I've written on the concept of
the Tragedy of the Commons in the
past. An example in
Field's Natural Resource Economics
presents more than one potential solution to the problem of
over-consumption in the commons, exacerbated by the lack of property
rights in the world's oceans:
The tragedy of
the commons is a dilemma arising from the situation in which multiple
individuals, acting independently, and solely and rationally consulting
their own self-interest, will lower the yield a shared limited resource,
even to the point of ultimately depleting it, even when it is clear
that it is not in everyone's short or long term interest for this to
happen.
The net result is that no individual
has any economic incentive to practice sustainable harvesting of fish,
and in fact has the opposite incentive; if others are harvesting greater
amounts, they are receiving greater compensation in the market for
producing greater quantities of goods. This creates a situation whereby
depletion of natural resources happens at an ever-increasing rate, with
the end result being a supply of fish unable to meet the demand. The
responsible firm who practices sustainable fishing in fact drives
themselves out of the market. Each firm has an incentive to harvest as
much as possible and deliver those goods to the market, guaranteeing
each a continued ability to operate and profit.
Another
unfortunate effect of this concept in practice is through the act of
prohibition by the state. When a particular market for goods or services
is prohibited through fiat, that simply drives the market underground,
rather than bringing an end to that particular market. Prohibition also
has an incentivizing effect on that market, as it drives up the
potential profits due to the heightened risks associated with the black
market demand. The illegal drug trade is one such example, with the
inherent violence associated being an unfortunate unintended consequence of prohibition (see also
alcohol prohibition).
One solution with proven effectiveness is the
privatization
of those resources at risk of depletion by over consumption. With the
evident reversal in the decline in the populations of elephants, where
the prohibition of poaching elephants had little effect in Kenya
compared to implementing a
property rights
scheme in Zimbabwe, it becomes apparent that under the right
circumstances, the free market is more effective at alleviating
over-consumption of resources than efforts by governments.
As
long as profit is the motive for exchange, the concept of the Tragedy of
the Commons will likely continue in practice to present a need to
consider implementing property rights schemes that encourage
sustainability over the long term. Property rights promote a long-term sustainability by creating a system whereby profits can be guaranteed in the future, but only by moderating trade in resources today.
