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The Tragedy of the Commons: Definition & Examples

Written by Paul Boyce Posted in Microeconomics
Last Updated March 2, 2023

What is the Tragedy of the Commons

The tragedy of the commons is where shared resources are over-exploited because each individual is following their own self-interest. If each individual takes only a limited quantity, there would be enough for everyone. However, due to the self-interest of the individual, they over-exploit the resource and leave nothing left for anyone, hence the tragedy.

The original theory of the tragedy of the commons comes from an essay written in 1833 by British economist, William Forster Lloyd. He highlighted the effects of unregulated grazing on common land. American philosopher, Garrett Hardin, followed up on Lloyd’s work, coining the term ‘tragedy of the commons’ in his 1968 publication in the Science journal.

Key Points

A tragedy of the commons occurs when individuals pursuing their own self-interest deplete a resource, thereby leaving nothing left for the rest of society or themselves.
The tragedy of the commons is characterised by resources that are available to everyone (non-excludable), and its quantity declines the more its used (rivalrous).
Solutions to the tragedy of the commons include – collective agreements, property rights, and government regulation.

The term ‘commons’ distinctly refers to shared resources. So the likes of the atmosphere, oceans, rivers, fish stock, and farmland. The tragedy of the commons occurs when these resources are not regulated to prevent their full exploitation.

The tragedy occurs because each individual, following their own self-interest, takes more than is sustainable. In turn, the overexploitation of the resource leaves nothing left for anyone. This is best explained with an example.

There are 100 fish in the lake and four fishermen who use the lake. The lake itself is the ‘common’ resource, which local residents share, but has no regulation. Whilst sharing the lake, four fishermen notice other residents catching fish. Driven by their self-interest, they want to catch as many fish as possible in order to prevent the others from catching them all. They know that if the other residents catch enough fish, there will be none left for themselves. So in a viscous cycle, each fisherman tries to catch as many as possible, with each catching 25 fish a piece.

What happens as a result of the mad rush to beat one another to the resources, is that there are none left. There are no fish left to reproduce, so the lake becomes a barren and empty resource. As a result, all fishermen lose out in the long term.

The Tragedy of the Commons Explained

The tragedy of the commons occurs when individuals act in their own interest, expecting others to also do the same. When there is a resource available, each party expects the other to fully exploit that resource. So in their own self-interest and with the expectation that others will exploit the resource, all parties extract the full potential of the resource.

The reason why people exploit these resources is a combination of three factors – scarcity, rivalry, and non-excludability. These are also known as ‘common goods’. They are rivalrous in the fact that as people consume more, the less there is for others. Examples include fish stock, timber, coal, and other natural resources. Yet they are also non-excludable, which means everyone in society has access to those resources.

“The tragedy of the commons occurs when people exploit natural resources for their own self-interest”

Goods that are both rivalrous and are non-excludable, are prone to creating the tragedy of the commons. This is because they are limited in quantity, so each consumer maximises their consumption before others deplete the resource – thereby creating a tragedy. At the same time, because they are non-excludable, everyone in society has access, thereby creating a heightened sense of urgency to extrapolate as much from the resource before anyone else.

Tragedy of the Commons Solutions

1. Collective Responsibility

One solution to the tragedy of the commons is for all individuals to come together and decide collectively to limit their consumption. By agreeing a set amount to consume per person, it adjusts people’s expectations of one another. So instead of expecting each other to take as much as possible, they know only a limited quantity will be taken per person.

The main problem with this solution is that it involves a significant amount of trust in others. After all, there is nothing to stop one rogue citizen from taking all the resources. This is why this solution is more suited to communities in small villages or towns whereby there is a sense of collectiveness.

2. Privatisation or Private Ownership

When private entities own the land, lake, forest, or other ‘common resource’, they have a direct incentive to maintain its supply. It would go against their own self-interest to completely deplete the lake of all the fish. If they did so, there would be none left to sell in the future.

By granting private entities property rights, it secures their incentive to maintain the resource. This is because they directly benefit from it, so will spend capital on maintaining it and ensuring its longevity. For example, private foresters have an incentive to plant new seedlings, control weeds, prevent wildfires, and prevent deer eating the tree saplings.

Without private ownership, there is nobody who would be able and willing to go through all that time and effort. As a result, wildfires become common, deer eat the seedlings, and the forest exploited. The tragedy that occurs is deforestation and destruction of a sustainable source of wood.

