Elinor Ostrom received the Nobel Prize in Economic Sciences in 2009 for her analysis of economic governance, particularly the commons.
Ostrom's work challenged the traditional economic approach to shared resource management, which assumes self-interest leads to overharvesting.
She demonstrated that people can self-organize and successfully govern shared resources, offering insights for policy and governance.
Ostrom was the first woman to win the Nobel Prize in Economic Sciences and worked across disciplines, using both qualitative and quantitative methods.
Her theoretical framework applies to various contexts, including the "digital commons," healthcare, and education.
This textbook introduces Elinor Ostrom's framework, concepts, and applications to undergraduate students, drawing from her books Governing the Commons (1999) and Understanding Institutional Diversity (2005).
The content is based on a course taught at Arizona State University since 2007, incorporating contemporary examples beyond Ostrom's original publications.
The textbook is published as a contribution to the knowledge commons, with a blog available for relevant examples and feedback at sustainingthecommons.asu.edu.
Theoretical Background
Why Study the Commons?
Key Concepts:
Definition of "commons".
Challenges to sustaining the commons.
Introduction to the tragedy of the commons.
Examples and critique of the tragedy of the commons.
The Commons:
Originally referred to shared land in Medieval Europe governed by community rules.
Generally refers to natural and cultural resources shared by many people, such as forests, fisheries, or groundwater resources.
Often implies the absence of established private property rights or "open access."
Examples include open-source software, Wikipedia, public roads, and public education.
The Challenge:
Sustaining the commons is challenging due to the lack of clear rules and enforcement mechanisms, leading to overharvesting.
This raises questions about who should regulate the use of the commons and make the rules.
Tragedy of the Commons:
Garrett Hardin's 1968 essay argued that shared resources are inevitably overharvested due to individual self-interest.
Hardin used the metaphor of sheep herders sharing an open-access pasture, where each herder adds sheep to maximize individual benefit, leading to overgrazing.
He concluded that the only options to avoid depletion were private property rights or government regulation.
The observation of people causing problems for the common good when following self-interest is not new, as noted by Aristotle.
Limitations of Hardin's Analysis:
Hardin's focus on inevitable tragedy neglects cases of successfully managed commons with sustainable shared resource use.
His perspective equates communal property with the absence of exclusive, effective right in governing the commons.
Experience shows communal property, or common-property governance regimes, provide effective rights to govern the commons.
The Open Field System:
Peasants had private property rights to grain grown on scattered strips of land but shared grazing rights on common land during specific seasons.
A village council made decisions to convert land from agriculture to pasture, enabling economies of scale in grazing and private incentives in grain growing.
Improvement of transportation networks and access to markets facilitated a shift away from the open-field system.
**Elinor Ostrom's research demonstrated that communities can self-govern shared resources effectively and identified eight design principles characterizing successful self-governance strategies:
**
Monitors are accountable to the resource users.
Conflict resolution mechanisms are cheap.
**Since Hardin’s essay, policies have changed, yet we haven’t seen a reversal of the overall trends.
There are no panaceas. The goal is to illustrate a set of tools that determine the conditions that make overexploitation more likely and those that are more likely to lead to sustainable use of shared resources.
Defining Institutions
Key Concepts:
Defining institutions and recognizing them in everyday situations.
Analyzing institutions using action situations.
Understanding the Institutional Analysis and Development framework (IAD).
Recognizing the diversity of institutions in use around the world.
Institutions Defined:
Institutions are prescriptions that humans use to organize all forms of repetitive and structured interactions.
Include rules and norms at different scales, from households to international treaties.
Individuals can choose whether or not to follow rules or norms, with consequences for themselves and others.
Institutional Diversity:
People experience many situations with different norms and rules daily, ranging from work contracts to traffic rules.
These situations change over generations due to technological developments and institutional changes.
Cultural and institutional factors affect expectations regarding the behavior of others.
Analyzing Institutions:
Framework to study institutional, from anthropology to economics, from psychology to political science.
The Institutional Analysis and Development (IAD) framework to study institutions systematically.
Action Arenas and Situations:
* Action arena: Occurs when individuals interact, exchange goods, or solve problems.
* Consists of the participants, rules and norms, and attributes of the physical world interacting.
* Action situation: Defined by positions, actions, outcomes, information, and control.
* Action situations remain stable over time relative to participants.
Brief Examples:
Chess Game: Two participants (John and Alice) where the action is composed of the physical game, its pieces, and the rules; interactions lead to a win, loss, or tie.
Money Lending: Alice lends money to John. The action arena takes shape from norms or formal contracts and leads to John receiving money and (possibly) paying it back.
Student Association Election: All students can vote in an action arena that includes debates, campaignings, and election day. Major votes in the decision.
Important Layers to Each Action Arena:
Action arenas refer to a social space where participants interact, exchange goods, and deliver health care, etc.
Action situations refer to the positions, actions, outcomes, information, and control in which interactions take place.
Exogenous Variables:
Biophysical Conditions: The environment around a given action situation affects what actions are physically possible.
Attributes of the Community: This effects the structure of an action arena and relate to the attributes of the community of which the participants are members.
Action Arenas and Action Situations
Key concepts:
Actions define the structure of interactions.
Adding individuals to an action situation leads to action arena.
The dissection of structure of an action situation.
Introduction to concepts
Two or more of individuals are faced with actions that jointly produce outcomes.
