The Tragedy of the Commons

In this video, we take a look at common goods. Common resources are nonexcludable but rival. For instance, no one can be excluded from fishing for tuna, but they are rival — for every tuna caught, there is one less for everyone else. Nonexcludable but rival resources often lead to what we call a “tragedy of the commons.” In the case of tuna, this means the collapse of the fishing stock. Under a tragedy of the commons, a resource is often overused and under-maintained. Why does this happen? And how can we solve this problem? Like we’ve done so many times throughout this course, let’s take a look at the incentives at play. We also discuss Nobel Prize Winner Elinor Ostrom’s contributions to this topic.

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[MrKnuk]

I was pretty sure what the tragedy of the commons was before already - but with that awesome video I cannot misunderstand it anymore. Very, very well explained! great job.. even I understand it now ;-)

[SithuminiAnuradha]

thank you very much for the explanation

[TheRedAngel]

Best econ video I've seen! so helpful and interesting.

[ReadingDave]

Nice clear logical examples. Thank you.

[deletemymind]

The tragedy of the commons is actually a tragedy of "no man's land". The difference should be obvious:
-The commons belong everyone; the "no man's land" belongs no one.
-For the commons are the municipality responsible; for the "no man's land" nobody.
-For the commons there are usage rules which are established and monitored by the municipality; for the "no man's land" there is nothing like that.

In addition, here is an excerpt from "Theorien alternativen Wirtschaftens" by Gisela Notz (translated by me):
"In economics, it is referred to as" tragedy of the commons", that their general use leads to their overuse or damage, since the people are not able to regulate social sharing, that is: What belongs to everyone, seems no one to be worth something. Single individuals use public goods unduly at the expense of all. The neoclassical economics concludes that the solution of environmental problems is impossible if the market and the state fails. By contrast, Ostrom turns. She believes that institutions can crucially contribute to disarm this "tragedy of the commons". As part of case studies, on the use of community pastures, irrigation systems and fishing grounds, that she has created for research, she found a lot more examples of successful community usage of property as the contrary. She highlighted it with works from geologists, historians and anthropologists. Their conclusion is that not privatization and market mechanisms, nor government controls and rules are useful for a sustainable, durable successful use of common goods because both threaten harmful overuse. "Institutionalized regional cooperation of stakeholders on the municipal or cooperative level", (i.e. Commons) would function better. Ostrom warns to wait for global solutions (e.g. a global climate agreement); real opportunities to act have to be tested at the local level. However, she calls for clear principles, which are determined and monitored by all participants in common, for the management of common resources. The use of mild penalties for violations is not ruled out. She refers to on self-organized local groups of the alternative economy, which have crosslinked globally - in the cities, in the regions of the USA and Europe and also in developing countries. Alternative-economic ecology-oriented projects have followed mainly the important task of collecting experimental experience of the careful use of the commons on a networked level. The increasing privatization and expropriation-processes of Commons confronts the actors also with new tasks. Finally, it is important to produce new Commons, namely in the material and immaterial area.
Inspiring for this purpose is also the theoretical approaches for an economy beyond commodity production and the market (so-called peer-economy). Peer-production always takes place in communities, where people in an open, never completed process determine the rules, organization- and institutionalization form, which correspond best to the attainment of their aims. In free cooperation, these self-organized communities manufactures products that are usually commons and freely available to all (or at least for all involved in the project). Anyone who have been involved in alternative economic projects knows, that joint production can make fun and that it can be pleasant and satisfying."

[vugiabaonguyen]

Me: I should got to sleep.
Youtube: why the chickens never go into extinction but tuna can?
Me: Well well well let's find out

[RedWinePlease]

Clear and to the point with examples supporting the concepts. Excellent presentation.

Hmmm... I wonder if the Federal Reserve(Fed) and its monetary policy is another example of an Individual Transferable Quota (ITQ) at 7:22. If we consider money as the commons, like fish in the Australian example:

~ The ITQ adjusts the amount of money a bank can create (ie. catch fish) in order to limit inflation or reverse deflation in the economy. (ie. decrease or increase fishing to increase available stock or decrease the overabundance of stock).
BANKS <===> FISHING
Inflation <===> Overfishing
Deflation <===> Underfishing
Cost of Credit <===> Quotas

~ Each ITQ gives a bank a minimum interest rate for borrowing from other banks and, less frequently, from the Fed. The borrowed money is used to maintain the Bank's Reserves at the minimum level to meet regulatory and internal policies.
The ITQ also determines a bank's lending rate to other banks and as a floor for private lending (e.g. mortgages).

~ The ITQ's are bought and sold when a bank borrows or lends.

ITQ's have issues, as the video states, where property boundaries overlap. For money, it's how imports (money leaving) and exports (money returning) affect our economy.

The parallels are worthy of more thought.

[johnswanson]

Looking at the ITQ system, could the same thing not be imposed through command and control while not excluding anyone from the commons? Here regulating fishing days and the number of boats was discussed, but why couldn't tonnage be regulated? Surely if it's enforceable through privatisation it should also be enforceable through command and control? Idk perhaps I'm missing something

[karljay]

It seems that ITQ would only work on a resource that replenishes itself. How would ITQ work on something like gold or silver? If commons applies also to roads and bridges, how would you apply property rights there?

[timothymccollough]

Great video. Best econ videos on the internet by far.

[vendonmore]

Could you do a video on carbon trading in relation to the tragedy of the commons?

[xcaliberd]

Thanks it's very helpful for my tomorrow's exam

[tasjalynn]

This video is 6 years old so I don't know who'll see this, but the death and depletion of American buffalo weren't due to the tragedy of commons, but instead imperialist rule that attempted to wipe out Indigenous communities' food supply.

[ClothesObsessed]

could you add references or extra reading?

[AdvenU]

Regulations that help to minimize environment damage, such as minimizing the amount of trees a paper industry is allowed to cut, that will help fix environmental damage.

[andrewprice]

Wrong to suggest Ostrom's work just said "cultural norms" like favour or disfavour could preserve the commons. She showed a number of complex ways in which this could be done without privatization or state regulation. It was also not necessarily "difficult" because it has been such a common form of ownership for centuries. Interesting you don't look at any of her actual empirical examples.

[guillermojustel]

Funny how you talk about the findings of a Nobel laureate as 'try agreeing with your housemates. See how that goes'.

[JavierBonillaC]

It sounded quite inconsistent when you said that the New Zealand fisher now has an incentive to not over-fish. The ITQs are a restriction on the quantity. HE CANNOT OVERFISH because the quantity being fished is fixed. That may bring about an increase in the population, but no individual incentive to conserve was at work here. I may be wrong, but that's how it sounded to me....

[ThePeterDislikeShow]

Haha we actually eventually created property rights to solve the roommate problem when I was in college.

[vividvisionart]

Hello to the people who were here 1+ years ago, and hello to those to come