What Is a Common Resource?
A common resource (or “commons”) is any scarce resource, such as water or pasture, that provides users with concrete advantages but that nobody owns or has an exclusive claim to. The abuse of communal resources is a big worry, especially when inadequate social management procedures are in place to safeguard the resource. Open-access resource is another name for a common resource.
Common Resources Explained
Common resources are those that no one person or group may claim ownership over. These may consist of public places (such as parks or nature preserves), certain natural resources (such as fish in the ocean), etc.
Overuse of common resources frequently results in economic issues, such as the tragedy of the commons, in which user self-interest leads to the resource’s long-term degradation, to everyone’s detriment.
The tragedy of the commons is an economic situation in which everyone has an incentive to consume a resource at the detriment of everyone else and there is no method to exclude anyone from consumption. It leads to excessive consumption, insufficient investment, and ultimately resource exhaustion.
As the resource’s demand exceeds its availability, each additional unit used directly damages those who can no longer reap its benefits. The tragedy of the commons happens when individuals disregard the welfare of society for personal gain.
History for Context
A small amount of history can provide some background. Many consider Adam Smith, the father of economics, to be the originator of “the tragedy of the commons,” despite the fact that Garrett Hardin technically coined the term.
Smith’s seminal work examined the interplay of individuals and private economic agents exploiting scarce and rival common resources (environmental) for their own rational, self-interested purposes, resulting in overproduction and, ultimately, the possibility of irreversible depletion of limited resources.
The source of this dilemma is inadequate and inadequately protected property rights, which in the 18th century were weakly defined and impossible to enforce (by contemporary standards).
According to the argument, since customers do not own common commodities, they have little motivation to conserve or increase their supply. Rather, there is an incentive to extract as much personal utility or gain as possible while still possible.
Cracks in capitalism systems are a current conclusion that is both obvious and poignant. As evidenced by the tragedy of the commons, market failures and inefficient distribution of scarce resources are a regrettable reality, much to Smith’s dismay.
Common Resources Examples
Public land in the United States, public forests, and fisheries are examples of typical resources. All of these assets are not owned exclusively by a single person. The government is the owner of public land, so no one can simply claim it.
No individual or group may prevent others from accessing the land unless the government as a whole agrees to sell it or make it inaccessible to the general public. In that they are not owned by a single person, lakes and forests are comparable. Obviously, people can own pastures, forests, and lakes and use the property as they choose, but then it would be considered a private good.
The United States’ public lands are a natural resource that can be utilized by anybody. They can utilize it for hunting, grazing their livestock, hiking, and camping. Public land is considered a common resource due to the fact that it is accessible to everybody without being deemed trespassing.
However, if one rancher is grazing their cattle on 10 acres, these 10 acres cannot be used by another rancher or a hunter. In terms of consumption, this makes it comparable.
Any deer, elk, birds, etc. killed by one hunter or trapper cannot be devoured by another. This requires the remaining hunters to either hunt a different animal or wait until the next season’s natural supply replenishment.
Most nations have imposed some type of restriction on who can cut down trees, making forests an intriguing shared resource. In the past, especially when the United States was in its infancy, anyone with the tools and strength to harvest and transport lumber was free to do so.
Historically, it was more of a public forest. The United States government no longer permits private persons to cut down trees without a permit, unless it’s for personal firewood or a Christmas tree.
The trees in public forests do not belong to a single individual, hence they are an example of communal resources. When you cut it down and use it to build a house or for firewood, no one else can use it to build a house or for firewood.
The fishing sector operates both nationally and internationally. Here, in contrast to public lands and forests, the resource is free to transcend borders and travel anywhere it pleases. This implies that nations must coordinate their policies to govern the business in order to avoid war.
Fishing is an example of a shared resource because the ocean’s fish population is part of natural biodiversity and does not belong to any one individual. It is a nonexcludable resource because everyone who goes fishing can capture it. Once a fish is captured, it limits the amount of fish available to everyone else, creating competition for consuming resources.
