TCS Daily

Commons Problems

By John Baden - December 14, 2007 12:00 AM

I recently read that a Japanese whaling fleet is heading toward Antarctica to kill humpback whales, a species "protected" since the 1960s. This took me back in time.

When I was a grad student at Indiana University, nearly 40 years ago, I met the ecologist Garrett Hardin at an AAAS meeting in Chicago. Garrett had recently written "The Tragedy of the Commons." This article, published in Science, became a classic; reprinted hundreds, probably thousands of times.

In it, Garrett explained the logic of overexploiting common pool resources‹things of value that are available to all who have the will and means to exploit them. Garrett became a friend and we produced a book, Managing the Commons, which remained in print for 20 years. It explored ways to address and preclude the tragedy he described. We employed the logic of economics to deal with the ecological problems he anticipated.

We are all familiar with such examples as bison on the plains and beaver in the Rockies during the early and mid 1800s. The logic of the tragedy of the commons also accounts for the problems of "open range" grazing. With neither regulations nor owners to protect these valuable resources, folks hunted them to near extinction or grazed them beyond carrying capacity. An identical fate befell whales in the 1800s. These species were saved by the discovery and development of petroleum as a substitute for whale oil.

The logic was formalized by Scott Gordon of Indiana University in his 1954 article "The Economic Theory of a Common-Property Resource: The Fishery." He used an open access fishery to illustrate the logic of over harvest. The take home lesson is simple: commercial fishing will increase until search and harvest costs equal the value of the harvest to the fisherman. He has little or no incentive to take into account the effects of his effort on the catch of others or, indeed, the breeding population. If he doesn't catch the fish, someone else will.

As fish become scarce, their price rises and there is increased incentive to fish beyond a level that can be sustained. As a result, the population is driven toward extinction. This is occurring in ocean fisheries where 90 percent of the commercial species are in deep trouble. This exemplifies the tragedy toward which we are relentlessly heading.

Our problem of excessive production of CO2 due to human activity is logically identical. It (presumptively) overwhelms the Earth's capacity to absorb CO2 without massive disruptions.

Fortunately, people are smart and see overexploitation as an institutional failure; the incentives governing behavior are perverse. It is commonly, indeed normally, fixed when dealing with terrestrial critters. That's why traditional peoples developed culturally enforced rules to control harvests and why we have state fish and game commissions. Establishing institutions to manage the world's oceans, groundwater, and CO2 in the atmosphere, however, is far more difficult.

How can the current Japanese whaling excursion help us understand this difficulty? The Japanese fleet has embarked on the largest whaling expedition targeting protected humpbacks since the 1960s. In a farewell ceremony, officials told a crowd that Japan should preserve "its whale-eating culture." This is in spite of strong international objections, even outrage. This demonstrates the weakness of moral sanctions when dealing with environmental problems that transcend national borders.

Prohibiting the harvest of whales in international waters is a remarkably simple problem compared with that of limiting CO2 emissions. In both cases the problem involves self-interest versus the interest of all. Japan is one of the world's richest nations, its citizens among the most materially privileged. Eating whale meat is a choice made by culture rather than out of necessity. Yet, moral sanctions and international prohibitions have failed to make them stop.

This is suggestive of the problems of limiting CO2 emissions. While Japan may have the remnants of a whale meat culture, we surely have a high-tech, big house, driving culture. In this context, I see but two feasible, enforceable responses; technological breakthroughs and a high carbon tax to encourage their adoption.

The logic of the commons leads to this. I'm open to other suggestions.



Do you want new medicines??
>once a drug has been developed -- especially one that combats a life-threatening illness -- why should we permit pharmaceutical companies to charge anything above the marginal cost of the pills they make?

1. So that they have incentive to stay in business! So they they have incentive to pour their own billions into research! So they they exist in the first place!

2. A little teeny weeny consideration called right to property.

If you don't believe that number one is all that important, consider this. Canada, which uses "mild regulation" to curbe the "insane" profits that pharmaceuticals can make; produces less than 10% per capita of the drugs made in America. They produce less than 1% of the world's pharamceuticals despite being among the richest nations in the industrialized world.

Also note that yes, government funds a lot of the basic reseach, in large part argubly because they fund public universities and universities are where basic research often gets done - not because private institutions are never interested in basic research; but in any case, this basic research does not magically translate into medicines. If it did, Canada would be producing most of the world's new medicines. After all, they do spend a lot on erucation.

Consider this:

Of the money in public-private partnerships, often most comes from private side.

* In 2000/2001 the WHO had a budget of US$ 958 million of which US$ 100 million came from the industry and 300 US$ million from foundations. In many fields WHO’s own funds seem very small compared to the money provided by the industry. For example, in the period 1998/99 the WHO had only some US$ 29 million at its disposal for its control programme concerning tropical diseases (TDR), and for its tuberculosis programme it only had a budget of US$ 7 million. In comparison to this, Pfizer supported the International Trachom Initiative (ITI) with US$ 60 million over 2 years, and Bristol-Meyers Squibb donated 100 US$ million to the AIDS programme “Save the Future”. The Global Alliance on Vaccines and Immunization (GAVI) has a volume of more than 1 US$ billion, with the lion’s share of US$ 750 million coming from the Bill & Melinda Gates Foundation. Also for the Global Fund fighting against AIDS, malaria and tuberculosis the Bill & Melinda Gates Foundation promised to participate for the amount of US$ 100 million.

* In 2004, research-based pharmaceutical companies spent a total of $49 bil discovering new medicines while NIH only spent only $28 billion total.

* NIH itself reported in 2001 that only 4 of 47 big-selling medicines received significant research aid from government in process of discovery.

Private funds poured into research grow each year, and while government can be given credit for helping basic research, they do very little to spur invention and discovery in the world of applied medicine research, drug discovery, medical devices and instruments or any filed not popular on the university campus.

A vital free market is the only answer to curing disease.

>>Yet while the commons movement raises important questions, its proposed solution of restoring the commons by chipping away at private property rights goes too far and likely is unnecessary.

Where does a silly movement like this come from? Sounds like another form of collectivism wrapped in "scholarly" clothes.

I thought that we settled the issue of private property over 300 years ago.


Because they own it.
Why does anybody have the right to charge what they do? Because it belongs to them.

They could charge you $100 for an aspirin if they wanted too. The thing is that they would not sell very many aspirin would they? No one has the RIGHT to anything that does not belong to them. Reversely you have the Right to sell anything you own for what ever you like.

This is the bases of our economic system.

Until Kelo
"No one has the RIGHT to anything that does not belong to them" least until Kelo v. New London came to pass.

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