Commons & Resilience

Research landscape framing

Remember: A semantic keyword analysis of sustainability-economics papers maps the field on two axes. Far right-middle: Nordhaus (environmental macro, discounting, intertemporal decisions). Left: Ostrom + studies of village subsistence livelihoods, stakeholders, cultural dimensions, organic/everyday cultivation — small-scale communities sustainably organising to manage the commons.

Taxonomy of goods (Stavins)

The 2×2

What: Goods differ in two dimensions — excludable / non-excludable and rival / non-rival.

Remember:

• Private (excludable + rival): aquaculture, fossil fuels, minerals.
• Club (excludable + non-rival): water quality of a municipal apartment; the global climate club (Ch.11).
• Common-Pool Resource / Open Access (non-excludable + rival): ocean fishing, large aquifers, grazing land.
• Pure public good (non-excludable + non-rival): global climate stability, clean air.

Why rivalry matters: A CPR (Common-Pool Resource) is a natural/man-made system large enough to make exclusion costly but not impossible, and rivalrous in use. Rivalry is the key difference from public goods — and it makes cooperation collapse faster.

VCM vs. CPR lab experiments

The two social-dilemma games

What: Both are finitely repeated, multi-person social dilemmas — a social dilemma arises when individually rational behaviour diverges from the social optimum.

• VCM (Voluntary Contribution Mechanism) / public-goods game: agents voluntarily contribute to a public good (Wikipedia donations analogy). Payoffs are linear; the aggregate is maximised if everyone contributes their whole endowment, but the dominant strategy is to contribute zero.
• CPR game: agents can also extract from a common pool; the benefit of extracting decreases in everyone's extraction. A non-linear public-bads game.

Behavioural results

Remember (VCM): Contributions start at ~half the endowment in period 1 (a pro-social urge — we're not pure homo economicus), then decline toward ~0 by the last period as people see others not cooperating (Ostrom et al. 1992). Outcomes hinge on the share of conditional cooperators (cooperate iff others do). This is why we fund public goods through taxes, not voluntary donations.

Remember (CPR): Aggregate extraction starts between social optimum and the selfish Nash, then quickly converges to Nash regardless of horizon. Cooperation dissipates faster than in VCM.

Mechanism (van Soest et al.): In CPR, defectors can actively undo others' good work (over-extract); in VCM the worst a free-rider can do is contribute zero.

The Claim Game

Design + numbers

What: 4 players, endowment 20 each; investing in the public fund multiplies by 1.6, then splits equally. Three treatments with the same socially efficient payoff but different temptation to defect:

• VCM: give 0–20 to the public pot.
• Claim-10: give 10 or take up to 10 from the pot (domain [−10, 20]).
• Claim-20: give up to 20 or take up to 20 (domain [−20, 20]).

Remember: Social optimum (all-cooperate, divided equally) = 32 units in VCM and Claim-20, but 60 in Claim-10 (because the give-range is reduced). Temptation to defect is the same in VCM and Claim-10, but highest in Claim-20.

Results

Remember: In Claim-20, you see not just the usual cooperation collapse but exhaustion of the public fund — the tragedy of the commons in the lab. Allowing claims drives aggregate contributions to ~0 from early on; even pro-social subjects stop contributing because their good work can be undone. The rising share of zero-contributors (not the claimants, who stay ~stable at <50%) drives the collapse.

What the lab game misses (field reality)

Remember: Features that help cooperation in the real world (absent from the anonymous 4-player lab): communication, non-anonymity / reputation, social embedding & norms, leadership / coordination, enforcement & punishment (monetary or social-reputation loss). Features that hinder: many users (not just 4) — especially a single large extractor; asymmetry / heterogeneity among players (jury still out experimentally); uncertainty about replenishment; time delays between investment and benefit; and positional / competitive preferences (caring about having more than others). Threshold CPR games typically make cooperation even harder.

Fishery economics: MSY ≠ economic optimum

State of the world's fisheries

Remember: Share of fish stocks that are biologically sustainable (fished below MSY) is shrinking over time; overexploited share growing. Overexploited = fished above the MSY level (stock below MSY biomass).

The standard diagram

What: X-axis = fishing effort (effort ↑ ⇒ stock ↓); the curve is the logistic growth / total-benefits curve. At maximum stock (carrying capacity $K$) growth ≈ 0 (system at capacity); at maximum effort growth ≈ 0 (stock exhausted); maximum growth at the MSY point in the middle.

MSY (Maximum Sustainable Yield)

What: Effort $E_{MSY}$ maximising biological growth: $S_{MSY}=K/2$, $Y_{MSY}=rK/4$. Used as the biological sustainability definition.

