the

commons in different ways. The first historical evidence of Commons Management

can be ascribed to the Byzatines, thanks to the emperor Justinian I “The Great”. In

534 AD, he created the Codex Iustinianus repetitae praelectionis (Justinianus

Codex)[1.6], where was also included the definition of Commons or in Latin, Res

Communes. These were one of the four genus (kinds) in which were divided all the

goods in the Byzantine Law, along with the Res Nullus (untamed lands), the Res

Privatae (private goods) and the Res Publicae (not natural public goods). The Res

Communes were: inland waters, the air, the sky, the flora and the fauna. In this

codex, inland waters were defined as a “goods subtracted to the authority of the

Princeps”

The next historical proof found about Commons in the history, is related to the

Middle Ages. During the so called Feudal Era, land was open for all to harvest:

anyone could gather firewood and mushrooms, peasants could graze their sheep

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on it, etc. Then, in 13th century, in England, King John I and the barons,

appropriated the commons for their own exclusive use. Their policy of enclosures

led to a popular uprising, that later brought to the Magna Carta Libertatum (1215)

and the Charter of the Forest (in Latin Carta de Foresta)[1.7], which introduced new

regulations about ensuring the right to use forests or other sorts of fields ("Forest"

did not necessarily mean treed areas, but can include fields, moor or even farms

and villages). This system, also known as Open Fields, allowed every family its own

allotment for their own use (grazing, foddering, etc). It survived until the

beginning of the first Industrial Revolution (in England and France), and until the

second industrial revolution (in the remaining part of Europe). With some

exceptions, of course, like Huertas in Spain, the Swiss pastures and the Japanese

open fields (section 2.5.1).

Everything changed with the Industrial Revolution, where the Open Fields became

Enclosed, a fact considered in Das Kapital (Marx, 1867) as the original accumulation

that started the private wealth at the expense of the rights of the local populations.

This fact changed the whole system of production forever, because most of the

countrymen peasants emigrated to the cities, and became Proletarian while

whoever remained in the countries (like Cottagers, little landowners and the

peasants without an own land which used to exploit the Common Fields), went to

ruin, simultaneously favoring the big landowners, which could afford by the

installation of the enclosures.

The installation was imposed with laws, like the Inclosure Acts[1.8], but also with

many episodes of violence and threats. Open Fields did not disappeared, also the

open lands for pastures, the Forests, the inland waters, the groundwater basins, etc.

Not all the Commons become privatized or enclosed.

Adam Smith (1776), was one of the first economists who sustained the change from

a rural economy (where Commons Goods and Open Fields have a fundamental

importance for the society) to a Market Economy influenced by an Invisible Hand

where the society turned up into a group of Homo œconomicus, which had an

egotistical behavior, such majestic, that got the better of interpersonal

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relationships. This fact was the basis of the destruction of collective properties and

their acts/rules.

On the other hand, despite all the limitations and all the attempts to privatize or

contain these goods, imposed in the last two and a half centuries, the subject of the

Commons remained a ductile institution, overcoming all the attempts to

privatization. Their flexibility allowed many times for different communities all

around the globe to express some of their inalienable rights, like the possibility to

cooperate (even in forms of auto-govern) for the access or the use of the Commons

themselves.

The concept of Commons mentioned in the section 1.1 , became flexible, thanks to

the adaptability of their use to the newest technologies and methodologies

achieved by the consumers. Thanks to the enlargement of use of the concept

nowadays, goods or services like pharmacies, health system can be considered as

Commons. This enlargement of use, often recurring in the Western World,

unfortunately moved the global attention off the Third World, regardless the fact

that 1/3 of the World Population, currently lives in conditions of barely

subsistence.

This reflection about the different global conceptions and attention addressed to

the Commons, clarifies one precise fact: there is no univocal and global definition for

the Commons because, beyond the concepts of access or sustainability, there are

infinite scenarios where the definition can be applied, and every scenario is

different from another one.

The suggestion which many theorists gave, is to read and describe all the features

of the local commons without trying to propose or reintroduce ancient concepts or

related to other realities. Otherwise, there would be no suitable description.

1.5 – “The tragedy of the commons”

Since Hardin (1968) “Tragedy of the Commons” (Hardin, 1968) was published on

the eminent Science magazine: from this day on, the contemporary discussion

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about the argument reached levels of cross-curricular analysis never touched

before.

Hardin’s strong word “Tragedy”, meant that every available optimal choice would

not be affordable in economic terms.

In this article, Hardin started with the description of a global phenomenon where

the not controlled demographic growth faced the limits imposed by the natural

resources, within the limit of the authorities (Common Goods disciplined by the

Public International Law were not included in his analysis[1.9] ) . This phenomenon

also had a reference to the Common Goods, due to the dilemma between the

individual interest (shown by individual consumers) and the collective interest

(shown by the public authorities). The solution for this dilemma is usually situated

in the recourse to the Public authorities. Talking about the commons, Hardin found

tragic anxieties between consumers, due to the possibility that some of them has to

the over-exploit and deteriorate the source itself (in some cases, there would even

be cases of profligacy): in fact, if the real tragedy is hidden behind the idea that

every single Appropriator will take the entire benefits from the common, but

nobody will sustain the costs for enhancements or for reinstatements, because

every appropriator prefers to share only a little part of the cost, while at the same

time the rest of the appropriators cover up the remaining part of the costs (social

costs). The final consequence for this prevailing behavior will be the predation of

the Common until its complete depletion. Hardin mentioned the example of the

Open Pasture where farmers brought their cattle.

In order to maximize their own utility function (in this case, profits), some farmers

enlarge by one marginal unit the quantity of the cattle brought to the Open Pasture:

the ensuing marginal reduction of grass would be very modest (the reduction will

damage all the farmers in a fractioned part) while the individual benefit would be

higher than the individual cost. This attitude, at first, encourages the farmers to

bring higher numbers of livestock for their own individual advantage; then,

without any kind of shared restrictions or limitations, lead the Open Pasture to its

destruction.

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Hardin (1968) also commented this mechanism with a phrase: “Ruin is the

destination toward which all men rush, each pursuing his own best interest in a

society that believes in the freedom of the commons. Freedom in a commons brings

ruin to all“

Hardin’s article and study was implemented by Ostrom (1990), with the

observation of both national and international regulators, which can create

optional problems. Her explanation defined a new way to find a solution to the

Tragedy, by not-following the national/international regulators and entrusting, at

the same time, local people who can come up with solutions which better fit the

challenge imposed by the Tragedy.

Other communities can create other opposite situations, like these shown in the

table 1.4.

Table 1.4 – Classification of the tragedies

PRIVATE OWNERSHIP COMMON OWNERSHIP

BAD OUTCOME Tragedy of the Anti-

Commons

Tragedy of the Commons

GOOD OUTCOME Successful Capitalism Comedy of the Commons

Source: Hardin (1968)

1) The comedy of the commons (or inverse of the commons) represents the

opposite result of the tragedy of the commons, because the people which act

in this way, instead of acting egoistically for their personal profit, prefer to

share their knowledge with the other part of the community. The term was

coined by Carol M. Rose (1986).

2) The tragedy of the anti-commons is a neologism invented by Michael Heller

(1998). Many theorist considered this tragedy as the mirror-image of the

tragedy of the commons, because in the tragedy of the commons, the

commons themselves were over-exploited and left to in a depletion status,

while in the tragedy of the anti-commons happened the opposite thing. In a

system ruled by the private property, it could happen that the good itself

could be misused or underused due to different failures, involving collapsed

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negotiation between right-holders. This happened for a huge number of

stores/retailers in the former second world countries. Many people wanted

to negotiate with the right-holders of many closed stores, but no one

wanted to rent (or sell) the license for their activity or their activity, despite

they were not earning money while demand was growing in the first

months after the end of Communism.

The tragedy of the commons is the trivial consequence for both the laws of the

demand and supply. To avoid the over-exploitation of the resources, all the

consumers of commons, could agree to achieve the privatization of the common

itself by creating a market. The creation of a market put the resource into a price

system, where demand and supply are the regulators of the market and allow all

the consumers, to achieve a level of long sustainability, expressed for example, by

an high level of prices. Otherwise, the consumers can agree for a regulation to the

access at the Commons, by clarifying the roles of each member and the property

shares.

Only few communities in history, succeeded to give themselves regulations to fight

the tragedy of the commons, while other communities got stacked in the middle of

negotiations or worse, failed totally or waited for other solutions coming from an

external institutions (from public authorities or private).

Only few communities succeeded in achieving some results. Before mentioning the

classic possible solutions to the tragedy of the commons, hierarchy must be

explained. Hierarchy was the key constituent for many successes in different

ancient communities, often little based. In these communities, where individual

properties were limited, the interest of the monarch was the same of the people.

This statement argues that the tragedy of the commons are one of the main negative

results produced by the modern era, started with the first industrialization.

The concept of tragedy of the commons was also used by other studious of other

disciplines, but it was not such effective for the regulations of commons like:

atmosphere, oceans, climate due to the lack of intervention of both possible private

owners or public authorities. The international law, the regulator of these commons,

does not have and did not have in the past, the necessary “weapons” to fight these

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problems, but the situation is slowly changing. Unfortunately, international law still

remains just a governance mechanism, due to issues in reaching international

cooperation, political problems and amount of costs, considered too much high to

reach an international agreement.

1.6 – Possible solutions for the “tragedy of the commons”

Elinor Ostrom theorized two main different kinds of solutions to the tragedy of the

commons: the first solution was connected with the games theory (especially with

particular cases of prisoner’s dilemma), the second solution was related to the logic

of collective action.

1.6.1 - The prisoner’s dilemma

Often shortened as “PD”, prisoner’s dilemma is a paradoxical situation described in

games theory, a branch of economics analyzing decisions made under conflict and

uncertainty. The two (or more) individuals try to pursue their own best interest of

a course of action. The dilemma is set up when both parties choose to protect

themselves at the expense of other participant, by not cooperating. As a result of a

following a purely logical thought process to help themselves, both participants

then find themselves in a worse state than if they had cooperated with each other

in the decision-making process.

Some studious have translated the tragedy of the commons of Garrett Hardin into a

prisoner’s dilemma, because the PD is none other than an optimal rational strategy

for the individual, but not optimal for the collectivity.

In the commons’ PD, the production of the common made by an individual is

considered not advantageous for the production. The intervention which does not

give a contribution, will result to be the dominant strategy, thanks to the

interception between the rational individuals. This discovers an equilibrium

situation (the Nash equilibrium), but this is not a Pareto-efficient situation, because

the individuals could choose a better situation.

People are trapped by the prisoner's dilemma only if they treat themselves as

prisoners, by passively accepting the suboptimum strategy the dilemma locks them

into. In case, they try to work out a contract with the other players, or find the ones

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most likely to cooperate, or agree on rules for punishing cheaters, or artificially

change the incentive ratios - they can create an institution for collective action that

benefits them all.

In the Hardin’s variation, the game provides to the two players to take a decision

about the use of a common pasture. The outcome of the game depends from two

conditions: the first one is given by the possibility for both the players to strive for

having a dominant, favorable and not limited to other player’s strategy, which is the

non-cooperative one; the second one is linked to the fact that nobody has an

incentive to chance a strategy which is independent from the other’s choice.

