ToC - Elinor Ostrom vs Tragedy of the Commons

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● Economic Principles ..

Common goods deplete over time, as more people use them. It's difficult to exclude people from using these goods, hence their name. This non-excludability, plus depletion, leads to an issue called the tragedy of the commons – the tendency for common goods to be overused, and under-maintained. It’s a thorny issue. Other dilemmas are related to goods — such as the free rider and forced rider problems, which challenge both private markets and the public sector.

"Commons" is a term used in resource economics to describe types of goods that can be accessed by anyone but their use by one party limits their availability to others. Examples of common-pool resources include pasture lands, freshwater, fisheries, forests, etc. Through her research with different communities across the world, Elinor Ostrom showed that it is possible for local communities to sustainably manage their common resources without any external intervention like state control or privatization.

Elinor Claire "Lin" Ostrom (née Awan; August 7, 1933 – June 12, 2012) was an American political economist whose work was associated with the New Institutional Economics and the resurgence of political economy. 

Design principles for Common Pool Resource (CPR) institution
Ostrom identified eight "design principles" of stable local common pool resource management:

1. Clearly defined (clear definition of the contents of the common pool resource and effective exclusion of external un-entitled parties);
2. The appropriation and provision of common resources that are adapted to local conditions;
3. Collective-choice arrangements that allow most resource appropriators to participate in the decision-making process;
4. Effective monitoring by monitors who are part of or accountable to the appropriators;
5. A scale of graduated sanctions for resource appropriators who violate community rules;
6. Mechanisms of conflict resolution that are cheap and of easy access;
7. Self-determination of the community recognized by higher-level authorities; and
8. In the case of larger common-pool resources, organization in the form of multiple layers of nested enterprises, with small local CPRs at the base level.

These principles have since been slightly modified and expanded to include a number of additional variables believed to affect the success of self-organized governance systems, including effective communication, internal trust and reciprocity, and the nature of the resource system as a whole.

Ostrom and her many co-researchers have developed a comprehensive "Social-Ecological Systems (SES) framework", within which much of the still-evolving theory of common-pool resources and collective self-governance is now located.

Ostrom's law is an adage that represents how Elinor Ostrom's works in economics challenge previous theoretical frameworks and assumptions about property, especially the commons. Ostrom's detailed analyses of functional examples of the commons create an alternative view of the arrangement of resources that are both practically and theoretically possible. This eponymous law is stated succinctly by Lee Anne Fennell as:

A resource arrangement that works in practice can work in theory.

Elinor Ostrom's 8 Design Principles: 

0:00 Intro
2:02 Clearly Defined Boundaries
2:29 Proportional Equivalence of Costs and Benefits
3:02 Participation
3:22 Monitoring of Activities
3:46 Graduated Sanctions
4:28 Conflict Resolution
4:58 Recognition of Rights
5:30 Nested Enterprises

In 2009, Ostrom was awarded the Nobel Memorial Prize in Economic Sciences for her "analysis of economic governance, especially the commons", which she shared with Oliver E. Williamson. To date, she remains the first of only two women to win the Nobel Prize in Economics, the other being Esther Duflo.

After graduating with a B.A. and Ph.D. from UCLA, Ostrom lived in Bloomington, Indiana, and served on the faculty of Indiana University, with a late-career affiliation with Arizona State University. She was Distinguished Professor at Indiana University and the Arthur F. Bentley Professor of Political Science and co-director of the Workshop in Political Theory and Policy Analysis at Indiana University, as well as research professor and the founding director of the Center for the Study of Institutional Diversity at Arizona State University in Tempe. She was a lead researcher for the Sustainable Agriculture and Natural Resource Management Collaborative Research Support Program (SANREM CRSP), managed by Virginia Tech and funded by USAID. Beginning in 2008, she and her husband Vincent Ostrom advised the journal Transnational Corporations Review.

Since the 60s, Ostrom was involved in resource management policy and created a research center, which attracted scientists from different disciplines from around the world. Working and teaching at her center was created on the principle of a workshop, rather than a university with lectures and a strict hierarchy.

Ostrom studied the interaction of people and ecosystems for many years and showed that the use of exhaustible resources by groups of people (communities, cooperatives, trusts, trade unions) can be rational and prevent depletion of the resource without government intervention.