Three effort levels — the ordering

Remember: $E_e < E_{MSY} < E_c$.

• Efficient effort $E_e$ is below MSY because effort is costly — set marginal benefit = marginal cost of extraction. Result: higher stock and lower harvest than MSY, with positive net resource rent.
• Open-access / competitive equilibrium $E_c$ is above MSY: individual fishers enter to grab positive resource rent until total cost = total benefit and the resource rent is fully dissipated. Stock heavily reduced.

Trap — shadow price under open access: Under open access the shadow price of the stock = 0 (no one owns the future value), which is why effort overshoots to $E_c$. The efficient $E_e$ correctly prices the resource's future. This is Hardin's tragedy of the commons — but it is not inevitable.

Ostrom: the commons can be managed

Nobel reframing

Remember: Long held that collectively used resources would inevitably be overexploited. Elinor Ostrom disproved this through field studies (pastures, fishing waters, forests): communities establish rules for ecologically and economically sustainable use. Nobel "for her analysis of economic governance, especially the commons."

Ostrom's 8 design principles

Remember:

1. Clearly defined boundaries (resource + user group).
2. Congruence of appropriation/provision rules with local conditions.
3. Collective-choice arrangements — those affected can modify the rules.
4. Monitoring — by users or those accountable to them.
5. Graduated sanctions — severity scales with the offence (one extra fish for grandma's birthday → small fine; big-time poaching → prison/exclusion). (Most-often-forgotten on lists.)
6. Conflict-resolution mechanisms — accessible, low-cost.
7. Minimal recognition of the right to organise (not challenged by external authorities).
8. Nested enterprises — governance in nested layers within larger structures.

Remember: These principles are for smaller-scale communities; several hit limits once the system gets too large.

Property regimes

The four regimes

Remember:

1. Open access — no enforced property rights → tragedy of the commons, shadow price = 0.
2. Group property — rights held by a group that can exclude others (Ostrom's communities).
3. Individual property — rights held by individuals who can exclude (market mode; essentially private goods).
4. Government property — rights held by a government that regulates use (often the government owns the resource but grants use rights).

Rights-based fisheries

Remember:

• Iceland / New Zealand: ITQ (Individual Transferable Quota) — "an ETS for fish": cap total catch, distribute tradable shares to individuals. Government owns the stock; individuals hold the use right. Works reasonably well (still needs monitoring).
• Chile: TURF (Territorial Use Rights for Fishing) — use rights given to communities/groups (group property).

Costello et al. (2016)

Remember: >4,000 fisheries worldwide. Rights-Based Fishery Management (RBFM) substantially outperforms both MSY-targeting and business-as-usual (BAU, ~open access) — large economic and conservation gains.

Scaling up

Remember: The tragedy of the commons is not inevitable — works in small communities, and in larger systems if institutions/property rights are right. But as scale grows, management gets harder → need more institutionalised, transboundary/global approaches (transboundary air-pollution protocols, global biodiversity hotspots, international climate cooperation / the club).

Collapse: Diamond's framework

Diamond (2005), Collapse

Remember: A loose 5-factor framework for societal collapse: (1) environmental damage, (2) climate change, (3) hostile neighbours, (4) loss of trading partners, (5) society's response. Key generalisation: collapse reflects "a conflict between the short-term interests of those in power and the long-term interests of the society as a whole" — i.e. a discounting problem. Applied to Greenland Norse, Maya, modern Australia, and Easter Island. The examinable part is this 5-factor framework.

Easter Island — NOT on the exam: The Ricardo–Malthus phase-diagram model is explicitly flagged as not needed for the exam. Know only the idea: combine renewable-resource dynamics (logistic growth, harvest depletes stock) with Malthusian population dynamics (resource consumption ↑ fertility) → cyclical boom-bust dynamics. Caveat: a recent Nature DNA study suggests the Easter Island "collapse" story is likely a colonial cover-up — the crash came later, via European colonisers. Treat the case as illustrative, not historical fact.

Resilience

Definition

What: The amount of disturbance an (eco)system can absorb without changing its basic structure and controls (shifting to a different regime).

Why: Real ecosystems have multiple equilibria, several of which can be stable — so static MSY-style optimisation around one equilibrium fails.

Bi-stable systems + regime shifts

Remember: Examples — shallow lakes (clear/oligotrophic vs. turbid/eutrophic), savanna (with/without vegetation), reefs (coral- vs. algae-dominated); economic analogues (financial crises, poverty traps). Structure: slow-moving driving variables (overfishing, eutrophication, ocean acidification) erode the resilience of regime 1 (shrink its basin of attraction); then a trigger event (hurricane, disease, bleaching, flood) tips the system into the other regime.