Considering all the circumstances of the PD applied to the Hardin’s model, the two

(or more) rational players, would both choose for a dominant strategy,

independent from the other one.

Figure 1.5 – Garrett Hardin’s herders’ game

Source: Ostrom (1990)

Considering the other fields’ “tragedies”, all the prisoners usually have the personal

interest to establish a collaboration with the authorities, “to leave the prison”,

instead of trying to pursue a non-profitable cooperation. But this presupposition,

seems not to be applicable for the tragedies of the commons, because individualistic

choices and free-riding behaviors led to massive privatizations, often constituted by

divisions into a wide number of shareholders. Of course, privatizations must not be

demonized, but many common goods (for example water) cannot be divided into

20

smaller parts due to their nature. In these cases, we can finally state that we need

another possible solution for the problem of the CPRs.

Ostrom took an empirical approach by examining legal records and other public

documents, and found that it is possible to determine whether every population

over-consumes and under-provisions all common pool resource. In many different

cultures all over the world, some groups would find ways to overcome the

obstacles that defeated others - by creating contracts, agreements, incentives,

constitutions, signals, media to enable cooperation for mutual benefit.

1.6.2 – The logic of the collective action

American economist Mancur Lloyd Olson Jr. (1965) talked about the possibility to

avoid the tragedy of the commons. The tragedy, sometimes, is unavoidable.

The reasons behind the unavoidability of the tragedy are often situated in the

nature of the groups of consumers themselves, in the nature of the common good

and in the relationship occurring between the common goods’ provision and the size

of the group. Olson found three different typologies of problems:

1) Large sized groups of appropriators: is easy to find problems for the

management and the provision of the commons, like:

assisting at a lower share of benefits with respect to small/medium

sized groups;

difficulty for an higher number of appropriators to focus in an

adequate way to the commons’ management and provision;

the organizational costs rise with the group size.

2) The typology of the commons due to supply (as shown in the table 1.6)

21

TABLE 1.6 – Division of the Commons

EXCLUSIVE COMMONS INCLUSIVE COMMONS

These goods are

characterized by limited

supply

These goods are not characterized by limited supply

Profits are limited: every

firm try to increase them,

but if they would act in that

way, the price will

subsequently drop

Profits are not limited: provision of the goods

expands when group gets larger. This often happens

in non-market situations. When a company sell

more at a price, the other firm will sell less

Source: Elinor Ostrom (1968)

3) The relationship among its provision and the size of the group (illustrated in

the table 1.7)

TABLE 1.7 - Relationship between common goods provision and the group

size:

GROUP SIZE COMMON GOODS PROVISION

When increases Provision become less optimal

When the group is Privileged Goods always provided

When the group is Intermediate Goods might be provided

When the group is Latent Goods will not be provided (expect for cases

like coercion)

Source: Ostrom (1990)

These problems could be ascribed to the possible conflict could rising up from

different members of a group: there is always a possibility that some members, not

attracted by the Collective Action, decide to Free-Ride on the efforts of the other

members, due to lacks in incentives, disagreements about the sharing costs, other

member’s activities or social pressure. It could happen the opposite: the problem

could have an answer in a scenario when every member is active and every

member receives an incentive.

22

The application of the logic of the collective action to the Hardin’s herders’ game is

easy: once we consider the number of herders, if the number of the herders is be

small (for example, two or three herders), every single herder will see the over-

exploitation the grazing. The problem would be easily solved.

1.6.3 – Alternative solutions

Hardin (1968) himself proposed also an hobbesian[1.10] solution to solve the

tragedy, with the introduction of an external authority which can monitor the

situation of the grazing and can inflict penalties or fines. This choice can lead to an

enhancement of the level of security of the common itself. The external authority

can be found either through an imposed coercion (in the majority of the cases) or

through a democratic election of a supervision agency.

In the Hardin’s proposal one problem arises: the incapacity of the appropriators to

autonomously solve, in the majority of the cases, their own problems of

management of the common source. This problem, can be solved through the

imposition of a “leviathan”, a figure who can release them from the State of Nature.

The leviathan (Hobbes, 1651) is considered one of the most important book which

talks about the legitimacy of the state. The individual tries to escape from his state

of nature, characterized by the bellum omnium contra omnes (Latin for “war of all

against all” – a man, moved by his own instinct, tries to achieve his desires by

eliminating the obstacles he would face), is disposed to deprive a part of his own

freedom by authorizing an imaginary agreement to the monarch, the prince or to an

assembly. The man is rational and informed about what he is currently doing

(authorizing a self-restraint), escaping from a tragedy. The “Leviathan” was not a

random title chosen by Hobbes, but represented a metaphor for “a necessary evil” to

overcome the egotistical interests and the competition between men. The

Leviathan solution is hardly to apply: Hobbes himself declared that the common

lands must not be managed by the communities, but obtained through struggles,

because people do not act like ants or bees, animals which live “sociably one with

another”, but they are constantly “in competition, for honor and dignity”, and are

full of “envy and hatred”. These factors finally lead to a “war”, among themselves.

For ants and bees, common goods do not differ from the private good, because their

23

natural instinct, lead them to provide goods for themselves, and while they are

doing this, they are reaching the entire community well-being. Among human

communities, instead, “men’s happiness are reached only through competition, so

men are able to appreciate only those things who lead them a distinction from

other people”. This distinction between men and ants/bees is reflected also in the

system of governance:

Ants and bees, without the intellect, are able to create a community and a

govern which is not objectionable;

In a world governed by men, some of them will retain some others more (or

less) wise (or able) to govern than others.

Hobbes continued his analysis by mentioning quality of the communications,

personal desires, insults, appearances, affections, personal sentiments and

conventions as factors which make huge difference in behavior, that lead to the

impossibility of obtaining a management of the commons by men.

Amartya Sen[1.11] remarked the fact that the hobbesian solution is not achievable

and not convenient in the commons’ world, especially for the global commons

because it is hard to reach a global agreement with different governments and

authorities, and to impose sanctions to whoever will be caught. Sen also remarked

two facts: the current trend to privatize the commons and the necessity to

reintroduce a new season of collective governance for the commons, if men want to

save them from the over-exploitation or from privatizations. The model of

governance should be egalitarian, communitarian and should be one of the most

important instrument to maintain the peace and an economic growth in the

globalization era. These requirements, united to the complexity to meet billions of

independent people who tries to maximize their own objectives, a coordinated

global pact for the commons seems to be unfeasible and impossible.

Another solution could be found on the individual ethics: through the responsibility

of a cohesive and stable community is possible to avoid Tragedies. This lead to a

change of personal and group preferences and considerations: the common good

itself thanks to the ethic could be seen as Private despite its status of Public.

24

1.6.3.1 –Solutions and the dominant models of the Economy

Considering the previous solutions, is verified that there is a lack of innovation, due

to the behavior of the Communities and the imperfections represented by their

management procedures. In order to innovate in the future, all the studious must

know the past. Elinor Ostrom demonstrated in her book and blamed the classical

economic theories who tried to solve the commons’ problem: from the Tragedy of

the Commons to the Prisoner’s Dilemma to the Ronald Coase’s approach to the

property rights.

Hardin showed the fact that every herder, in an open-access grazing, will follow the

systemic logic of the individual profit, which, combined collectively, lead to the

depletion of the Common Good. The Prisoner’s Dilemma instead, strengthened the

uncertainties related to the existing relationship between the non-cooperative

games and the individual rationality: instead of cooperating, the rational individual

would betray the other prisoner, while at the same time, to achieve a collective

advantage, he should not act in that way.

Ostrom instead, criticized the Prisoner’s Dilemma solution for:

Absence of communication between players

Unique turn of the game

In fact, Ostrom introduced more “reality” into the PD of Hardin, with the integration

of:

communication between players;

learning processes based on the past errors;

games with repeated turns.

The solutions achieved with these new introductions, were far away from the

previous inauspicious results achieved by Hardin. Those results were intermediate

with respect to the theoretical optimum. Another solution could be achieved with

the self-imposition of rules and sanctions for every infraction: these are

characteristics which allowed her to be confident in saying that a third way could

be reached, and also to be confident that public authorities could be attracted to

give to other institutions, the possibility to manage these goods (of course after

the analysis of the transactional cost of the Coase’s model).

25

After these considerations about PD, the “ostromian” third way is explained: a

territorial management of the CPRs through self-governance institutions. The new

approach to the CPRs is the utterance of the individual capacity to solve various

sorts of dilemmas in different ways according to the local circumstances.

Hardin argued that the possible solutions to his tragedy, to fulfill a sustainable

management of the common, might be the public intervention or the privatization.

Ronald Coase (1960), demonstrated through his analysis of the property rights that

through the definition of the private property rights and in absence of transactional

costs, the privatization would be a

better solution compared to the public intervention.

Elinor Ostrom did not agree with both Ronald Coase (1960) and Garrett Hardin

(1968), and critiqued their methodologies, arriving to different results. Her critique

to Hardin’s model, is linked to the fact that Hardin erroneously defined the

“commons” with the term “Open access good”: a not insignificant confusion, because

commons represent in historic, scientific, geographic terms, defined collective

spaces and collective natural sources, managed by a precise group. Commons are

definitively not unregulated and opened to an access. According to Bromley and

Cernea (1989), “the term common property has been largely misunderstood and

falsely interpreted for the past two or three decades”.

Ostrom took some inspirations from forerunners, like the german-american

Sigfried von Ciriacy-Wantrup[1.12], considered too much heterodox during the

1950’s. By analyzing different cases all over the world, he discovered several types

of properties which escaped from the (later) forecasted destiny of Garrett Hardin.

For example, he mentioned cases about forests and alpine grazing. He also made a

distinction of the typology of goods, by splitting the Commons into:

- CPRs (res communis omnium): without the presence of an institution which

can hold property rights, the difference is situated in the existence of a

community. The hypothetical membership which can be obtained, could

allow exploitation rights but at the same time, duties related to

management, maintenance and renovation, which if not observed, could

lead to various kinds of sanctions or in serious cases, to the exclusion from

the use and shared appropriation.

26

- Free Goods (res nullius): the tragedy unconsciously described by Garrett

Hardin in his famous book. It is a common good which its property is

ownerless. Many examples could be made about them: the most common

one is represented by the wild animals or by the abandoned properties.

So Garrett Hardin, due to this incomprehension, did not find a problem, but in the

case of absences of rules, he found one of the possible solutions in the cases of

CPRs. The CPRs represent the third way, beyond the public system and the privates.

The CPRs are represented by different and consistent forms of common goods all

over the world, which are studied and analyzed. These cases of study revealed the

existence of collective institutions which manage in a sustainable and efficient way,

goods and natural resources which seems to be, at a first sight, extremely hard to be

managed.

Elinor Ostrom demonstrated during the last decades, the fundamental role covered

by the institutional diversities to strengthen the solidity of different environmental

systems, through the development and the inspiration of a variety of empirical

studies on the local management systems and also on the human conduct.