3. Government Regulation

Another solution is to use law and enforcement to restrict the overuse of a common good. For instance, the EU issues quotas on the amount fishers can catch. There are also other rules that restrict the type of fish that can be caught. For example, fishers must return some species of endangered fish to the sea. If such laws are not adhered to, it can result in criminal sentences and large fines.

Hardin recommended regulation which was ‘mutual coercion, mutually agreed upon’. So solutions such as permits allow private entities to come together and agree to restrict themselves. In a way, this is similar to collective responsibility, but on a larger and more coercive scale. It particularly works better when the populations are larger and it becomes more difficult to arrange a voluntary arrangement between individuals.

Tragedy of the Commons Examples

The tragedy of the commons occurs when individuals pursuing their own self-interest deplete a resource, meaning that it is no longer available to anyone – leading to a tragedy.

Air Pollution

The air we breathe is available to everyone. It is non-excludable by its very nature. Everyone has access to air, but not everyone has access to clean air. So when we look at clean air itself – it is limited in quantity. That means the more one individual pollutes, the less clean the air is for everyone else. Which brings us onto the tragedy of the commons.

If one company is releasing 100 tonnes of C02 into the atmosphere, then why would another restrict its own pollution? After all, it will cost it more to install a more environmentally friendly supply chain. Therefore, companies may elect to do what is most economically effective – driven in part by competition.

The tragedy is that there is no longer clean air for everyone. Yet there are potential solutions. One of which is a ‘pollution tax’, so companies will face a tax based on how much pollution they emit. Whilst another solution is to provide each company with a quota.

Deforestation

Leading on from air pollution, deforestation not only destroys natural wildlife and the sustainability of the forest, but can also affect the atmosphere. As trees naturally take in C02, their destruction has a negative effect on the wider carbon emissions in the atmosphere.

The tragedy of deforestation lies in the fact that private entities have plundered common forests and, in some cases, turned it into farmland. In fact, this is a particular problem in Brazil, which faces constant destruction to its Amazonian rainforest. Even though deforestation of the Amazon is illegal, it still occurs due to its vast and unpoliceable size.

Fishing

Whether it’s in the sea, or in a lake – overfishing can lead to a depletion of the resource, meaning there is none left for anyone else. That not only means none for humans, but also other animals in the food chain. So overfishing salmon and tuna may have an eventual impact on animals such as sharks, seals, and polar bears.

This is a particular problem in the sea where policing is difficult, and there is no real clear boundary line of what one country owns and what is a ‘free-for-all’.

Traffic Jams

Public roads are a common good as everybody has access to them, yet they can be made largely unavailable due to congestion. The tragedy occurs in the fact that so many people cram into the road in order to get to their destination. Not only does traffic result, but the potential for an accident increases (the more cars, the more likely one of them hits one another).

Due to the limited capacity of some roads, and the high level of demand, workers waste hours in traffic – let alone the psychological stress it does to some.

Littering

Whether it’s in the oceans, on the street, or in a public park – littering creates a toxic environment. This is not only for people, but also for fish and other animals. The hazardous chemicals left in the litter can pollute not only soil but also the water as the toxins leak out. In turn, those can enter the food chain and cause significant ill-health.

The tragedy lies in the fact that the world around us is free and accessible, but the quality of our water, soil, and supply system is limited. As there is no real meaningful consequence of littering, people have only their conscience that stops them from littering. It is much easier to drop a chocolate wrapper than find the nearest bin.

Poaching

Animals such as white elephants and rhinos are endangered species, yet they are in high demand for their tusks and horns. In the wild, there is nothing to stop poachers from tracking and finding such animals. And although there are rangers to protect them in some cases, over 600 have been shot down between 2009 and 2016.

The tragedy, in this case, is that driven by their interest in ivory, the ‘resource’ is fully depleted – meaning elephants go extinct and there is no longer a supply of ivory left.

FAQs on Tragedy of the Commons

What causes tragedy of the commons?

The tragedy of the commons is caused by individuals following their own self-interest, expecting others to also do the same.

What are some good examples of tragedy of the commons?

Examples of the tragedy of the commons include: air pollution, deforestation, fishing, traffic jams, littering, and poaching.

What is tragedy of the commons?

The tragedy of the commons is where common goods such as lakes or forests are depleted as individuals follow their self-interest and extract the full use of the resource. In turn, rivers are left without fish, and forests are left without trees – leaving nothing for future consumption.

About Paul

Paul Boyce is an economics editor with over 10 years experience in the industry. Currently working as a consultant within the financial services sector, Paul is the CEO and chief editor of BoyceWire. He has written publications for FEE, the Mises Institute, and many others.