Tragedy of the commons

Meaning. A common resource is a good that is rival in use (what one person takes leaves less for others) but non-excludable (it is very hard, or very costly, to keep anyone from using it): for example the groundwater under a group of farms, an open coastal fishery, or the air over a city. The tragedy of the commons is the tendency of such a resource to be used far more than is efficient, and even exhausted, because no one can be kept out.

Why it happens.

• Each user decides how much to take by comparing her own benefit with her own cost.
• But every litre pumped or every tonne of fish netted also reduces what is left for all the others. This harm to others is a negative externality that the individual user does not count.
• Since every user ignores the cost she imposes on the rest, the total taken is more than the efficient amount; and since no one can be excluded, no one has a reason to hold back and save the resource for later, because what she leaves may be taken by someone else.
• Each person acts sensibly for herself, yet the group as a whole ends up worse off. That is the tragedy.

Example: groundwater. Our own example. Fifty farmers in a district of Punjab draw water from the same underground aquifer with tube-wells. Each farmer gains by pumping as much as he needs for a thirsty crop such as paddy, but every litre he pumps lowers the water table for all his neighbours, who then need deeper wells and more electricity. No farmer can stop the others from pumping, and water he leaves in the ground may simply be pumped by someone else, so each keeps pumping. The water table falls year after year until wells run dry for all fifty. A single owner of the whole aquifer would have pumped less, to keep it in use for years to come, since she would bear the whole loss herself.

Remedies.

• Regulation of use: limits on the size of the catch, fishing seasons, or the hours a tube-well may run.
• Charges or licences for use, so that each user pays for the harm she does to others.
• Turning the resource into property, private or held by a community body that controls access, so that the owner can exclude others and has a reason to conserve it.
• Agreed sharing by a planner or the community: a social planner could divide the total use fairly so that all can keep enjoying the resource.

Conclusion. The tragedy of the commons is the over-use of a rival but non-excludable resource, because each user ignores the cost her use imposes on others; limiting access or pricing use is needed to prevent it.