1.6.3.2 – Ronald Coase and the property rights

Ronald Harry Coase was awarded with the Nobel Prize for Economics in 1991,

thanks to his contribution to the neo-institutional economy[1.13]. The main research

which led him to be awarded with the Nobel Prize was his article called “The

problem of the Social Cost” (1960): it was an attempt to demonstrate that an

efficiency could be found in the market and this efficiency represents the

superiority of the net sum of the social well-being with respect to the other

alternatives, like the public system.

The “coasian” analysis, started before the 1960, had a simple, basic idea: if the

realization of market transactions would be costless for real, everyone could work

for his own profit, exchange goods and services. At the same time, there are

different big companies, which take advantages from the insourcing instead of

outsourcing some other relations. Coase discovered that outside the firms, price

movements directs the production which is coordinated through the exchanges on

the market, while inside the firms these transactions do not exist and the

27

entrepreneur and his partners, lead the production: a confrontation between the

costs sustained by the market and the firms was his next step.

The existence of the firms is associated to smaller transactional costs respect to the

transactional cost that firms faces on the market.

In 1960, Coase protracted his analysis with the addition of the property rights to the

transactional cost mechanism. If the rights are well-defined and simultaneously

there are not transactional costs, the market responds by favoring individuals who

will estimate more the property rights themselves. In this way, there will be an

efficient allocation of the source, irrespective of the initial allocation of the

property rights.

In case of meaningful transactional costs, the initial allocation of the rights and its

use, will influence the final allocation: this means that the market does not allow

the efficient allocation of the source. In presence of transactional cost, the

concentration and the definition of property rights depend from the transactional

costs.

In order to achieve the efficient allocation of the sources, it is necessary the

comparison between the institutions (market, public authorities) who allow the

achievement of the best allocation available, given the constraints and other

limitations. The choice becomes alluring only when is achieved a better market

exchange.

This analysis has been critiqued by Elinor Ostrom for many perspectives, like:

The assumption of a linear relationship between costs and benefits;

Unlikelihood to apply when are involved more than two subjects;

External agencies usually do not have accurate information on the common

itself. This behavior, lead them to lower payoffs, confusion in focusing and

excess for costs of monitoring and enforcements;

Unlikelihood to delete the transactional costs;

In case of externalities, there are no market prices able to regulate them;

The public intervention when tries to regulate the externalities, always fails,

while the market considers all the externalities as another good. In every

case, property rights must be defined.

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1.6.3.3 - Oliver Williamson’s optimal governance

In 2009, the Swedish Academy of Sciences also awarded along with Elinor Ostrom,

Oliver Williamson for their important results achieved in the analysis of the

economic governance: Elinor Ostrom focused her academic research in the field of

commons while Williamson, focused his analysis in the field of economic

governance, especially the boundaries of the firm.

Oliver Williamson was the creator of the neo-institutional economy, a field of

economics where the firm is considered the dominant economic model because it

facilitate the management of the conflicts. His analysis underlined elements to

understand fundamental choices held in a human organization, like centralization

of decisional power or, on the opposite side, when decisions should be made

through independent agreements.

The theory of transactional costs explained by Williamson, analyzes the basic

elements in the choice to produce inside or outside a firm. His analysis wants to

comprehend which is the best form of governance when transactional costs are

present.

Transactional costs are important to investors because they are one of the key

determinants of net returns. They involve: information costs, negotiation costs and

extra activities. This concept was introduced by Ronald Coase (1937) while he was

explaining the advantages and the disadvantages between the vertical extension

and the horizontal extension of several companies. Transactional costs diminish

returns, and over time, high transaction costs can mean thousands of money lost,

and a reduction of the amount of available capital to invest.

Fees, such mutual fund expense ratios, have the same effect. Different asset classes

have different ranges of standard transaction costs and fees. With everything else

remaining equal, investors should select assets whose costs are at the low end of

the range for their type. while awarding Oliver Williamson, the Swedish academy of

sciences explained to fundamental aspects of his research: the formulation of a

newer concept of transactional cost obtained through his analysis about the

appropriate forms of governance between market and internal centralization.

29

The theory of the vertical integration made by Williamson is based on two main

assumption about the limited rationality of the agents and the opportunity that

individuals have to behave opportunistically. Three main factors can influence the

decisional power of a firm to choose between market and internal centralization,

and finally, the transactional costs. These are: Uncertainty levels, frequency of

transactions and the presence of specific investments.

The levels of uncertainty are related to either the internal or the external

environment of a company;

The frequency of transactions is connected with the number of transactions held in

a company and the nature of commercial relationships between the contracting

parties;

The presence of specific investments refers to the possibility that the firm can face

long-lasting investments, which cannot be considered as normal transactions.

If the influence of this three factors is high, the incentive for a vertical integration is

high too (along with the typology of activity of the firm itself).

The first match-point between Ostrom’s and Williamson’s analysis is situated in the

governance theme, seen as an intermediate regulation between the public

authorities and the behaviors of the market. The second match point, could be

found in the shared idea that organization has an important role to determine

efficiency and fairness. The third match point is located in the shared, refused

opinion that the economic agents are perfectly rational and they assume the people

can have incomplete knowledge and many times, are characterized by a bounded

rationality. The last match point refers to the sharing opinion about the fact that

economics should reason beyond the theory of the market, based on the market

prices. The markets do not work appropriately if there are no proper regulations

either in the aspect of stipulation and respect.

In his Nobel Prize Lecture[1.14], Williamson sustained the necessity to abandon the

old ideological separation, between the automatic mechanisms of the markets and

the intentional mechanism of the organizations, because both should co-operate to

let the organization work properly.

30

The market, the firms and the institutions governing CPRs are not in contrast each

other, but they need each other to efficiently work and to avoid phenomena like

asymmetrical information, opportunism and lacks in regulations.

Notes:

[1.1] = Monsanto Company is a publicly traded American multinational agricultural corporation. It’s a worldwide leader for

the production of genetically engineered seeds, traditional seeds, pesticides and herbicides. In 2007, Monsanto sued a

farmer, who kept the seeds from the former OGM plants in order to reuse them in future, for a violation of the property

rights. From this point on, it was born a global (also here, in Europe) discussion about the validity or not of the license

extension for OGM seeds.

[1.2] = FREE-RIDER & FREE-RIDER PROBLEM (DEFINITION): in Economics, the free-rider problem is a condition where an

individual (or more than one) in a population prefers to consume and enjoy the good (or service) more than the fair share

assigned of a common pool resource, without sharing its cost or paying less than the necessary for it. FREE-RIDER’s behavior

become a problem when lead to under-provision of goods (or services) or more frequently to the opposite side, represented

by overuse, degradation, over-exploitation of a Common Property Resource.

[1.3] = http://www.nobelprize.org/nobel_prizes/economics/laureates/2009/ostrom-prize-present.html

[1.4] = Market Failure represents a condition where, in any given market, the quantity of a product demanded by consumers

does not equate to the quantity supplied by suppliers. This is a direct result of a lack of certain economically ideal factors,

which prevents equilibrium.

[1.5] = Social costs of production are cost which includes all the costs of production of the output of a particular good or

service. We include the third party (external) costs arising, for example, from pollution of the atmosphere. SOCIAL COST =

PRIVATE COST + EXTERNALITY

For example: - a chemical factory emits wastage as a by-product into nearby rivers and into the atmosphere. This creates

negative externalities which impose higher social costs on other firms and consumers. e.g. clean up costs and health costs.

Another example of higher social costs comes from the problems caused by traffic congestion in towns, cities and on major

roads and motor ways.

[1.6] = It was the replacement of the previous Codex Gregorianus and the Codex Hermogianus. And it involved some revision

about : Clerical Law, Private Law, Criminal Law, Administrative and Financial Law. After its promulgation in 533 AD, it

became one of the most fundamental law in the Roman Society. It is currently studied in Law Universities all over the

Western Countries.

[1.7] = The charter re-established rights of access to the royal forest for free men that had been eroded by the Conqueror and

his heirs. Many of its provisions were in force for centuries afterward. It was first issued in 1217 as a complementary charter

to the Magna Charta from which it had evolved. It was reissued in 1225, with a number of minor changes to wording, and

then was joined with Magna Carta in the Confirmation of Charters in 1297. In contrast to Magna Carta, which dealt with the

rights of barons, it provided some real rights, privileges and protections for the common man against the abuses of the

encroaching aristocracy. At a time when the royal forests were the most important potential source of fuel for cooking,

heating and industries such as charcoal burning, and such hotly defended rights as pannage (pasture for their pigs), estover

(collecting firewood), agistment (grazing), or turbary (cutting of turf for fuel). This charter was almost unique in providing a

degree of economic protection for free men, who also used the forest to forage for food and to graze their animals.

31

Since "forest" in this context didn't necessarily mean treed areas, but could include fields, moor or even farms and villages, it

became an increasing hardship on the common people to try to farm, forage, and otherwise use the land they lived on.

[1.8] = The Inclosure or Enclosure Acts were a series of United Kingdom Acts of Parliament which enclosed open fields and

common land in the country. They removed previously existing rights of local people to carry out activities in these areas,

such as cultivation, cutting hay, grazing animals,using other resources such as small timber, fish, and turf or sometimes even

living on the land. They have been introduced in the 12th century and but the peak of the procedure was reached in the 1750-

1860 period. Under this process there were over 5,000 individual Inclosure Acts and 21% of land in England was enclosed,

amounting to nearly 11,000 square miles (28,000 km2)

[1.9] = The International Law is a governance system applied to a common good, therefore a cooperation is required to

achieve every sort of result. It is not possible to achieve these results for commons like Oceans, Climate, Atmosphere due to

the Administrative Costs. Despite this alerts, there exists international institutions like the Earth System Governance Project,

sponsored by United Nations.

[1.10] = Thomas Hobbes of Malmesbury (5 April 1588 – 4 December 1679), was an English philosopher, best known today

for his work on political philosophy. His 1651 book Leviathan established the foundation for most of Western political

philosophy from the perspective of social contract theory. He was one of the founders of modern political philosophy.[4] His

understanding of humans as being matter and motion, obeying the same physical laws as other matter and motion, remains

influential; and his account of human nature as self-interested cooperation, and of political communities as being based upon

a "social contract" remains one of the major topics of political philosophy.

In addition to political philosophy, Hobbes also contributed to a diverse array of other fields, including history, geometry, the

physics of gases, theology, ethics, and general philosophy.

[1.11] = Amartya Kumar Sen (born 3 November 1933) is an Indian philosopher and economist who was awarded the 1998

Nobel Memorial Prize in Economic Sciences for his contributions to welfare economics and social choice theory, and for his

interest in the problems of society's poorest members. Sen is best known for his work on the causes of famine, which led to

the development of practical solutions for preventing or limiting the effects of real or perceived shortages of food.He helped

to create the United Nations Human Development Index. He is currently the Thomas W. Lamont University Professor and

Professor of Economics and Philosophy at Harvard University. He is also a senior fellow at the Harvard Society of Fellows,

distinguished fellow of All Souls College, Oxford and a Fellow of Trinity College, Cambridge, where he previously served as

Master from 1998 to 2004.Sen is a member of the Advisory Board of Incentives for Global Health, the not-for-profit behind

the Health Impact Fund. He is the first Indian and the first Asian academic to head an Oxbridge college. He also serves as the

first Chancellor of the proposed Nalanda International University.

