Governing the Commons: The Evolution of Institutions for Collective Action (Canto Classics) Paperback – 8 Oct. 2015

Elinor Ostrom won the Nobel for her work on common-pool resources, so this book represents Economics orthodoxy on the topic.It does not disappoint.Presumably to get us interested, the author starts backwards, taking us through three examples of simple theories that predict common-pool resources will always perish: the "prisoner's dilemma," the "tragedy of the commons" and the "logic of collective action."From there she goes on to explain how a common-pool resource differs from a public good like national defence or public safety: First, if my cow is grazing on a meadow, it's eating grass that won't be there for your cow to eat. Second, by dint of competing with one another to extract fish from a lake, we could be doing so at the expense of our future ability to fish from the lake. National defence, on the other hand (a public good, rather than a common-pool resource) is there for all of us to fully take advantage of and does not perish through the tragedy of the commons. A common-pool resource is thus defined (p.30) as a "stock" of variables that can produce a maximum quantity of "flow" variable without harming the "stock" or the system, with the added complications that 1. it could be costly to monitor / police / limit the "appropriation" of the "flow" 2. it could be costly to ensure the continued "provision" of this common-pool resource itself (for example, a community might need to keep a dam in good shape)Next, the author politely points out that the three game-theoretical constructs which predict the demise of all common-poor resources are far too abstract and proceeds to disprove them by counterexample, listing a number of thriving examples of common-pool resources that 1. have stood the test of time and 2. are isolated and simple enough for us to examine without having any second thoughts as to whether our analysis is complete: High mountain meadows and forests in Switzerland and Japan, irrigation institutions in Spain and the Philippines are described in great detail, and their common characteristics are summarized as follows:1. Clearly defined boundaries2. Congruence between local conditions and the rules governing "provision" and "appropriation" of the common-pool resource3. Collective choice arrangements whereby those who use the common-pool resource have voice in establishing or modifying the rules4. Monitoring that is, at a minimum, accountable to the appropriators5. Graduated sanctions for rule-breakers6. Conflict-resolution mechanisms7. The right of appropriators to organise must not be challenged by outside authorities8. For larger common-pool resources there is a need for multiple layers of nested enterprises to take care of "provision," "appropriation," "monitoring," "enforcement," "resolution," "government" etc.It's a formidable list, but it's not exhaustive. In the spirit of Douglass North and Mancur Olson, the author next introduces a further factor in the equation, and that's the contribution that government institutions have to make to common-pool resources by means of providing technological expertise and a helpful legal framework that will jointly act to support, help shape and enforce the decisions of the agents who engage in the provision and appropriation of the common-pool resource. The example here comes from a very thorough examination of how institutional change was made possible in the case of a number of rather diverse groundwater basins in California in the 1950's and 60's.A long list of failures comes under the microscope next: two Turkish fisheries, yet another Californian groundwater basin, a (totally fascinating) Sri Lankan fishery (p.151), followed by a couple borderline cases in Sri Lanka and Canada. They are all checked against the list, with a summary (p.180) of successes and failures that makes for some very persuasive reading.Rather than declare some type of "breakthrough," the book closes with an extremely humble assessment of the quandary facing participants in common-pool resources and an attempt to describe a general framework for assessing the potential for success through their eyes: the size, variability, quality and longevity of the benefits that will flow to the potential appropriators must be weighed against the costs inherent in helping out with "provision," the transformation costs, the monitoring and enforcement costs, the information costs and the potential for positive institutional change. The author submits that in her opinion the following factors are most conducive to a positive decision to adopt a new rule / participate in a proposed solution:1. Looming harm if the rule is not adopted/changed to save the resource2. Appropriators will be affected in similar ways if a rule is adopted/changed3. Low discount rates4. Low information, transformation, monitoring and enforcement costs5. Pre-existing social capital (e.g.in the form of norms or reciprocity and trust)6. A relatively small and stable group appropriating from the common-pool resourceI'll be totally honest, I read this entire book with an eye toward analysing the European common currency as a common-pool resource, but in the end I was captivated by the theory itself. Even if I never apply this knowledge to anything, I thoroughly enjoyed reading "Governing the Commons." I was entertained and challenged in equal measure.

Once you tune in to some academic jargon, this book is fascinating.The firm and government have their theorists and avatars a-plenty (Smith, Coase, Hume, Hobbes, Marx, Rousseau). There's another form of economic organisation sandwiched between the two: the Commons. Or, in the jargon, Common Pool Resources. Ostrom is a brilliant guide to how these CPRs work, or sometimes don't work. Most people, from left and right of the political spectrum, seem to think CPRs don't work, based on Hardin's famous phrase of the "tragedy of the Commons". But in fact many CPRs are older than the states that enfold them, and have been working for over 1,000 years. If you live in an English village you may find that your house deeds include the right to pannage, coppice, charcoal...Ostrom describes a range of cases: forests, irrigation and fishing are the classic examples. She derives (chapter 1, cart before the horse, this is academe) some general features and rules for successful CPRs. She describes successes and failures in subsequent chapters, from a world wide set of examples. Her rules seem robust (I'm not qualified to say) but she may be underemphasising some points. To criticise:1. If CPRs which fail are characterised by over exploitation, CPRs which last may imply systematic underuse. It's inconceivable that a durable equilibrium would be perfect, no?2. Monitoring and sanctioning are crucial in Ostrom's view, to prevent free riders. She says the costs of these must be low. Yes, but the costs could also be quite high if the costs of alternative organisation such as privatisation, division and nationalisation are even higher.3. Ostrom discusses the question of changing the rules of the CPR to accomodate weather, rainfall, etc. It's excellent but does it cover revolutionary change? Swiss and Japanese foresters have adapted to the chain saw, Spanish farmers have adapted to the water pump. Newfoundland inshore fishers have simply banned new technology while the Common Fisheries Policy is a notorious scandal.4. CPR institutions are only sort-of democratic (exclusiveness is a must) and one-man-one-vote probably is a rarity.These four questions make me fear that there is a bureaucrat sharpening his pencil somewhere...Common Pool Resources, despite the jargon, are wonderful. Once you start to examine them, they seem to be everywhere: church congregations, cricket clubs, PTAs, Mt Blanc, coral reefs, even maybe sharia courts in non-muslim countries.This is an eye-opening book, worth the effort. Elinor Ostrom richly deserves her "Nobel" prize. If I could I'd give her the Freedom of the City and the right to herd bankers over London Bridge as well.

Many discussions and "authorities" on the management of common pool resources (CPR) refer to the "tragedy of the commons" as something that is inescapable - that whenever there is a public common pool resource (alpine meadows, fisheries, groundwater,...) humans will always act collectively to over-exploit it. Indeed, this is not the case, as Elinor Ostrom clearly describes. Instead, she analyses a range of case studies where local institutions have been developed to successfully manage CPR's, sometimes for a thousand years or more. At the end of the book she proposes a framework for the analysis of CPRs, which should be required reading for anyone who wishes to put in place, or see put in place, an effective management strategy for a CPR.Most of the CPRs she has studied are within reasonably well-scoped geographic regions. She does offer guidance on, and examples of, scaling their management through nested enterprises. However, further work is needed to extend this framework to the management of global CPRs.Although targeted more at the academic community, this book is very clearly written and quite accessible. I really wish it could be much more widely read. If you are interested in this book, do also take a look at Panarchy: Understanding Transformations in Human and Natural Systems and Navigating Social-Ecological Systems: Building Resilience for Complexity and Change.