Individuals in the action situation occupy a certain position.
Action arena combines the action situation.
Focus on the rules and norms with participants with their own preferences, skills, and mental models.
To distinguish between different points of views.
For the same period of time action situation may remain the same, however, a new action arena is generated every time a new set of participants enter into the action situation.
Participants can have different action situations when filling different areas.
Each action situation is described and analyzed by using a set of common variables.
Set of participants
Positions available for them
The potential outcomes
Actions and the actions of maps used to realize outcomes
Controls on the function the individual has
Information available on actions, outcomes, and the link between them
The costs and benefits of incentives and deterrents based on assigned actions and outcomes
Action internal structures are dependent on known or unknown finite numbers or indefinite ones
Internal structures of action also contain if the same location with two different participants and have different expectations about what others do.
The college framework is another example stating that participants have different roles and duties related to their assigned status (Professor, TA, etc.)
The poor and wealthy is another demonstration of action situation and who has the power over another.
Individuals can make actions and choices over actions, but if they wish to change rules they can go to higher decision making areas and levels.
The core elements of action situation discussed here include
Participants and qualities such as
numbers of participants - can be specified loosely or defined through regulations
Individual, team, or composite (number of individuals sharing the same idea) - Must have intentions to work together and share some goals
Attributes, knowledge/ skills/ education - are dependent on where they are from
Positions and the ability to recognize not everyone gets the same ability to all positions
Outcomes which should be carefully analyzed in situations
Actions which can be thought of as a selection of settings or control variables that a participant could implement. This concept is also closely tied to strategies.
The control, a power participants have in a situation
*The amount of information people in each type of situation has
complete
asymmetric
Cost and benefits that come with actions
Action arenas can be linked and different levels of activities
Operational rules
Collective-choice rules
Constitutional-choice rules
To link different areas and achieve positive outcomes it is important to review different criteria including
Economic efficiency
Equity
Accountability
Conformance to general morality
Sustainability
Social Dilemmas
Key Concepts:
Learn the concept of social dilemmas.
See what selfish and rational individuals do in social dilemmas.
Be introduced to coordination games.
Learn to recognize different economic goods and resources.
See how the Institutional Analysis and Development framework can be used to study social dilemmas.
Introduction:
Social dilemmas are when best for the individual is not best for the group.
In general, society will not function if individuals do only what is best for themselves.
Prisoner’s dilemma:
Captured in 1950, The best situation requires both prisoners to remain silent but each are incentivized to rat out their partner so they betray
Best solution for both involves remaining silent together
Social dilemmas as an action situation:
* Players have decisions, limited information, and only control decision, but based on that it is still possible to have different outcomes on an individual scenario
Coordination games:
You have two options: you can go left or right. If both drivers go right (i.e., from their perspective; from an onlookers perspective, one goes right, one goes left), they will avoid a collision. The same is true if both drivers go left.
An action where people receive points when they meet but low values when they do not intersect in different settings: a business stakeholder interested in windmill development and their local village wanting to conserve natural resources
A typology of goods:
Resources distinguished by exclusion and subtractability
Subtractability - consumption by one reduces availability/utility of good for another.
Excludable- participants can be prevented from accessing resources.
*Private Goods - One can restrict the use of the good easily and when that good is in use, someone else cannot use it.
Use by one person limits use to anyone else.
*Examples include mobile phone or cars.
Club Goods - Use does not affect use by others, these include
Access is restricted to members.
Example: Satellite television
Common Pool Resources:
Difficult to exclude or limit users once resources are provided/produced by nature or society one person’s consumption of resource units removes those units from what is available to others.Examples that are limited once used:
Water
Fish
Trees
Public Goods - Can’t restrict the good and use by some doesn’t mean those goods cannot be used by others.Examples include open software or clean air.
Case Studies
Water Governance
**Key concepts:
** Water-related social dilemmas.
Introduction of effective water governance systems.
Effective systems without any central control.
That water is often governed on multiple levels.
Core problem of unequal access to water institutions must cope with.
**Introduction:
** Focus on examples of succeeding or failing in sustaining the "commons", otherwise known as preventing people from accessing what they share via private property rights and rules set by the community to govern the access.
The "commons" are the natural infrastructure of watersheds and climates and made-made infrastructure like canals and dams.
Most problems result from too little clean water, too much polluted water, disasters and unequal distribution.
Example: The city of Phoenix demonstrates this due to constant desert climate conditions despite the increase of people moving there every year and the use of water for swimming pools, gold courses, and domestic needs.
**Main Themes Discussed Are:
** * Water scarcity is caused by either physical scarcity, lack of infrastructure, and overuse.
Water over abundance and the damages it causes are usually related to
*Distribution of water to multiple areas with and using systems to get it to individual locations.
*Water pollution stemming from rivers used as systems and industrial waste that contaminates water with things like phosphate.
Examples of Success - City of Phoenix, AZ
Solved water scarcity issues using dams and canals to create dependable stream of water and public infrastructure that was previously managed by local communities with shared land.
**The Netherlands
** * Used structural water measures such as dikes and sluices to protect communities from natural disasters
Used independent water boards to govern local and regional water management, as recognized by higher regional authorities that had a good water management but resigned responsibility.
At a larger perspective, this demonstrated a well designed method that was based on local populations and supported by various local government and spatial levels.