Sen's books have been translated into more than thirty languages over a period of forty years. He is a trustee of Economists

for Peace and Security. In 2006, Time magazine listed him under "60 years of Asian Heroes" and in 2010 included him in

their "100 most influential persons in the world".New Statesman listed him in their 2010 edition of "World's 50 Most

Influential People Who Matter".Sen was one of the 20 Nobel Laureates who signed the "Stockholm Memorandum" at the

third Nobel Laureate Symposium on Global Sustainability in Stockholm, Sweden on 18 May 2011.

[1.12] = SIEGFRIED VON CIRIACY-WANTRUP was a pioneer in the economics of natural resources treated within the context

of environmental problems and values. Fascinated by the role of political institutions in formuLating policies, he sought in his

writings to bring home to his reader the consequences to be expected from policy options adopted in utilizations of natural

resources. Born in 1906 in Langenberg, Germany, he was a Ph.D at the University of Bonn till 1936, when he left Germany for

Berkeley, California due to the Nazi Repression of Academic Freedom. He died in 1980 in Berkeley, California.

[1.13] = RONALD HARRY COASE (born 29 December 1910) is a British-born, America-based economist and the Clifton R.

Musser Professor Emeritus of Economics at the University of Chicago Law School. He received the Nobel Memorial Prize in

Economics in 1991.

32

Coase is best known for two articles in particular: "The Nature of the Firm" (1937), which introduces the concept of

transaction costs to explain the nature and limits of firms, and "The Problem of Social Cost" (1960), which suggests that well-

defined property rights could overcome the problems of externalities (see Coase Theorem).

Additionally, Coase's transaction costs approach is currently influential in modern organizational economics, where it was

reintroduced by Oliver E. Williamson.

[1.14] = http://www.nobelprize.org/mediaplayer/index.php?id=1225

33

CHAPTER 2 – The third way of Elinor Ostrom

In order to achieve a shared management of the CPRs, there is the necessity to see

the communities cooperate in a balanced way, and then to let them meet a fair

distribution of benefits which can satisfy the centralization of the exploitation

sustained for the reinforcement of the production. These characteristics are

needed to reach a responsible auto-organization.

Ostrom realized that bad managed commons (which led to the tragedy of the

commons) cannot be solved through the classic solutions of market or by public

authorities. This conclusion overcome years of traditionalism where these goods

were misused or over-exploited. The solution proposed to stop those issues were

inappropriate and often, dangerous for the future of the same commons. Ostrom

explained the third way as a way where all the consumers/appropriators can

associate each other and create a group which can give higher results than the

traditional ways, in many cases all around the world.

2.1 – The Role of the communities

Ostrom proceeded with her ambitious analysis by conducting an empirical analysis

on several cases, analyzed by her or analyzed by other studious and collected in her

book. “Governing the commons” in fact, is full of examples who involve local

communities and institutions from every part of the world (Spain, Turkey,

Philippines, Nepal, Canada, United States and Switzerland) involved in many

activities, from fishing to grazing, irrigation and management of the groundwater

basins. These empirical studies demonstrated what she was looking for: there are

evidence which demonstrate the fact that a Third way beyond public and private is

achievable, in both economic and institutional ways. So, all the communities should

not feel as condemned to tragedy. Universal solutions (the afore-mentioned

panaceas) are hard if not impossible to find. Otherwise, there were also failures:

conclusions can be made behind the reasons of these failures.

Self-organization can be one of the essential characteristics to achieve superior

benefits and to reach, at least, the same level of management detectable in the

34

centralized public authorities or in private systems. The analysis was conducted

with the rigorous methods of the biologists, by analyzing small communities and

small CPRs under the surface, in order to find the existing sorts of relationships

between the individuals of the communities, their relationships with the CPRs and

with the local institutions and most important, to find the right terms which can

guarantee the best access to every appropriator so as to reach a farsighted future

for all the actors involved. All the cases also tried to analyze the institutional

changes over the time, but not all of them reached an idealistic combination to

allow to all the continuity of the CPRs.

Communities today, represent the leading players against the logic of the market,

where relationships between individuals still counts more than business

partnerships. Of course relationships are not only related to families, but they

represent also a dimension where connections between individuals are well-

established to front the past or present problems born from egotistical flatteries,

which can ruin democratic access and participation to the CPRs or to their

administration. New democratic forms, like the horizontal one, are insistently

required to overtake the bureaucracies and the power of the corporations, but

these forms happen under the regulation of public authorities. In the section 2.2,

there will be the introduction of all the cases collected in Governing the commons’

book, starting from the long-lasting cases, and ending with the vulnerable

institutions.

2.2 – Global cases: principles and reasons behind success or failure

In all the examined cases, only the 46,67% of the cases are ascribed as successes

while the remaining percentage represents the failures, despite every attempt

tried: this percentage represent the vulnerability of the systems and the complexity

to find something that can be operating in an acceptable way. However, the

explained cases have been chosen from a list of collected cases (without any

distinction between artificial and natural) because they gave the necessary

information about the self-government processes, and proposed solutions for

35

issues like: lacks in the administrations, institutions those needs structural changes

and problems in the management of the CPRs.

The first definitions are related to the difference in the production systems: the

basic mechanism in those systems, distinguish the sources’ production (usually

called as stock) from the sources’ flow generated by the system itself: sources’

production represents the considered CPRs, while the sources’ flow represents

sources like fodder or plankton: sources’ which are not produced by the system of

the CPRs but it is already included by the nature or by the system. This complex

lead to two definitions: appropriation and appropriators. The appropriators are the

people who participate at the appropriation: they are non-other than all the

individuals who participate to a CPR, no matter if they are fishers or herders or

whatever, which consume the withdrawn unities for their own purpose. These

purposes refer to uses like:

Self-consumptions, the direct consumption of the withdrawn source;

Inputs, for other productions or services;

Sale units, in case of selling by the appropriators to other people.

The appropriators could be divided into two categories: suppliers or producers.

Suppliers are the people who structured the system at the beginning, while the

producers represent the people who guarantee the maintenance and the

sustainability over the long run; they can also be individuals or firms; either

suppliers and producers at the same time; the withdrawal of the unities can be

sequential or simultaneous.

The only exceptions are situated in the process of common appropriation of the

source: this is not commonly accepted, whereas the benefits coming from the

enhancement of the system are distributed in a fair way between all the involved

appropriators, even if they did not intervene in the enhancement process.

The basic principles of the CPRs remind some characteristics of other typology of

goods: for example the CPRs are very close to the public goods in terms of costs to

exclude an appropriator and contemporaneously they are close to the private goods

in procedural terms, especially if the most relevant problem is the over-exploitation

of the CPRs.

36

Two last important factors are needed before making decisions: fairness and

precision in the distribution of the sources’ unit: these qualifications later will turn

out in the principal reasons which allow the appropriators to maintain the sources’

production system.

The main problem which afflicts the appropriators is related to the lacks in the

capacity of organization, which can entail miss agreements for: the acceptance of

rules related to the withdrawals; sorts of contribution given or to the system;

technique to monitor and sanction the trespassers. These contentions brought

uncertainty to the institutional process and the appropriators found many

obstacles to face, despite the use of trial and error approach, which usually allows

the possibility to overcome many problems over the time.

Anyway there is the necessity to build an organization, an aggregation of

individuals which is needed to reorganize the activities through the use of

sequential decisions. Individuals unfortunately face a series of issues, which could

be divided into:

appropriation issues: these issues are connected with the methods about the

repartition of the profits and of the accesses.

organization and preservation issues, connected with the administration of

the system through the time.

To avoid these problems, individuals must be involved in the analysis and must

understand three sequential levels: the incentives which conditions the

individuals; the characteristics which can facilitate the collective action and finally,

and institutional level.

2.2.1 – The IAD framework

The IAD framework (Institutional Analyzing and Developmental framework)

emerged thanks to pioneers like Elinor and Vincent Ostrom (1977). This is the

product of multiple collaborations among researchers from around the world who

were interested in understanding how individuals behave in collective action

settings and the institutional foundations that inform such arrangements. It also

represents a conceptual structure where operates researchers who come from

different disciplines and use as common language databases which collects

37

empirical results. These databases are specifically divided into different typologies

to study the CPRs in an appropriate way (for example, there are researchers who

study forests and others who will study fisheries) to avoid confusions in

cataloguing: anyway it is obvious that the results from all these different groups are

used in a comparative analysis.

Figure 2.1 – The IAD Framework

Source: sspp.proquest.com

The IAD Framework at a first sight seems to be a multitier conceptual map, which

divides the analysis in three main conceptual elements:

Action arena: is located in the middle of the framework. It represents the

place (also called as action situation) where the actors operate and where

social choices and decision usually takes place. The arena and all the actors

operating in it, are influenced by several kinds of Factors.

In the action arena, the actors are evaluated for: (I) their information processing

capabilities; (2) their preferences or values for different actions; (II) their

resources; (III) the processes they use for choosing the actions

The action situation has several key components: (1) participants of the situation;

(2) their positions; (3) the outcomes of their decisions; (4) the

costs/benefits/payoffs associated with the outcomes; (5) relations between

38

actions and outcomes; (6) The control of the situation by the participants and (7)

the information.

Factors: these are the variables determined by the IAD Researchers and they

could be divided into:

o Physical factors or biophysical environment: represent the

environmental (either natural or artificial) scenario where the

actors moves within an action arena. These factors interacts with the

group of appropriators and with the capacity of consumption of the

exploitation

o Socio-economic factors: represent either the features of the

appropriators and the cultural and social characteristics of the

community. The analysis is concentrated on the degree of

dependence of the appropriation by the users and values shared by

the appropriators.

o Institutional factors/arrangements: represent the ensemble of rules

for the collective use of a certain CPR.

The analysis of various system with the IAD framework granted many researchers

to compare the results and arrive at the definition of some design principles, which

were fundamental for many systems. These principles do not define precise rules,

but they are flexible to every local system, therefore the rules are variable. The

comparison between several cases allowed the observation of a particular

phenomenon: if rules are respected, all the actors will definitively reach a

sustainable solution for the dilemma, without any aid from the outside (like the

public authorities). These principles do not show the characteristic of necessity and

sufficiency for the definition of a successful system, because other factors can

intervene in these institutions, declaring either success of the failure.

Finally, the challenge for the commons’ researchers, under the theoretical and

empirical point of view, is hard, because different individuals’ problems must be

primarily deepened and then solved, through the demolition of some obstacles: for

39

this reason many researchers, Ostroms included, suggested the way of the active

democracy, where the society is self -governed and self-organized.

2.2.2 – Design principles behind the self-governments

Elinor Ostrom theorized a series of planning principles that must be respected in

order to grant the simultaneous conservation of a favorable employment for the

communities. These principles are defined by her as “planning principles observed

in institutions which are managing CPRs for a long run” and as “essential conditions

which help us to explain the success of institutions in preserving CPRs’ while

obtaining at the same time the respect of adopted rules, generation after generation”.

