Climate Change And The (Anti) Tragedy of the Commons

Any student of economics would be familiar with British economist William Forster Lloyd’s concept of The Tragedy of the Commons, which was popularised by American ecologist Garrett Hardin. It refers to a situation where individuals with access to a shared, public resource act in their own individual interests, neglecting the wellbeing of society and of the common good, thus leading to the ultimate depletion of the shared resource.

Today, this is seen in many great environmental tragedies: from overfishing in publicly-available waters, to “slash and burn” deforestation methods, Lloyd’s Commons Tragedies seem inescapable in a world dominated by fears of irreversible climate change and inequitable access to shared resources. After all, what rational, self-serving individual would choose to sacrifice his or her own profit such that others can prosper at their own expense? Conversely, if the commons were to be allowed by an individual to be exploited by others, would that not harm that individual’s own prospects of profit?

Picture the aforementioned example of overfishing. If you were a fisherman and there were a limited amount of fish in the sea, would there not be a race to catch as many fish as possible before the population of fish were entirely depleted by rival fishermen? With the problem of overfishing, often times, fishermen fail to see that there are issues of overfishing, similar to global warming, which results in these problems worsening.

Thus, as explained above, the Commons Tragedies fall in great relation to the problem of climate change today (which is, by far, the greatest motivator in pushing people, largely those running social media accounts dedicated to the environment, to Google “Tragedy of the Commons”), suggesting that we are locked into an inescapable cycle of “fouling our own nest”, so long as individuals and corporations continue to operate in an independent, self-serving manner. Simply put, the “discount rate” of climate policy reform is too uncertain for individuals and corporations to take credible action, particularly when “actions to mitigate climate change by cutting greenhouse gas emissions involve incurring costs long before the benefits are registered”. Viewing climate change through the lens of the Commons Tragedies, the question (and answer) can be found as to how exactly such an issue can be addressed.

In terms of resolving the Tragedy of the Commons, there are two conventional ways through which a depletion of the commons can be mitigated: direct government regulation, and the conversion of common-pool resources (CPRs) into a private good. Such could be the key to resolving the climate crisis, a sentiment widely echoed by current academia. The Stern Review of 2007, considered a landmark piece of academic literature on the economics of climate change, called climate change “the market failure on the greatest scale the world has seen”. It argued that “strong, deliberate policy action” is required to mitigate the effects of climate change, and that it “demands an international response, based on a shared understanding of long-term goals and agreements on frameworks for action”.

But action in what sense? And when such action, at least on the national level, requires enforcement, can it be enforced to an effective degree?

On a state-by-state basis, much study has been dedicated to calculate, often utilizing increasingly complicated economic models, the cost of noncompliance with national environmental regulations, including factors such as the frequency of regulatory inspections and the size of financial penalties, as well as calculating the costs of repeated violations should states utilise dynamic penalty strategies. Enforcement, however, can vary wildly from state to state. A state that is run on a federal basis, for example, such as Malaysia or the United States, could have a non-homogenised climate enforcement policy, simply due to an unavoidable difference in the stringency of regional authorities, while a geographically-large state such as India or Russia, could have physical constraints on the frequency of regulatory inspections or lead to under-manned and under-funded enforcement agencies.

In addition, the political impact that climate regulation can bring to a particular government should also be taken into account. The economic theory of regulation argues that the individual agencies and organs of the state operate to maximize political support, with the definition of “support” not merely limited to the votes of its citizens.

The best (or worst, depending on who you’re asking) example of this would be the United States today, with large sums of money spent by corporations in the form of political campaign contributions, more often than not in an effort to curry favor with particular political candidates. The prevalence of this questionable practice has created highly-recognisable household phrases such as “Big Pharma”, “Big Tech”, and the “military-industrial complex”, showing the extent to which they continue to dominate American politics, and, by extension, the grip to which “Big Oil” has over American climate policymaking. If politicians are capable of justifying the gain in political capital that large campaign contributions would bring them, in contrast to the loss of political capital as a result of unpopular climate policy, then, in accordance with the economics of regulation, that would be a trade-off they would be willing to make.

The above examples highlight the reality of failed government oversight when it comes to the enforcement of climate policy. Evidently, while some of them are vast generalizations, the arguments that support them still ring true on a state-by-state basis. A government is only as legitimate as the institutions it oversees, and there is certainly much more work to be done when it comes to the political independence and practical effectiveness of climate change enforcement.

A much-touted Commons Tragedies approach (or Non-Commons Tragedies, if you will) is the one raised by Nobel laureate Elinor Ostrom, in her book Governing the Commons, which argues that cooperative, collective action could be used to overcome the Commons Tragedies, based on a number of prerequisites, in effect allowing for sustainable development without risk of diminishing the commons in the long-term. Through her research, she looked at commons through the lens of CPRs, stating that while Lloyd’s and Hardin’s Tragedy of the Commons principles held true for large-scale CPRs “in which everyone acts independently, no attention is paid to the effects of one’s actions, and the costs of trying to change the structure of the situation are high”, they “are far less useful at characterising the behaviour of appropriators in [...] smaller-scale CPRs.

