Governing the Commons: The Evolution of Institutions for Collective Action

Governing the Commons: The Evolution of Institutions for Collective Action (1990) is a work of nonfiction on the governance of commons by Elinor Ostrom. Ostrom examines The Flaws of Collective Action Theories when applied to small-scale common pool resource (CPR) problems. After using case studies to demonstrate the failure of such theories, she presents The Conditions for Successfully Managing Common Pool Resources and emphasizes The Importance of Understanding Institutional Change. Ostrom has a PhD in political science. In 2009, she received the Nobel Prize in Economic Sciences for this work and her subsequent research in this area.

This guide refers to the 2015 Cambridge University Press paperback edition.

Summary

Ostrom explains that academics tend to use three models of collective action to explain why individuals are incapable of governing natural resources or goods themselves. She argues that these three theories—the tragedy of the commons, the prisoner’s dilemma, and the logic of collective action—use a simplistic form of rational choice theory in which individuals opt to maximize short-term self-interests. All three theories assume that individuals do not communicate with one another and lack motivation to organize to protect a resource. These theories question why individuals should work to protect a common good when they could take a free ride and let others do such work. They also posit that without external intervention, the natural resource will be depleted. As a result, they prescribe either privatization of the resource or central governmental regulation of it. 

Focusing on small-scale CPRs, which have between 50 and 15,000 users or appropriators who take from the resource, Ostrom provides examples of the users themselves successfully managing the resource. With this empirical evidence, she argues for the inapplicability of collective action theories to small-scale CPRs.

Relying on case studies, Ostrom draws upon new institutionalism and biological empiricism to analyze the findings. She starts with detailed observations of each case, just as biologists examine specimens. Her specimens are CPR situations, which she defines as resource systems that at least 50 people economically depend upon. These CPR situations are large enough to make it costly, but not impossible, to exclude people from obtaining benefits from it. New institutionalism pays close attention to the details of organizational rules and emphasizes how slight changes in such rules influence incentive structures. The details can spell the difference between successful and unsuccessful management of a CPR.

Examining long-standing CPRs that were successfully managed by their participants, Ostrom searches for common factors. Her case studies are all contained within one country, but they are varied and include the study of common lands in Switzerland and Japan and irrigations systems in Spain and the Philippines. The cases, which include more than one CPR in each country, are of small communities. After detailing the cases, she finds seven design principles common to all the successful cases. First, all have clearly defined boundaries and stipulate those with the right to withdraw from the CPR. Second, appropriation or withdrawal rules are related to local conditions. Third, most of those affected by the rules can participate in changing those rules. Fourth, either the appropriators themselves or those answerable to them monitor compliance. Fifth, there is a series of graduated sanctions for offenders, with first offenses given minor penalties. Sixth, there is access to low-cost arenas to settle any disputes. Seventh, external governments do not challenge the rights of appropriators to create their own institutions. 

For more complex CPRs, Ostrom adds an eighth principle of nesting. When nested, there are multiple layers of governance, but local participants have representation in the regional and national layers. To be sure that these principles are only found in successful cases, Ostrom examines unsuccessful CPRs. She includes studies from two Turkish inshore fisheries; a Sri Lankan fishery; San Bernardino, California, groundwater basins; and irrigation development projects in Sri Lanka. In all these cases, more than one of these design principles was missing. 

Since all the successful cases are at least 100 years old, Ostrom selects other cases to understand how successful management structures for CPRs are formed. Specifically, she examines the management of groundwater basins in Los Angeles County, California. In the 1940s and 1950s, these important resources for the storage and use of water were threatened by prevailing practices. There were conflicts about water rights, which violated her first design principle. However, the city of Pasadena initiated a lawsuit against other users of the Raymond Basin. The filing of this lawsuit had major ramifications. The judge ordered an independent study of the resource. That study provided all the users with unequivocal proof that the amounts of withdrawals from the resource exceeded its safe yield. This information caused 30 of the 32 users to agree among themselves to cutbacks. 

A lawsuit over the West Basin had a similar effect. In that case, an agreement was reached among users because they feared more drastic cutbacks from a judicial decision. Another basin, the Central Basin, benefited from the precedents set in these two cases, and the users came to an agreement. Ultimately, the West and Central Basins created a combined governable entity that was managed by two private associations and public agencies. That resolution disproves the assumption of reigning theories of collective action that posit only one of two resolutions, either public or private control. Instead, many of the successful cases rely on a mix of private and public solutions.

From these cases, Ostrom explains how the users of a CPR create institutional change. While traditional theories posit a choice between inaction and wholesale change, she observes that change occurs incrementally. Once the lawsuit over the water basin was filed, the incentive structure for participants changed, and they were willing to take another step toward organization. The lawsuit additionally furnished them with information that they did not previously have. Ostrom believes that for change to occur, the most important factor is that the users of the resource believe that they will be harmed without some change. Next in importance, the users must all be similarly impacted by the rules. The users must also highly value the resource and value future benefits from it. 

Next, the costs of information, change, and enforcement must be reasonably low. Users must share norms. Lastly, their numbers must be small and stable. These factors account for understanding such changes when the external government is neutral. If the external government seeks to impose its own rules, it is less likely that changes will be made. External governments can alternatively play a helpful role, as California’s did, by providing public arenas, such as courts, to resolve conflicts.

Ostrom therefore argues for the inadequacy of collective action theories to explain the management of successful CPRs. She offers a new theoretical model for scholars to test on additional cases.