Many hypothesis were made by Ostrom and other researchers about the possibility

that groups of individuals are perfectly able to self-organize for a reasonable long

time, in self-government forms, while other groups are not able to achieve it. This

comparisons were the incentives which led them to the definition of internal and

external factors, factors that prevented or permitted to some communities around

the world to self-organize themselves and manage CPRs.

In many of the considered communities, were found an uncertain outside

environment opposing at a strengthened internal one. These communities also

were more confident for the future and shared many habits from the past: this

means that their discount rate[2.1] with respect to the future, was very low. The

creation of rules, in these circumstances, inspired good behaviors, avoided the

arise of several internal conflicts, permitted to these communities to build a good

reputation and improved of the level of trust between the individuals. Other

characteristics found in these scenarios were: the homogeneity of the groups; the

sustainability of the system after the instauration of the institution; the evolution

over the time of the same institutions in conjunction with external changes.

Elinor Ostrom found seven design principles which characterize many resistant

CPRs’ institutions, with the addition of an extra principle for complex cases. These

principles are:

1. Clear boundaries and membership: individuals and the families which have

right to withdraw a precise number of units from the CPR, must be explicitly

identified and the same CPR must be defined. This allow the individuals who

40

participate at the management to have the certainty to prevent the action of

outsiders or free-riding behaviors.

2. Congruent rules: there must be a congruence between the rules of

appropriation and provision, and also between the previous rules with the

local conditions. Appropriation and provision rules must be specific for the

considered environment. They can’t be general and different rules for

different system are peremptorily requested.

3. Collective-choice arenas: Interpretation of norms which define the

procedures with are built the CPRs’ management techniques. In order to let

the self-government regularly function, it is necessary for the majority of

the individuals, to have the possibility to change the rules, to adequate them

at some peculiarities or to systemic changes. The fact that correct rules

would be respected is not granted. To reach a reasonable level of respect,

the institutions must operate enforcements and investments in monitoring

and sanctioning.

4. Monitoring: the member of the community must be responsible for either

the controllers and for the other members of the community. They are also

responsible for the accountability. The members must implement audit

systems.

5. Graduated sanctions: There must be the possibility to punish and sanction,

in a graduated way, whoever would violate the operative rules. Solid

institutions often presents systems of monitoring and sanctions managed

by the same members of the institutions, instead of presenting external

monitors. The first sanctions usually result to be surprisingly low. Many

researchers talked about the system of the sanctions, like Margaret Levi[2.2]

and Jon Elster [2.3] .

Margaret Levi (1988) defined the term “quasi-voluntary compliance”, about the

possibility to respect the rules by the people without any sort of coercion. Jon

Elster on the other way, studied the effects of the monitoring costs, due to the fact

that the sanctioning costs are higher for who punish instead for who is punished.

These facts were observed in the Huerta systems in Spain and in the japanese

fisheries, systems where it was instituted a monitoring by product mechanism

41

(automated system of monitoring). Often the monitors receives extra benefits or a

social approval, while whoever is caught in vioLating the rules will lose his

personal prestige. In conclusion: once the members are incentivized to monitor

themselves the other members’ behaviors, they will achieve a contingent self-

commitment.

6. Conflict resolution mechanisms: the appropriators and whoever is in charge

should have quick access to the local system to solve the conflicts between

appropriators in the cheapest way.

7. Recognized rights to self-organize: the rights hold by the appropriators

cannot be criticized by outside institutions, even in case of governmental

authorities.

8. Nested enterprises: in case of organizations composed on more levels, where

there is the presence of appropriators, suppliers, controllers, executive

committee, representative with the purpose to solve conflicts; there must be

the necessity to organize all the members involved in multiple layers of

firms or authorities.

42

Table 2.2 - Principles applied to the collected cases

Legend:

NR = Not relevant

* = With two exceptions, in the period between 1739 and 1840 and for the period

since 1930 until 1950

** = Missing information

The letters from “[A]” to “[N]” would be explained in the chapter 2.3.1

The numbers from “1” to “8” refer to the principles listed in the chapter 2.2.2

Source: Ostrom (1990)

2.2.3 – Brief analysis of the global CPRs

43

After the inclusion of fourteen different CPRs in the previous table, it follows the

explanation of all these CPRs, by making two different analysis: The analysis of the

long-enduring self-organized and self-governed CPRs (in the chapter 2.2.3.1) and

the analysis of the institutional failures and fragilities (in the chapter 2.2.3.2).

2.2.3.1 – Long Enduring, Self-Organized and Self-Governed CPRs

With this title we catalog different CPRs characterized by robust institutions (or in

an institutional equilibrium, in the sense defined by Kenneth Shepsle (1986)[2.4]

which presented ex-ante institutional changes). In these cases appropriators

forecasted operative rules, created organization for the operative management of

the CPRs and modified the rules to conform the system to the collective choices’

rules and the constitutional rules. In the real world, CPR institutions that succeed

are those that survive, and those that fail sometimes cause the resource to

disappear.

These cases result to be useful to deepen the modalities with these self-organized

communities solve two of the major problems: legitimization and the problem of

the mutual control, problems strategically connected each other. The solution for

the first problem is found in the application by the appropriators of restrictive

rules, to maintain under control the activities of appropriation and supply. These

rules, in certain cases, if not respected, would give better results and in some

particular cases, the rescue of the entire CPR. The mutual control is often not

assigned to external guardians, but the monitoring system are very different,

despite the fact that in every system appropriators perform an important role in

the activity. Anyway, all these systems have experienced lot of errors before the

discovery of good principles which can entail low costs and a good level of

institutional planning.

Some studious like Partha Dasgupta and Geoffrey Heal (1979)[2.5] sustained that the

imposition of property rights to a herder or to a grazing, immediately solve the

problem. Many other studious of property rights affirmed that problems like the

complete depletion of the CPR and exaggerated negotiation costs that led to the

exclusion, are likely to happen. The Swiss and Japanese cases to the contrary,

44

demonstrated that in both the scenarios the communities chose to preserve the

commons’ institution.

The CPRs which meet these requirements are:

Table 2.2 - [A] Torbel - Switzerland: Torbel is a 600 inhabitants village in the Valais

canton. This village is characterized by “steepness of its slope, wide range of

microclimates demarcated by altitude, paucity of precipitation and constant

exposure to sunlight”[2.6]. For centuries, all the peasants cultivated in their fields,

while the grazing were conducted on the common alpine pasture. The first ever

statement is dated back to 1224: these legal documents explained the first rules

adopted by the villagers to control all the common lands: from the irrigation

systems, to the alpine pastures, the forests, the non-cultivated fields, the paths and

the roads. In the 1483 the inhabitants subscribes the act of constitution of an

association to preserve the regulation to the use of the mountains, the forests and

the common lands, with restrictions for the foreigners. The municipal map with the

regulation of all the shared properties was established only in 1507: whoever

wanted to violate these regulations, received a fine from a local official called

gewalthaber. All the rules of the village were voted by all the members of the

association. In this place all the decisions about maintenance, contributes,

elections, rights were decided. This system held up until the 19th century, when the

increase of population enhanced the demographic pressure on the available fields

and reduced the available fields. Torbel must not be considered as a prototype of

all the swiss villages, but 4/5 of the alpine territories are subject to similar forms of

common property. In rare cases was found an over-exploitation on the alpine fields,

sign that all the swiss forms of regulation worked. The few characteristics in

common are: self-governance, low costs of control, low possibility of conflicts,

methodologies of allocation. The institutions are changing now in all the

Switzerland, due to the change of importance of the production factors, but the

change is not uniform.

Table 2.2 - [B] Hirano, Nagaike, Yamanoka – Japan: the common land have been

existed and regulated for centuries. The first estimations made by Margaret A.

McKean (1986) showed that during the Tokugawa Period (1600-1867) almost 12

million of hectares of forests and pastures were managed as a CPR, while now, 3

45

millions of hectares still are managed in this way. These three villages, according to

McKean, are very similar to the swiss correspondent in their physical features, but

they differs in the typology of regulations: many villages was governed by all the

paterfamilias, which had a feudal decision-making power (the families have

political rights connected with the possession of the fields while the other people

can work the adjacent fields). By the end of the 16th century, feudal system changed

into a large estate system due to the first ever national cadastral census that

coerced the paterfamilias to turn from a feudatory system into a system governed

by peasants, which by affirming their properties, established which fields were

common and which were private. All the peasants then associated themselves to a

group, called Kumi to allocate the fields and regulate the access to the common

lands. One particular rule established the access to the common lands only to one

member of the family, penalizing the large families. Another particular rule

restricted the harvest of the scarce fruits, while the non-scarce fruits were equally

divided by all the members of the Kumi. The works for improvements and the

maintenance were fractioned works and involved particular members of the Kumi

itself, while the monitoring was a task conducted by guardians or young people.

The system of sanctions predicted a graduated series of penalties for a respective

series of violations, like disrespect of the Kumi's leader decisions or impatience.

Many penalties were paid with the sakè.

Table 2.2 - [C],[E] Huerta systems – Spain: The characteristics of the spanish

Huertas (irrigation systems) located in four different cities (see the figure 2.3), are

explained in the table 2.2.2:

46

Table 2.4 – Characteristics of the huertas

Place

Peculiarities

Valencia[C] Murcia[C] Orihuela[C] Alicante[E]

Foundation 29/05/1425

(but canals

already

existed for

500/1000

years)

13th century 16th century Before 1594

Dimension of the

Firms

participating to

the huerta

80% ≦ 1

hectare

10% ≦ 5

hectares

83% ≦ 1 hectare

64% ≦ 1 hectare

86% ≦ 5 hectares

63% ≦ 1

hectare

93% ≦ 5

hectares

Climate semiarid semiarid (aridity superior

to Valencia)

semiarid (aridity

superior to

Valencia)

Highest lack

of water

(aridity

superior to

Valencia,

Murcia and

Orihuela)

Figure 2.3 - Location of the

spanish huertas

Source: Ostrom (1990)

47

Place

Peculiarities

Valencia[C] Murcia[C] Orihuela[C] Alicante[E]

Property rights

related to the

water rights?

Yes Yes Yes Yes, but the

rights could

be borrowed

or sold (in a

part) in 3

different

ways: Local

weekly

market, On

Sunday at

the Central

Square,

Public Bid.

Management

system

“Tribunal de

los Aguas”:

court

system

which

decides the

irrigation

system.

Composed

without

lawyers, in

public,

decisions

took by the

Administrat

ors without

“Consejo des Hombres

Buenos”, executive

commission composed by

5 administrators and 2

monitors. Presided by the

major of the city.

General assembly

held every 3 years.

In the meantime, a

court (constituted

by 1 judge and

several officials) is

on charge

General

assembly

held every

year.

Existence of

an executive

commission

(constituted

by 12

“sindicos” -

representati

ves)

48

Place

Peculiarities

Valencia[C] Murcia[C] Orihuela[C] Alicante[E]

Renewal of the

governance

systems

Every 3

years

Every year Every 3 years Every 4

years

Water withdrawal

methodologies

“Por turno”:

per turn

withdrawals

in a fixed

order. Every

hereter

decided

how much

to withdraw.