Hysteresis / irreversibility

Remember: Recovery can require a much larger reversal than the original perturbation. Netherlands lake example: raising phosphorus load eventually collapses the vegetated state, but to recover you must cut phosphorus far below the original collapse threshold. Implications: precautionary management, preserve diversity, monitor early-warning signals.

"Resilience of what, to what?"

Remember: Always specify. Specified resilience = a defined system, a defined service/performance, against a defined disturbance. General resilience = broad buffer capacity against all kinds of disturbance. (Health analogy: resilience to a specific disease vs. general fitness.)

Economic value of specified resilience

Remember: Treat resilience as a stock = the distance from current driver conditions to the believed tipping point. Greater distance → lower probability of flipping → resilience insures the ecosystem against functional failure.

Resilience-as-insurance subtlety

Remember: Higher resilience raises expected income from the resource, but can raise or lower perceived riskiness. Near a tipping point, investing in resilience is good (raises expected income) but makes income more variable/uncertain — so if you strongly dislike that uncertainty, resilience is not insurance in the strict economic sense (an insurance reduces the influence of a threat on well-being). It can still be a very worthwhile investment because it raises expected income. The hard part: specified resilience needs you to know the system well enough to pin the tipping-point distance numerically — often impossible.

Salt & Walker, Resilience Thinking — general resilience

Remember: When you can't numerically pin the system, use the general-resilience approach. Core message: optimisation via tight control can be part of the problem, not the solution — there is no optimal state of a continuously evolving dynamic system. Approach systems holistically with precaution and redundancy for adaptive management. Their 9 components a resilient world values:

1. Diversity (promote/sustain it in all forms).
2. Ecological variability — embrace it rather than control/reduce it.
3. Modularity — loosely (not tightly) linked components.
4. Acknowledge slow-moving variables — focus policy on the slow controlling variables where the thresholds lie, not short-term triggers.
5. Tight feedbacks — between modules, to learn about the system.
6. Social capital — trust, networks, leadership for adaptive management.
7. Innovation — learning, experimentation, locally developed rules; embrace change.
8. Overlapping governance — redundancy in governance structures (deliberately, contrary to standard efficiency-seeking economics).
9. Ecosystem services — include all unpriced services in development proposals/assessments.

Remember: Items 2 (embrace variability) and 8 (redundancy/overlapping governance) are the memorable contrasts with standard command-and-control efficiency. Note the tension: standard economics usually has one clean solution (a resource/carbon tax) for a well-specified single-failure system, but real systems are messy/multi-equilibrium and second-best, so a policy mix and redundancy become defensible.

Key formulas & one-line takeaways

Key formulas

MSY: $S_{MSY}=K/2$, $\;Y_{MSY}=rK/4$.

Effort ordering: $E_e < E_{MSY} < E_c$ (efficient below MSY because effort is costly; open access above MSY because rent is dissipated).

Open access: shadow price of the stock $=0$.

Claim game: endowment 20, multiplier 1.6, social optimum 32 (60 in Claim-10).

One-line takeaways

• CPRs are non-excludable but rival — rivalry makes cooperation collapse faster than for public goods.
• VCM: contributions start ~50%, decay to 0 (conditional cooperators). CPR: converge to Nash fast.
• Claim game: letting players undo others' work (claim from the pot) destroys reciprocity and exhausts the fund — tragedy of the commons in the lab.
• MSY is biological, not economic: efficient effort is below MSY (effort is costly); open-access effort is above MSY (rent dissipated, shadow price 0); $E_e<E_{MSY}<E_c$.
• Ostrom's 8 design principles let small communities self-govern the commons — don't forget #5 graduated sanctions.
• Property regimes: open access / group (TURF, Chile) / individual (ITQ, Iceland & NZ) / government. Costello et al. (2016): rights-based management beats MSY and BAU across >4,000 fisheries.
• Diamond's 5 collapse factors (environment, climate, hostile neighbours, lost trade, response) = a short-vs-long-term (discounting) conflict — the examinable part; Easter Island math is not on the exam.
• Resilience = absorbing disturbance without a regime shift; bi-stable systems tip via slow drivers + triggers; hysteresis means recovery needs a bigger reversal.
• Resilience near a tipping point raises expected income and variance → not always insurance in the strict economic sense.
• Salt & Walker's general resilience values diversity, variability, modularity, slow variables, and redundancy/overlapping governance — against optimisation-by-tight-control.