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20141221 Governing the Commons

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MAIN IDEA:

Traditional approach to use, maintenance, and allocation common pool resources (CPR) is not sufficient to describe successfully existing arrangements known in multiple societies. It is also usually fails to fully explain failures of CPR use that very often occurs. The detailed analysis of multiple real life cases allowed author identify common features of successes as well as failures and develop a workable framework for creation institutions necessary for successful management of CPR.

DETAILS:

CHAPTER 1 REFLECTIONS ON THE COMMONS

The book is a reflection on common use of resources and has 3 objectives: critic existing foundation of political analysis of commons, provide empirical example of successful resolution of the problem, and develop tools for understanding self-governing mechanisms for use of common resources.

Three influential models: The tragedy of the commons; the prisoner’s dilemma game; the logic of collective action: The free traditional models reviewed are: tragedy of commons when lack of responsibility leads to degradation of common resource, prisoner’s dilemma when one uses commons at the expense of another, and Olson’s logic of collective action when effective use of commons is possible only by using coercion against individuals who fail to act in common interest.

The metaphorical use of models: These 3 models and their variations routinely used by politicians as metaphors to justify some policy in regard to such resources as fisheries or logging areas when direct control is difficult.

Current policy prescriptions: Leviathan as the “only way”; Privatization as the “only way”; the “only” way? An alternative solution; an empirical alternative; Policy prescriptions as metaphors; Policies based on metaphors can be harmful: the political prescriptions usually one-sided promoting either leviathan option (centralized control) or privatization (decentralized control) as the only way to solve the problem. The first one encounters problem of cost and effectiveness of control, while the second had difficulty to overcome complexity of resource division. Author believes that there is another better way than these polar options. This way is provided by empirical evidence of real societies managing commons.

A challenge: to develop theory of human organization based on reality of human abilities and limitation rather than on metaphorical ideas. The key approach to organization as self-organizing entity with limitations being: common pool resources (CPR) should be renewable, scarce, and situations when user can harm each other. Based on empirical research presented in the bulk of the book, author provides some conjectures about ways to meet this challenge.

CHAPTER 2 AN INSTITUTIONAL APPROACH TO THE STUDY OF SELF- ORGANIZATION AND SELF-GOVERNANCE IN CPR SITUATIONS

The approach is based on study of small scale CPRs with self-organization of group of principals who successfully managed beneficial use of resources and prevented such downsides as free riding and shirking.

The CPR situation: CPRs and resource units; Rational appropriators in complex and uncertain situations

Here author defines detailed meaning of CPR, resource system, resource units, and other key notions of this research.

Interdependence, independent action, and collective action: The theory of the firm; the theory of the state

This part is review of different types of actions that individuals could use in relation to CPR with special attention to interdependency of actions by all individual appropriators of CPR benefits. Author reviews and compares firms as voluntary contractual organizations with state as involuntary organization based on ability of some individuals punish others.

Three puzzles: supply, commitment, and monitoring: The problem of supply; the problem of credible commitment; the problem of mutual monitoring

This is a brief review of literature on problems of supply of institutions, making commitments, and monitoring actions of individuals in relation to CPR.

Framing inquiry: Appropriation and provision problems; multiple levels of analysis

The main feature of this inquiry is that it has multilayer character rejecting usual limitation of prisoner’s dilemma. The main interest here assigned to CPR management when PD is not applicable. Appropriation problem is related to how participants allocate fixed and time-independent quantities of resource to avoid its dissipation and conflict. It relates to assignment of spatial and/or temporal access to resource. The problem of provision relates to investment into creation and maintenance of CPR. It reviewed from both supply and demand sides of the issue. The levels of analysis include institutions, which defined as set of rules that includes subsets of rules about changing the rules (constitutional rules), collective choice rules, and operational rules. Additional division is into formal and informal rules at all levels.

Studying institutions in field settings

Here author provide rationality for selection of objects for studies presented in chapters 3, 4, and 5.

CHAPTER 3 ANALYZING LONG-ENDURING SELF-ORGANIZED AND

SELF-GOVERNED CPRs

The key parameters for selection were: 1. Appropriators devised their own rules and implemented their own control, mechanisms 2. CPR and rules survived for a long time.

Cases reviewed: Communal tenure in high mountain meadows and forests: Törbel Switzerland, Hirano, Nagaike, and Yamanoka villages in Japan; Huerta irrigation institutions: Valencia, Murcia and Orihuela, Alicante; Zaniera irrigation communities in the Philippines

Similarities among enduring, self-governing CPR institutions:

They all include the following 8 principles:

  1. Clearly defined boundaries;
  2. Congruence between appropriation and provision rules and local conditions;
  3. Collective-choice arrangements;
  4. Monitoring;
  5. Graduated sanctions;
  6. Conflict-resolution mechanisms;
  7. Minimal recognition of rights to organize;
  8. Nested enterprises

The chapter provides detailed discussion based on reviewed cases for each principle of successful CPR control by community.