If he does

not

withdraw,

he lost his

turn

“tanda” procedure: time

withdrawal

“tanda” procedure:

time withdrawal

Who have a

certification

can

withdraw

water.

The

sprinkler

(hereter) can

sold, borrow

his rights

Who elects who? All the

members of

the huerta

can elect

officials and

administrat

ors

All the members of the

huerta can elect officials

and administrators

All the members of

the huerta can elect

officials and

administrators

Owners who

have ≦1.8

hectares:

participate

and vote at t

general

assembly;

Owners who

have ≦ 2.2

hectares :

vote in

executive

commission;

Owners who

have ≦ 3.6

hectares:

part of

executive

commission

49

Place

Peculiarities

Valencia[C] Murcia[C] Orihuela[C] Alicante[E]

Role of the

officials

Inflict

penalties;

Open/close

the canal

gates.

Inflict penalties;

Open/close the canal gates.

Inflict penalties;

Open/close the

canal gates.

Inflict

penalties.

The canal

gates are

opened and

closed by

the hereters

Efficiency level Less

efficient due

to too low

probability

to discover

the violators

and low

fines

Not so much efficient,

because violators often

decide to pay low fines

instead of respecting the

rules

Not so much

efficient, because

violators often

decide to pay low

fines instead of

respecting the rules

Quite

efficient:

every

member

who has an

excess of

water can

sold his

shared part

to other

people

without

waste water

while

gaining

money

Table 2.2 - [F] Zanjera irrigation system – Philippines: First of all, this system is the

representation that CPRs could represent a solution even in the so called, Third

World Countries. This system was born in 1630 in the area of Ilocos Norte, 500 km

north-west from the capital Manila. The Zanjeras are three or more parts of the

whole irrigation area, divided in symmetrical lots, distributed like in the figure 2.5

50

Each lot is owned by a different member of the association who managed the entire

area divided in blocks, called atar. The participation at the atar guaranteed for each

member one vote, a proportional lot of field in every zanjera, and the instruments

for the work. With the vote, the peasants can elect the master (the person in

charge for motivate all the people involved), a boss, a secretary, a treasurer and a

chef (because someone might prepare the food for everybody in case of business

trips). Every peasant had a contract, called biang ti daga, that allowed them to have

the property rights of the fields extended to the irrigation rights. This contract

allowed to every member of the association to hold several lots, one for every

section: this partition was democratic and facilitated the possibility for every

peasant to irrigate in a favorable area. Higher levels of the whole irrigation system

gave the best results.

Some lots were closed in cases of drought and some others were assigned to the

maintenance of the zanjera itself. During the years the competition among the

member of the atar increased, due earnings related to the partition of work and

instruments:

Table 2.6 – Amount of work for every atar:

Atar #1 Atar #2 Atar #3

48% of the work and of

the instruments used

30% of the work and of

the instruments used

22% of the work and of

the instruments used

55% of the available

water

25% of the available

water

20% of the available

water

Figure 2.5 – Representation

of the zanjera system

Source: Ostrom (1990)

51

Source: Ostrom (1990)

The efficiency of the system was low and expensive, especially in terms of time.

Many of the water gates maneuvered by the gunglos (teams of peasants) were

obsolete and the water allocation was inefficient, despite the good level of

mobilization of the gunglos and high amount of work days employed (16000 hours

in a year).

Table 2.2 - [D],[M] Los Angeles’ Groundwater Basins – United States: The nature of

the groundwater basins is related to the stratification of the soil around the city of

Los Angeles, which permitted to exploit natural tanks for the waters. With the

letter [D] will be explained the state of the Californian basins today, while with the

letter [M] will be indicated the state of the same basins before the pronunciation of

the Supreme Court’s sentences.

The water provision system observed in California, was composed with the mix of

two different sources of water: the flow extracted from the groundwater basins in

the local area and the water withdrew from the Colorado river. From the 1960s,

another source of water was added to the mix, coming from the injection of the

excess of the water treatment process of the entire area of Los Angeles. The

Figure 2.7 – Californian

Groundwater Basins’ map

Source: Ostrom (1990)

52

substitution of a kind of waters with another one, comported a difference in terms

of costs, summarized in the table 2.8:

Table 2.8 - Basin management costs per acre-foot resulting from basin

management in the three basins (in $)

Basin

Costs

Raymond West Central

Basin management

cost per acre-foot of

ground water

extraction (1985)

3,50$ 77,40$ 73,77$

Average cost of an

acre-foot of water

with basin

management

184,65$ 235,71$ 224,85$

Estimated cost of an

acre foot of water if

all groundwater

were replaced by

imported water

748,68$ 739,30$ 739,94$

Source: Blomquist (1987)[2.7]

These tanks and the people which were in charge for their management anyway,

faced many problems were often connected each other into a vicious circle: the

over-exploitation of the groundwater basins caused an enhancement of the demand

of waters from other sources: the importation of the water from other sources

(like the Colorado river), was expensive. The over-exploitation also caused a

simultaneous decrease of the groundwater level. Then the phreatic basic risked to

be invaded with the salty water of the adjacent Pacific ocean. The invasion or the

potential contamination would have led to an increase of the costs of extraction. In

the end, the increase of the costs of extraction, would have led to an over-

exploitation of the basin by the same extractors, due to the recovery from the costs.

Other problems related to the groundwater basins could be ascribed to the water

pollution, inefficient strategy adopted by the extractors and the difficulty to obtain

correct information about the state of the basins. During the twentieth century, the

53

entire system of rules and regulations of the water in the region has changed, ax

explained in the following pictures:

Figure 2.9 – West basin timeline

Source: Ostrom (1990)

Figure 2.10 – Central basin timeline

54

Source: Ostrom (1990)

Figure 2.11 – Raymond Basin Timeline

These are the conclusions arising from the Californian cases:

Since the acceptance of the sentences, the level of infractions quickly

become insignificant. The few infractions which was settled down in a court

was won by the local committees which already respected the rules;

55

the water magister currently has wide power on the subject of monitoring

and sanctioning;

Every single extractor must transmit his datum of extraction to the magister.

The magister will also publish all the results (results controlled by many

agencies, in order to grand an high degree of affordability);

The past fortuitous non-compliances of the rules were sanctioned with

bearable fines while the past unflinching non-compliances of the rules, in a

super-monitored system were sanctioned with severe fines;

The monitoring processes were organized by the same members of the

various committees, which also can vote for the election of a water magister

It was created a hydric common district, which provided the resolution of

many controversies and brought some benefits, like better relationship

between members of the committees, high quality information and the

reduction of the costs for the maintenance of the basins.

2.2.3.2 – Institutional failures and fragilities

In this chapter, several conclusions will be made about the issues, the failures and

the fragilities observed in many cases around the world. Many cases, must be

considered as weak or fragile because of the lack in the institutional developments

and the uncertainty characterizing the 8 principles explained in the table 2.2.

Table 2.2 - [G], Alanya, Izmir and [J] Bodrum – Turkey: These three cities are

located in a 400 km area, but they passed through two similar experiences,

especially due to overcrowding and income dispersion. During the 1970s, the fishers

of the city of Bodrum, (a city populated by 25000 inhabitants), rarely respected the

three miles limit imposed by the local authorities, and contemporaneously the

fishers bought and built dozens of big fishing boats, which allowed in the first

times, to a rapid enhancement of both fishing and profits. Many fishers, encouraged

by big fishers’ results, enter into the game, until the costs of fishing became higher

than the revenues, realizing the income dispersion. Some fishers tried in vain, with

the creation of a cooperative, to mediate the conflicts between all the fishers

involved: the result was a complete failure, and the cooperative closed in 1983.

56

Izmir, a metropolitan area with almost a million of inhabitants, the situation was

quite the same, with a relevant difference: the dimension of the population

stimulated the demand of high quantities of fish: this demand led to the creation of

an oversized fishing industry, in spite of the exiguous quantities fished in the

previous years. With the addition of scarcity of controls by the public authorities,

heterogeneity of interests and unsuccessful agreements and organization between

all the parts involved, even the Izmir scenario rapidly become a failure.

In Alanya, all the institutions should be considered weak despite the effective

operating system which allowed to all the fishers, a correct access to the CPR. The

main problem, in fact, was situated in the lack of coordination (therefore,

organization) found in the system that could led to many future fragilities,

especially in the aspect of regulation. There were not found problems like over-

exploitation or other threats for the CPR system.

Table 2.2 - [N] – Mojave basins – United States: Other californian basins faced

problem, especially the basins of the San Bernardino’s county, the biggest county in

all of the United States. The 83% of this county, anyway, is in the Mojave’s desert,

and consequently, an high quantities of water have been demanded by the people

who lived in that area. Until the end of the 1940s, everything seemed to proceed in

a sustainable way, because the area was scarcely populated and the withdrawn

water did not exceed the sustainable limits. At the beginning of the 1950s, the

department of the water sources of California, decided to the realization of the

Feather aqueduct, which should brought the water from the northern part of

California, full of prosperous water sources, to the southern, which was the

complete opposite, in terms of water sources. The construction of the aqueduct

inspired a significant increase of the local demographics, but the local hydric

agency of the Mojave District never tried to face the new problems that were

arising, like conflicts between appropriators, over-exploitation of the Mojave basin

and many more. At the end of the construction of the aqueduct (end of 1960s), the

local hydric district and all the public authorities were involved in the Watergate

scandal (paraphrasing the most famous Watergate Scandal [2.8]), which led to a

rigid political and media discussion.

57

The results of that discussion? Beyond the suspension of several administrators,

nobody found an acceptable plan to distribute the water in the area, despite many

attempts to change the situation, like the creation of an agency, which has not

succeed even to permit to the local people, to extract water from the Feather

Aqueduct.

Table 2.2 - [K] Mawelle – Sri Lanka: Mawelle is a 300 inhabitants village in Sri

Lanka, where between the 1901 and the 1931, were used 3 different techniques to

fish: trawling, fishing with little boats and deep-sea fishing. The most used

technique was the trawling, but the shared fishnets owned by all the fishers

(shared in order to share the purchase costs) were excessive for the necessary use

(100 fishnets owned, while the optimal level was set to 20). The appropriation

system decided before 1931, worked very well, because gave the same fair

opportunity to fish for all the fishers, while the level of fishing guaranteed only the

subsistence of the local population. One fishnet required 8 fishers to threw it and

trawl, and 1/8 was the individual shared property per net. During the same time,

Mawelle population grew by 70% and the new generation of fishers wanted to be

involved in the fishing system: the entrance of new people, reduced the individual

shared property of the nets, due to the increase of the number of fishnets. During

the 1935-1945, the price of a single share for a fishnet increased and the fishing

business costs too. During the 1950s-1960s, several entrepreneurs took over

important segment of the market, and transformed a village traditional business

into a real fishing industry. The income dispersion become evident, because the

trend of the profits became more and more modest by the passing of the years, and

the same happened for the quantity of the fishing.

