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The Evolution of Institutions for Collective Action
By Elinor Ostrom
Cambridge University Press, 1990, 280 pages

This study looks at the problem of collectively managing shared resources. Because of the book's unassuming nature and rather formal scholarly tone, it's easy to pass it over as just another academic work. But together with such books as Herman Daly and John Cobb's For the Common Good, Paul Hawken's The Ecology of Commerce and Vandana Shiva's work on restoring the commons, I consider it one of the more far-sighted and genuinely significant works to emerge in recent years on environmental resource management.

Ostrom uses the term "common pool resources" to denote natural resources used by many individuals in common, such as fisheries, groundwater basins, and irrigation systems. Such resources have long been subject to overexploitation and misuse by individuals acting in their own best interests. Conventional solutions typically involve either centralized governmental regulation or privatization of the resource. But, according to Ostrom, there is a third approach to resolving the problem of the commons: the design of durable cooperative institutions that are organized and governed by the resource users themselves.

"The central question in this study," she writes, "is how a group of principals who are in an interdependent situation can organize and govern themselves to obtain continuing joint benefits when all face temptations to free-ride, shirk, or otherwise act opportunistically."

The heart of this study is an in-depth analysis of several long-standing and viable common property regimes, including Swiss grazing pastures, Japanese forests, and irrigation systems in Spain and the Philippines. Although Ostrom insists that each of these situations must be evaluated on its own terms, she delineates a set of eight "design principles" common to each of the cases. These include clearly defined boundaries, monitors who are either resource users or accountable to them, graduated sanctions, and mechanisms dominated by the users themselves to resolve conflicts and to alter the rules. The challenge, she observes, is to foster contingent self-commitment among the members: "I will commit myself to follow the set of rules we have devised in all instances except dire emergencies if the rest of those affected make a similar commitment and act accordingly."

This book is aimed chiefly at policy-makers, bureaucrats, and resource users, rather than scholars. Ostrom is concerned with the effective management of common property resources, rather than explanatory theories. Throughout the book, she stresses the dangers of overly generalized theories of collective action, particularly when used "metaphorically" as the foundation for public policy. The three dominant models — the tragedy of the commons, the prisoners's dilemma, and the logic of collective action — are all inadequate, she says, for they are based on the free-rider problem where individual, rational, resource users act against the best interest of the users collectively. These models are not necessarily wrong, Ostrom states, rather the conditions under which they hold are very particular. They apply only when the many, independently acting individuals involved have high discount rates and little mutual trust, no capacity to communicate or to enter into binding agreements, and when they do not arrange for monitoring and enforcing mechanisms to avoid overinvestment and overuse.

Ostrom concludes that "if this study does nothing more than shatter the convictions of many policy analysts that the only way to solve common pool resource problems is for external authorities to impose full private property rights or centralized regulation, it will have accomplished one major purpose."