In her book, Ostrom places forth a number of design principles of CPRs to optimally facilitate sustainable development, including, but not limited to:

• That the boundaries of a CPR, and the rights of the individuals, corporations or entities allowed to withdraw from that CPR, are clearly defined.

• That there are in place rules restricting the rights of individuals, corporations or entities to withdraw from the CPR, such as place, time, technology and quantity of resources withdrawn.

• That the individuals, corporations or entities affected by the operational rules of rights to a particular CPR are allowed to participate in modifying these operational rules, allowing them to be best tailored to their users.

• That the enforcement mechanisms that monitor the usage of CPRs can be held accountable by the individuals, corporations or entities with rights to that CPR.

Ostrom’s arguments discount the aforementioned example of OPEC, condemned to fail by many of her contemporary economists. Saudi Arabia, the OPEC member with the net largest oil output, would often step in as a swing producer, disproportionately cutting its own oil production compared to other members in order to maintain oil prices for the benefit of all. Her work does, to a certain extent, offer some hope that the Tragedy of the Commons of the planet’s climate could potentially be averted.

However, the direct solutions she proposed may yet prove too idealistic to realize in the current global climate , or on a state-by-state basis. For instance, when it comes to the definition of a CPR and the rights of individuals, corporations or entities to withdraw from that CPR, how should this be done? At what point will the line be drawn on who is too, for example, geographically far from a CPR to have access to it? Moreover, who is to determine the specificities of the rights of individuals, corporations or entities to withdraw from a CPR? Would allowing some access but denying others not lead to the creation of more political detractors? Surely governments, as unreliable, prone to political biases, and enslaved to the economics of regulation as they are, cannot be appointed with such a task. In this regard, Ostrom admits to the high prerequisites for her argument to work, that “if, instead of honest officials, one posits corrupt centralized regimes, the problems involved in institutional supply become more difficult”.

Therefore, the dilemma for climate change regulation persists, with governments caught between the will of corporations unwilling to pay the high costs of transitioning to cleaner, greener alternative sources of energy, and a need for such a transition to take place, lest it be too late to reverse the course of current climate trends.

A number of actions can be taken on an individual basis, however. While the creation of more Instagram pages dedicated to social media activism for climate change is all well and good amongst a stream of countless others, greater political activism specifically may pave the way forward to more stringent climate change regulation. By playing into the economics of regulation and pooling together the political power of individual voters, climate change can be made an increasingly more important issue in domestic politics, allowing governments to be held accountable to the promises they make internationally, as well as tipping the balance of political power from corporations to climate-concerned individual voters. Obviously, such a conclusion would vary from state to state, but if this essay should fail at convincing a reader of anything else, it would be that social media activism is not enough, and that voters will have to use their political power to bring climate issues to the forefront of any political debate, and to for the improvement of the process of direct governmental regulation over climate change regulation.

While CPR management in accordance with the writings of Ostrom does hold its merit, these prove, at least in this author’s opinion, too idealistic to implement on a scale that could actualise a real reversal of the change in climate. Success, from Ostrom’s point of view, could only be possible with the engagement of local communities in cooperative, collective actions, and there are simply too many incentives at present for corporations to overlook the long-term effects of their actions for quick, short-term benefits, and too many inept governmental mechanisms to fairly and unbiasedly allocate the rights to CPRs.

It would be best to conclude with a quote by Garrett Hardin, that “freedom in a commons brings ruin to all”. In a 1994 paper, entitled “The Tragedy of the Unmanaged Commons”, Hardin clarifies his initial arguments, stating the presence of shared commons does not necessarily have to end in their ultimate destruction. The danger therein lies in the freedom to exploit these commons, of which governments, and by extension, the people that empower them, will have the final say.

Bryan Sim 5.07

Bibliography

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Jr, Emmett Tyrrell. “Milton Said This Would Happen.” Washington Post, 1981. https://www.washingtonpost.com/archive/politics/1981/08/31/milton-said-this-would-happen/a1f70704-9bfb-4f23-84a0-f2ab8e5eac1e/. (Accessed March 10, 2022).

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Books

Ostrom, Elinor. Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press. Cambridge: Cambridge University Press, 1990.

Journals

Cooper, R. N. “International Approaches to Global Climate Change.” The World Bank Research Observer 15, no. 2 (2000): 145–72.

Frischmann, Brett M., Alain Marciano, and Giovanni Battista Ramello. “Retrospectives: Tragedy of the Commons after 50 Years.” Journal of Economic Perspectives 33, no. 4 (2019): 211–28.

Stigler, George J. “The Theory of Economic Regulation.” The Bell Journal of Economics and Management Science 2, no. 1 (1971): 3–21.