The public authorities, from the 1930s to the 1970s, never tried to regulate and set

up an efficient system which could try to solve definitively all the problems, from

the quantity of the fishnets, to the number of shares held by the fishers and others

problems. They temporarily blocked the introduction of new shares and fishnets.

By all the regulations created confusion which turned out into: incapacity to have

the rules respected from all the appropriators, inefficient system of fish, an

eloquent decrease of the salaries and an increase of the social inequalities.

58

Table 2.2 - [H],[L] – Gal Oya and Kirindi Oya irrigation system – Sri Lanka: The

history behind the irrigation system in Sri Lanka is dated back to the 12th century

A.D., when christian missionaries arrived in the island of Ceylon, decided to build

the first irrigations, which served the local people for hundreds of years. By the end

of the 19th century, English colonists reinstated the old system of irrigation, which

was completely abandoned for over 100 years. During the 20th century, the English

colonists and the authorities of the state of Sri Lanka, tried many times to create

sustainable ways for their irrigations, but they faced problems, like:

Low productivity of the paddy rice which needed lots of irrigations and

weeding works;

Lots of irrigations needed lots of water, but many farmer took high

quantities in illegal ways;

Nobody respected the standard levels of efficiency and tried to organize

itself.

Table 2.12 – Differences between the sinhalese cases

Place

Characteristics

Kirindi Oya [L] Gal Oya [H]

Foundation:

1876: restoration of the field

close to the Kirindi Oya river

1920: the artificial river bank

was built

1950: The project started after

the end of the works

59

Place

Characteristics

Kirindi Oya [L] Gal Oya [H]

Structure:

From 1920 to 1958 (english

colonization): double structure

composed by the irrigation

department and the vel vidanes

(appropriators). They both

referred to the income

department

Since 1958: administrative

controllers (Govimandala

Sewakas) replaced the Vel

Vidanes and the Income

department was replaced by the

agricultural service department.

There was also the presence of

committees of local

appropriators.

It was a governative

experiment which tried to

include university graduates

into the system in order to

avoid or solve particular

conflicts between

appropriators and the

institutions, by giving back an

higher level of trust to the

appropriators.

Pros:

In the first period, the double

structure worked very well: the

department had an official

which served also as a

supervisor, with the help of two

guardians. The Vel Vidanes were

great landowner which rent

their fields to other

appropriators, in exchange of

money and a share of the

harvest. They also had the

power to sanction them and to

collect information for the

Department.

The Gal Oya system, faced

initial problems like: lack of

maintenance, degradation of

the control structures, wrong

water sharing, skepticism

between appropriators and

the deparment, no

cooperation between

appropriators which belonged

to 2 different etnies.

The Cornell university used

many graduated students

which were unemployed, to fix

up these problems by

catalyzing on their newer

authority (institutional

organisms – I.O.) all the

information available in order

to solve the existing problems.

60

Place

Characteristics

Kirindi Oya [L] Gal Oya [H]

Cons:

During the colonial period, the

main problems were the control

of the behavior of the

department’s official.

After the independence of the

Sri Lanka, the problems

increased with the new system:

there was less coordination in

the management of the canals,

the administrative secretary

was not obligated to sanction

the appropriators and the

appropriators had enough

influence to adopt illegal or not

correct techniques to gain at the

expense of other appropriators.

Many I.O.s did not have an

adequate formation for their

role, and the 95% of them,

leave the job when they found

another and more lucrative,

opportunity.

The construction of the

peripheral canals was

supposed to be for free, with

no profits for the single

appropriators. In other fields,

private obtained high profits

from similar constructions.

These constructions in fact

were incomplete and many

appropriators protested and

refused to participate at those

works.

Conclusions The previous system worked

very well, despite some non-

influential issues.

The change of institutions led to

an enhancement of the

problems: in the past, there

were several observed

problems, but they did not

conduct to disorganization,

destruction of the self-

government structure, collapse

of the local institutions, and

complaisance to illegality.

The system worked and the

appropriators were satisfied.

The external agents helped the

appropriators to overcome

their previous problems.

Anyway, this was a non-

repayable governmental

project: its fragility gave

uncertainty to future

investments in Sinhalese

irrigations.

Source: Ostrom (1990)

61

Table 2.2 - [I] – Port Lameron, Canada: Many villages on the Atlantic coast of

Canada, had similar rules although the distance between them and the complete

freedom given by public authorities. The regulation ongoing in Port Lameron,

before 1976, provided the use of a lottery to establish who was supposed to place

the fishnets in a specified time and location. In Port Lameron, fishing was a

traditional activity, because many generations of fishers alternated during the

previous centuries. The preferred typology of fishing involved the use of small

boats (42 out of 52 available boats), while there was the participation of bigger

boats (the remaining 10 out of 52) to exercise the deep sea fishing for ¾ of the

year. In order to achieve a sustainable access of the CPR, all the fishers divided the

CPR in many sub-sectors, for typology of fishing and seasons. This system brought

advantages like low participation costs, low impact of the advanced technologies if

applied, ease to create a system of monitoring. The fishing rights could be normal

or exclusive:

Normal rights allowed families to maintain or inherit a family business;

The exclusive rights allowed families to yield the 40% of their annual

earnings and the first access to the CPR;

The exclusive right-holders highly tolerated the access of normal right-

holders during the peaks of the season, while they scarcely tolerated the

access in shortage seasons.

Public authorities, in the voice of several ministers for fishing and the oceans, never

recognize these structures, due to the fragilities of the systems. The systems were

considered fragile due to the many discussions between the categories of right-

holders and due to reiterated failures in the attempts to create a national

legislation for the regulation of the territorial waters. In 1976, the canadian

government, extended the territorial waters jurisdiction from 20 miles to 200

miles, to avoid the depletion of the oceans and the robberies made by international

ships. It also replaced the old system which consisted in a complete free access to

the CPRs with the block on the new assignations of fishing licenses, a which was a

brake against the illegal fishing and led to the assignation of the first sanctions.

62

This law was persistently contested by the local communities of fishers, which felt

damaged by the block imposed by the Government, which was forced to about-face

the legislation, by not blocking the possibility to get a new fishing license and

applying several boundaries. The conclusion of this case is related to the change

(or not) of the national policies: whether the policies will change, the system would

survive but it must reformulate itself to achieve an efficient level of the CPR and

overcome the fragilities; otherwise the system and the local communities are

condemned to a slow but considerable decline.

Notes:

[2.1] In a multi-period model, agents may have different utility functions for consumption (or other experiences) in different

time periods. Usually in such models they value future experiences, but to a lesser degree than present ones. For simplicity

the factor by which they discount next period's utility may be a constant between zero and one, and if so it is called a

discount factor. One might interpret the discount factor not as a reduction in the appreciation of future events but as a

subjective probability that the agent will die before the next period, and so discounts the future experiences not because they

aren't valued, but because they may not occur.

A present-oriented agents discounts the future heavily and so has a low discount factor. Contrast discount rate and future-

oriented.

In a discrete time model where agents discount the future by a factor of b, one usually lets b = 1/ (1+r) where r is the

discount rate.

[2.2] = Margaret Levi (born 1947) is an American political scientist and author, noted for her work in comparative political

economy, labor politics, and democratic theory, notably on the origins and effects of trustworthy government.

Ph.D. degree in government at Harvard University in 1974. Since then, she has taught at the University of Washington in

Seattle, where she is presently a professor of international studies in the department of political science. She has a joint

appointment as Chair in US Politics at the United States Studies Centre at the University of Sydney. Levi has been a visiting

professor at numerous institutions, including the Max Planck Institute, Oxford University, the European University Institute,

the London School of Economics, and the Australian National University.

Levi's book Of Rule and Revenue (1988), a study of the institutions of state revenue production, helped pioneer rational

choice approaches in comparative politics.

[2.3] = Jon Elster (born February 22, 1940, Oslo) is a Norwegian social and political theorist who has authored works in

the philosophy of social science and rational choice theory. He is also a notable proponent of analytical marxism, and a critic

of neoclassical economics and public choice theory, largely on behavioral and psychological grounds.

Elster earned his PhD from the Sorbonne in Paris with a dissertation on Karl Marx under the direction of Raymond Aron.

Elster was a member of the September Group for many years but left in the early 1990s. Elster previously taught at the

University of Oslo in the department of history and held an endowed chair at the University of Chicago, teaching in the

departments of philosophy and political science. He is now Robert K. Merton Professor of Social Sciences with appointments

in Political Science and Philosophy at Columbia University and professeur titulaire at the Collège de France.

63

[2.4] = Kenneth A. Shepsle is the George D. Markham Professor of Government and a founding member of The Institute for

Quantitative Social Science at Harvard University.

Professor Shepsle has written numerous articles on formal political theory, congressional and parliamentary politics, public

policy, and political economy. He was a National Fellow at the Hoover Institution, Fellow of the Center for Advanced Study in

the Behavioral Sciences, and a Guggenheim Fellow. He was editor of Public Choice, sits on the Board of Editors of the

Cambridge University Press Series on the Political Economy of Institutions and Decisions, and served as Vice President of the

American Political Science Association. In 1990 he was elected to the National Academy of Sciences and to the American

Academy of Arts and Sciences. He was chair of the Department of Government at Harvard, 1995-98.

He chaired the Faculty Planning Committee for the Center for Government and International Studies, a building complex for

government, international and social scientific research centers. His current research focuses on formal models of political

institutions and intergenerational politics.

[2.5] = Sir Partha Sarathi Dasgupta, FRS, FBA (born November 17, 1942), is the Frank Ramsey Professor Emeritus of

Economics at the University of Cambridge, United Kingdom; Fellow of St John's College, Cambridge; and Professorial

Research Fellow at the University of Manchester. He was born in Dhaka, Bangladesh, then moved to India, and is the son of

the noted economist A.K. Dasgupta. His father-in-law was the Nobel Laureate James Meade.

Research interests have covered welfare and development economics; the economics of technological change; population,

environmental, and resource economics; social capital; the theory of games; the economics of global warming, and the

economics of malnutrition.

Geoffrey Heal is Paul Garrett Professor of Public Policy and Corporate responsibility and Professor of Finance and

Economics at the Graduate School of Business at Columbia University, Professor in the School of Public and International

Affairs, Co-Director of Columbia’s Center for Economy Environment and Society and of the Earth Institute’s Center for

Globalization and Sustainable Development. He studied and physics and economics at Churchill College, Cambridge, from

which he obtained a first class honors BA and a doctorate.

[2.6] = Elinor Ostrom’s “Governing the Commons”, page 98 – Italian version

[2.7] = William “Bill” Blomquist joined the Department of Political Science in 1987. He teaches American politics, Indiana

politics, constitutional law, and occasional courses in public policy or research methods. His primary research focus has been

on water problems and policies in the western United States. His publications include Dividing the Waters (1992) and

Common Waters, Diverging Streams (2004). His current research focuses on the management of watersheds and river

basins in the U.S. and other countries.

Professor Blomquist attended Ohio University from 1975 to 1979 and received a Bachelor of Sciences degree in economics,

and a Master of Arts degree in political science. He received his Ph.D. in political science from Indiana University -

Bloomington in 1987. Bill was chair of the Department from 1995 to 2002. He became Dean of the School of Liberal Arts in

July 2008.