Characteristics of Common Resources
Consumption competition and nonexcludability are characteristics of common resources. Common resources include frequently, but not exclusively, natural resources, such as a diverse population of animals and plants (biodiversity), clean air, and water.
These two traits can be problematic for the resource itself if a large number of people want to use it but cannot do so simultaneously. Consequently, they are frequently subject to regulation in order to ensure their preservation.
Generally, goods can be classed as either excludable or non-excludable. If a good is excludable, it means that it can be denied to certain individuals. Whoever provides the good can block others who do not pay from accessing or utilizing it. Common resources are nonexcludable resources.
This means that they are accessible to everyone, therefore no one can be excluded from using them. This is crucial since it is practically difficult to restrict the use of certain resources, and some people may not be able to afford to participate.
If all roads were excludable resources, people who could not afford to pay to use them would be harmed, particularly if there is no alternative.
Rival in consumption
Consumption of shared resources is considered competitive because only one unit at a time can be utilized. A resource is nonrival in consumption when several people can utilize it simultaneously, such as the Internet or the public sanitation system.
Common resources cannot be accessed simultaneously by numerous individuals, which makes them scarcer as more individuals utilize them. On a road, no one can occupy the same location as you without triggering an accident.
The resource grows scarcer as the number of cars on the road increases, because not every car and bicycle can fit on the road at the same time.
|Types of Resources
||Rival in Consumption
||Nonrival in Consumption
||Artificially Scarce Goods
- Subscription-based Entertainment
- Computer Software
- Wild Game
- Water in a River
- Public Sanitation
- Law Enforcement
Types of Common Resources
Common assets can be divided into at least two distinct categories. Some are man-made while others are natural. Irrigation systems, wells, man-made ponds, highways, parking lots, and boat ramps are examples of man-made shared resources.
Common natural resources include rivers, grasslands, woods, wildlife, and fishing. The government typically creates and maintains man-made resources, so they can be produced over time and are not as limited as natural resources.
Roads and parking places can be constructed in a couple of years, and tax cash has already been put aside for their construction. Even with the replanting of trees after the area has been logged, it takes far longer for naturally occurring resources such as forests to regenerate.
Even with remediation, it will take decades for the natural habitat to regenerate.
Tragedy of the Commons
The tragedy of the commons refers to the occurrence in which common resources are exhausted because everyone who had access to them used them for their own benefit, culminating in their misuse and depletion for everyone else.
When a pasture is open for shepherds to graze their flocks of sheep, they all want their sheep to have access to the greatest grass so that they can produce the highest-quality wool and earn the most money.
Every shepherd will locate the best area of grass and let their sheep to graze there as often as possible. Then, they will proceed to the subsequent best patch, and so on.
If all shepherds with access to these pastures do this, there will be a gradual increase in use until the pastures can no longer regenerate in the current season. Now, there is little grass remaining, and no one can graze their sheep because there is nothing left. The shared resource had been exhausted.
The tragedy of the commons refers to the occurrence in which common resources are exhausted because everyone who had access to them used them for their own benefit, resulting in their misuse.
Overuse happens when a shared resource is depleted due to consumers’ disregard for the notion that their use diminishes the quantity of the resource left for others.
Solutions to overuse of a common resource
Common resources are frequently subject to control to prevent overuse and depletion. In cases of overfishing, governments impose quotas and seasonal limits on fishermen to prevent them from overfishing an area or population.
To be permitted to log land in the logging sector, you must possess particular permits, and then only for specified tracts and types of trees.
National and state parks are significant tourist attractions that can cause wear and tear and overcrowd these regions. To mitigate this, authorities impose admission fees and maximum capacity laws, which aim to protect parks and produce cash for their upkeep.
Privatizing the common resource is a common alternative strategy. If a resource is privatized, it is protected by whoever owns it, and it is their responsibility to ensure its continued viability.
