2.7 Unregulated use of resources can lead to a “Tragedy of the Commons”

Economists have argued that businesspeople pursuing their own self-interest would do what was best for society and the environment. But, in his classic 1968 environmental essay “Tragedy of the Commons,” ecologist Garrett Hardin disputed this view. He argued that unregulated use of a common resource would lead inevitably to its ruin.

Imagine a pasture available for community use—in other words, an open-access property on which everyone in a community is free to graze cattle and cannot exclude anyone else. They all seek to maximize the number of cattle they graze on the commons and by doing so maximize their own profits; for each head of cattle an individual farmer adds to the commons, he or she reaps all the profit of eventually selling the animal. So each farmer will graze as many cattle as possible on the property to maximize his or her own profits.

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What are some potential environmental consequences of viewing the environment as outside or “external” to the economy?

Adding cattle will damage the commons by reducing plant cover, increasing soil erosion, and decreasing future productivity of the grazing land. What are the costs to the individual farmer of damaging the land? Since all the farmers in the community share the costs of overgrazing, the cost to each one of them is only a fraction of the total cost. Therefore, in this situation, profit exceeds costs, so it is profitable for each individual farmer to add to his or her herd. Eventually, the productivity of the pasture is severely reduced and no one benefits (Figure 2.21). Hardin thus concluded in his essay that “freedom in a commons brings ruin to all.”

GARRETT HARDIN’S SCENARIO LEADING TO A TRAGEDY OF THE COMMONS
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FIGURE 2.21 Hardin proposed that a common-pool resource, such as grazing lands open to all, would be ruined ultimately as individual users attempt to maximize their profits. The results of such unregulated use might appear like the scene in this photo, showing a severely overgrazed pasture.
(Peter Essick/Aurora)

common-pool resource A resource owned and utilized in common by a community (e.g., a community forest or grazing land).

Hardin extended the logic of his analysis to the use of many other so-called common-pool resources, including rangelands in the western United States (Chapter 7), marine fisheries (Chapter 8), and water and air into which industries discharge pollutants (Chapter 13). In each of these situations, unrestricted use of a community resource leads to a market failure causing environmental harm. These represent some of the greatest challenges to environmental policy in the 21st century.

Think About It

  1. What are some assumptions of Hardin’s Tragedy of the Commons argument?

  2. What are some possible scenarios that would avert a Tragedy of the Commons without governmental intervention?

2.5–2.7 Issues: Summary

Human economies sit at the top of the energy pyramid and grow by tapping into natural ecosystems and Earth’s resources. Because economic systems are subject to the same physical laws governing ecosystems, they require inputs of energy and matter in order to keep functioning. Traditional closed economic models include no interactions between the economic system and the environment. The environment is included in open economic models, in which the economic system exchanges energy and materials with the environment. However, in these open models, the environment has been historically represented as “external” to the economic system.

Keeping potential environmental harm external to the economic system fails to account fully for the potential costs of economic activity. In his “Tragedy of the Commons” article, Garrett Hardin argued that unregulated use of a common resource would lead inevitably to its ruin.