[2.8] = The Watergate scandal was a political scandal that occurred in the United States in the 1970s as a result of the June

17, 1972, break-in at the Democratic National Committee headquarters at the Watergate office complex in Washington, D.C.,

and the Nixon administration's attempted cover-up of its involvement. The scandal eventually led to the resignation of

Richard Nixon, the President of the United States, on August 9, 1974 — the only resignation of a U.S. President to date. The

scandal also resulted in the indictment, trial, conviction, and incarceration of forty-three persons, dozens of whom were

Nixon's top administration officials.

64

CHAPTER 3 – Conclusions and critiques

3.1 – Final conclusions

After the illustration of all the solutions proposed for the CPRs in the previous

chapters, some conclusions must be made.

First of all, the considered models, tried to solve the problems afflicting particular

CPRs, should not presume to forecast every consequence resulting from a

particular scenario, because the empirical analysis of CPRs always involve complex

configurations and complex variables.

The second point regards the institutions which manages the CPRs: to achieve

credibility, must follow some principles, which are:

1. Institutions must possess a group (or more groups) authorized to use the

CPR itself;

2. Institutions must be a reference for the specific attributes of the CPR and

the appropriators;

3. The regulation of the same institution must be predisposed by the local

appropriators;

4. The monitoring of the CPR must be realized by the same local

appropriators;

5. The sanctions made by the monitors/officials must be graduated for the

committed infractions;

The problems which forbid the institutions to achieve that credibility, are:

I. Lack of information in the CPR system;

II. High number of participants in the CPR;

III. High levels of abandonment of the activity;

IV. Reluctance by the participants of the CPR;

V. High costs of transformation;

65

VI. Indifference shown by the political regime or political presumption that the

institutions should solve their problems without any help from the

government.

The third point regards two typologies of conflicts, generated by differences

between the size of the systems and of the appropriators. Analyzing the side of the

appropriators, situations which involve hostilities between external (often big) and

local (often small/medium) appropriators become ordinary, especially in areas

where the external appropriators take over the local ones by interrupting in

several cases, traditional or inherited employments. The motivations of these

conflicts are usually connected with: the imposition of shared rules; the reception

of the rules by the local appropriators and the lack of information that the external

appropriators have, with respect to the local appropriators (which often have

scarce sources and low profits).

The fourth point regards the prevision of institutional changes. The adoption or the

conception of new rules is a difficult step to achieve for every institution, especially

for CPRs’ institutions which are afflicted by problems like free riding and where

changes are often reached when the situation of the CPR become serious and

difficult. The prevision could be influenced by the opinions of the majority of

appropriators, like:

If the appropriators will not adopt an alternative rule, they could be

damaged;

It is a common opinion that the appropriators wants to accept the change of

institutions only in case of a majority of intentions;

Preference to have a small sized and stable group to manage a CPR;

Preference to have face low costs of information, transformation.

The fifth point to analyze is related to the nature of the public authorities. The

public authorities must not impose anything, (legally talking) unless for grave

mistakes in some cases. The same public authorities should not found one or more

panaceas for their damages, but they need to encourage some individuals to self-

organize themselves without any preconception. The institutions, in order to

66

convince the public authorities, must propose a detailed and adequate plan for the

resolution of the problems: the answer to this plan must be the application of

specialized instead of the application of uniformed rules, if the public authorities

want to guarantee impartiality. The same public authorities also should fostering

the legality, limiting the over-exploitation of the CPRs, forecast the future scarcity of

the CPR but they must avoid the imposition of models (despite the use of complex

configurations and models).

The sixth point to examine are the reasons behind the success or the failure of an

institution. The main reasons behind a failure are:

a) External influence by factors/appropriators on costs and benefits;

b) Transactional costs (explained in the figure 3.5);

c) Degree of influence of the institutional variables (as seen in figure 3.1)

Figure 3.1 - Variables which influence the institutional choices

Source: Ostrom (1990)

d) Rate of influence of the situational variables (as shown in figure 3.2)

67

Figure 3.2 - Situational variables influencing benefits’ situation

e) Slowness showed by Public Authorities due to an excess of Bureaucracy or

due to Corruption;

f) Independence of the institutions due to political regime or environmental

factors;

g) Role of the Past Decisions (which always influence the Future);

h) Non-adaptability to the market (rarely discussed, because the CPRs’

institutions and their appropriators do not want to achieve Maximization of

the profits, Free-Riding behaviors and Failures).

The main reasons to achieve a Success and especially, to avoid a Failure, are:

i. Need to obtain new regulations for the CPR: this become easier to achieve

when the CPR is in condition of degradation, whether the CPR is afflicted by

a systemic crisis. The speed of the change in regulations depends by the

quality of the collected information. The new regulations usually brought to

immediate costs instead of benefits and negative periods instead of good

ones.

ii. The institution does not expect to have all at once;

iii. The institution must impose estimation and Information processes;

Source: Ostrom(1990)

68

iv. The institution must have an higher consideration of the potential losses

than the potential revenues;

v. The institution must impose higher communications and set reunions and

meetings; between all the appropriators, especially to share the

fundamental knowledge and to obtain more respect of the rules;

vi. Institutions which are bigger or situated close or in a city, often constitute in

an easy way but they are harder to manage than other small institutions or

some other which are not close to city areas.

The seventh point is related to the Costs that every institution faces. These costs are

influenced by Situational Variables. The main costs related to the CPR institutions

are: Monitoring, Transactional Costs, Transformation Costs.

The monitoring costs are influenced by the technology used by the

appropriators, which often are involved as officials, and by the rate of

sharing of the rules (if the rate is high, the monitoring costs will be low and

vice versa). This system encourage the organization of strategies and

penalizes external causes. This system is represented in the figure 3.3

Figure 3.3 – Situational variables influencing monitoring costs

The Transactional costs depends on the level of the information collected

about the CPR. These information should not be taken for granted, because

Source: Ostrom(1990)

69

they could be incomplete, scarce or manipulated. The achievement of exact

information depends on the amount of money that the institution want to

spend. In order to save money and obtain more precise information, some

institutions or the Public Authorities, should contact the local appropriators.

The framework of all the variables influencing transactional costs is shown

in the figure 3.4.

Figure 3.4 – Situational variables influencing transactional costs

Source: Ostrom (1990)

The transformation costs depends on: kinds of regulation proposed by the

members of the Institution which want to change; taxation levels;

estimation about the costs; forecasted probability to obtain benefits from

change which can lead to hostility in the decisional process. This is

exhibited in the figure 3.5

70

Figure 3.5 – situational variables influencing transformation costs

Source: Ostrom (1990)

3.2 – Limits arising from the analysis

3.2.1– Problems of scale

Ostrom shows that individuals can and often do devise ingenious and eminently

sensible ways to manage CPRs for individual and collective benefit. These cases

shatter the convictions of many policy analysts that the only way externals have to

solve CPR problems is to impose full private property rights or centralized

regulation and, as Ostrom argues, demonstrate “rich mixtures of public and private

instrumentalities.”

71

Most of her successful examples, however, involve as few as a hundred or so

appropriators. Anything much larger (her largest case involved fifteen thousand

users) required a “nested hierarchical” structure of decision making, rather than

direct negotiations between individuals. There is, clearly, an unanalyzed “scale

problem” at work here. The possibilities for sensible management of common-

property resources that exist on one scale, such as shared water rights between

one hundred farmers in a small river basin, do not and cannot carry over to

problems such as global warming or even to the regional diffusion of acid

deposition from power stations. As we “jump scales” (as geographers like to put it),

the whole nature of the common-property problem and the prospects of finding a

solution change dramatically. What looks like a good way to resolve problems at

one scale does not hold at another scale. Even worse, good solutions at one scale

(the local) do not necessarily aggregate up, or cascade down, to make for good

solutions at another scale (the global).

An increasing number of participants to a collaborators can have benefits: the

more people contribute the more data that become available to the others. There

are several downsides to a rise in participants too, however. Firstly, the number of

participants can rise to such a number that efficient management of the group

becomes impossible or very difficult. Moreover, it becomes rather unlikely that

those who become part of the collaborators will also benefit as much as they have

contributed. As soon as the data become publicly available however, this situation

changes: at that point the members of the collaborators have already reaped the

benefits of their efforts.

Afterwards, it can only be beneficial if as many people as possible use the data.

However it is mostly not the number of people that forms a problem to the

functioning of the collaborators, but their degree of participation. Being part of a

group of experts is for experts of the subject always interesting. However, if a large

number of people does not contribute but does manage to gain access to the results

obtained by others, problems may arise. This, incidentally, is also why the lessons

gained from the collective organization of small-scale solidarity economies along

common-property lines cannot translate into global solutions without resort to

72

nested hierarchical forms of decision making. Unfortunately, hierarchy is anathema

to many segments of the oppositional left these days.

3.2.2 – Leaving out politics

In the grander scheme of things, and particularly at the global level, some sort of

enclosure is often the best way to preserve valued commons. It will take a

draconian act of enclosure in Amazonia, for example, to protect both biodiversity

and the cultures of indigenous populations as part of our global natural and

cultural commons. It will almost certainly require state authority to do so against

the philistine democracy of short-term moneyed interests ravaging the land with

soybean plantings and cattle ranching. But in this instance there may be another

problem: expelling indigenous populations from their forestlands may be deemed

necessary to preserve biodiversity. One commons, in other words, may need to be

protected at the expense of another.

Questions of the commons are contradictory and therefore always contested.

Behind these contestations lie conflicting social interests. Indeed, “politics,” as

Jacques Rancière (2004)[3.1] remarked, “is the sphere of activity of a common that

can only ever be contentious.” At the end of it all, the analyst is often left with a

simple decision: whose side are you on, and which and whose interests do you seek

to protect?"

3.2.3 – Limited choice of examples

Not all forms of the commons are open access. Some, like the air we breathe, are

open, while others, like the streets of our cities, are open in principle but regulated,

policed, and even privately managed in the form of business-improvement

districts. And some, like a common water resource controlled by fifty farmers, are

from the very start exclusive to a particular social group. Most of Ostrom’s

examples are of the last variety. Furthermore, she limits her inquiry to “so called

natural” resources such as land, forests, water, fisheries, and the like (“So called

natural” because all resources are technological, economic, and cultural appraisals

and therefore socially defined). Ostrom expresses no interest in other forms of

73

common property, such as genetic materials, knowledge, and cultural assets, which

are very much under assault these days through commodification and enclosure.

Notes:

[3.1] = Jacques Rancière (born 1940) is a French philosopher, Professor of Philosophy at European Graduate School in

Saas-Fee and Emeritus Professor of Philosophy at the University of Paris (St. Denis) who came to prominence when he co-

authored Reading Capital (1968), with the structural Marxist philosopher Louis Althusser

74

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75

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Acknowledgements / Ringraziamenti:

“It is perfectly true, as philosophers say, that life must be understood backwards. But

they forget the other proposition, that it must be lived forwards.”

Søren Kierkegaard

Luca Bisighini