What Is a Common-Pool Resource?
A common-pool resource is a good that acts as a hybrid between a public good and a private good since it is shared and accessible to all, but also scarce and has a finite supply. If everyone pursues their own self-interest, these open-access resources are prone to overexploitation and decreased availability.
Common-pool resources share fundamental qualities with both public and private products. Common-pool resources, like public goods, cannot be excluded. In contrast to public goods, however, consumption of common-pool resources is competitive, similar to that of private goods or the typical items we purchase and sell on marketplaces.
All three sorts of economic products are scarce; the amount accessible at any given time is restricted, hence individuals are frugal in their consumption and use.
Being rivalrous in consumption means that when a unit of the good is consumed, it is no longer available for other consumers to consume; all consumers are rivals contending for the commodity, and each person’s consumption reduces the total stock of the item.
Note that for a common-pool resource to be economically significant, it must also be rare, as a non-scarce item cannot be rivalrous in consumption and, by definition, anything that is not scarce is not an economic good. No one is able to prevent others from consuming a good that is non-excludable.
The combination of these two characteristics (non-excludability in supply and competition in consumption) makes common-pool resources prone to misuse and congestion.
Individual and group interests being in conflict creates incentives for users to disregard the social costs of their extraction decisions, as the group must share the expense of managing, protecting, and cultivating the resource.
This is why they are susceptible to the tragedy of the commons, which occurs when each individual attempts to derive the greatest possible value from a shared resource.
Examples of a Common-Pool Resource
Typically, common-pool products are regulated and fostered to prevent demand from outstripping supply and to enable their continuous exploitation. Forests, man-made irrigation systems, fishing grounds, and groundwater basins are some examples of common-pool resources.
Without management and regulation, fish stocks would decrease rapidly. And while a river may provide drinking water to a number of cities, manufacturing firms may be encouraged to pollute the river if they were not barred by law from doing so, as the expenses would be borne by someone else.
In California, where there is a high demand for surface water but limited supplies, groundwater basins are not managed at the state level, exacerbating typical pool issues.
During the 2012-2016 drought, farmers with senior water rights dating back to the 19th century were able to use as much water as they wished, whilst cities and municipalities were forced to implement severe water conservation measures.
The Tragedy of the Commons
Garrett Hardin invented the phrase ‘tragedy of the commons’ to explain the issue of a resource shared by all.
In the original story of “The Tragedy of the Commons,” a herder grazes his livestock on the green grass of a common meadow. A second herder, upon observing the green grass, concludes that it would be advantageous for his herd to graze there as well.
Soon, even more herders conclude that allowing their cattle to graze on the meadow is the best option. As a result of each animal behaving in its own self-interest, however, all of the grass is consumed and there is nothing left to feed the cattle.
The common-pool resource is subject to the tragedy of the commons due to its characteristics (scarcity, rivalry in use, and non-excludability). Each consumer maximizes the value they receive from the commodity by taking as much as possible as quickly as possible, before others exhaust the resource.
No one has a motivation to reinvest in maintaining or reproducing the good since they cannot prevent others from taking the investment’s value by eating the result. The good becomes more scarcer and may eventually be completely exhausted.
Government regulation and voluntary communal action to curb consumption are popular responses for the tragedy of the commons.
Common resources are those that are accessible to anyone, yet cannot be exploited simultaneously.
Common resources are nonexcludable products, meaning that no one may be prevented from utilizing them. They are also regarded competitors in terms of consumption, meaning that if one party uses them, another cannot.
Common resources may be man-made, like highways and irrigation systems, or natural, such rivers, public land, and woods.
The tragedy of the commons occurs when shared resources are exhausted because everyone who had access to them used them for their own benefit, leading to their misuse and depletion for everyone.
The overuse of communal resources can be remedied via quotas, seasonal limits, permits, and privatization.