 CHAPTER 4 ANALYZING INSTITUTIONAL CHANGE

If chapter 3 analyzed existing long-term institution, this chapter is an analysis of the process of creation of such institutions. The case reviewed is CA water distribution between different areas. The analysis is conducted as multilayered review of different “games” played by participants in the process of setting up institution for control of appropriation of CPR of water:

The competitive pumping race: The setting, the logic of the water-rights game

The litigation game: The Raymond Basin negotiations; The West Basin negotiations; The Central Basin litigation; Conformance of parties to negotiated settlements; The entrepreneurship game: Reasons for forming a district to include both basins; Reasons against forming a district to include both basins; The polycentric public-enterprise game;

The totality of these games and their outcome led to establishment of robust institution that author believes would last for a long time.

The analysis of institutional supply: the supply of institution included creation of new private associations, extensive litigation, legislation and creation of new taxable entities. Overall these activities demanded very high allocation of resources for collection of information, development of detailed CPR knowledge, and complex negotiations.

Incremental, sequential, and self-transforming institutional change in a facilitative political regime: As result of analysis author stresses an incremental process of institution development within framework of self-rule facilitated but not fully controlled by political regime.

Reformulating the analysis of institutional change:

The result of analysis provides some rules of thumb for development of an institution such as need to ask two question at every step of development: 1. Is this action (outcome) required? 2. Is this action (outcome) forbidden? Finally author discusses difference between institution creation and institution change as two different types of activities requiring qualitatively different amounts of effort and resources.

CHAPTER 5 ANALYZING INSTITUTIONAL FAILURES AND FRAGILITIES

This chapter reviews a number of cases when CPR institutions failed.

Two Turkish inshore fisheries with continuing CPR problems; California groundwater basins with continuing CPR problems; A Sri Lankan fishery

Irrigation development projects in Sri Lanka; The fragility of Nova Scotian inshore fisheries;

Interestingly enough all reviewed cases of failure involved massive participation of government.

Lessons to be learned from comparing the cases in this study

Author divides causes of failure into 2 groups: faulty use of 8 design principles described in chapter 3 and situational and regime characteristics that effected capacity of individuals to change their institutions.

CHAPTER 6 A FRAMEWORK FOR ANALYSIS OF SELF-ORGANIZING AND

SELF-GOVERNING CPRs

Traditional models such as tragedy of commons, prisoners’ dilemma, and collective actions all are not applicable to reviewed real life cases. These models are not wrong, but they would work only in case when assumptions are fulfilled, which is not necessary case in real life. Based on reviewed cases author identifies specific rules for applied in successful use of CPR and develops framework for analysis of similar situations

The problems of supply, credible commitment, and mutual monitoring

The rules for CPR success are:

  • Defined set of appropriators of CPR
  • Rules are directly related to specific attributes of CPR
  • Rules designed by appropriators themselves
  • Individuals who are accountable to appropriators monitor compliance
  • Rules include predefined and graduated punitive sanctions

A framework for analyzing institutional choice: Evaluating benefits; evaluating costs; Evaluating shared norms and other opportunities; the process of institutional change; predicting institutional change

Author also provides a detailed framework for analyzing institutions for both types: constitutional choice and collective choice. The framework includes complex configuration of variables that should be included in order to achieve successful outcome.

A challenge to scholarship in the social sciences

Author identifies deficiency of typical analysis as use of rigid models that lead to predefined conclusion about necessity to increase centralization, often at expense of eliminating previously existing institution. The recommendation is to be more cautious with models and rely more on existing ideological and analytical framework of western civilization created by individuals like Hobbs, Hume, Adam Smith, American founding fathers, and other thinkers.

MY TAKE ON IT:

It is a very interesting book in which economist goes beyond simple ideas of tragedy of commons versus private ownership and proposes well justified and based on empirical research framework of cooperative management of CPRs based on voluntary participation. For me this is the key ingredient of not only economic, but also moral success because in this case coercion used minimally and only to enforce previously agreed upon rules. I also find this research extremely useful for future designers of institutions of cooperation for CPR use and maintenance that we’ll have to develop sometime in the future when dead end of society based on government coercion become obvious for majority and multitude of new institutions for voluntary cooperation will be required to substitute old non-working bureaucratic arrangements of contemporary world.


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