Environment International

Climate Change and the Tragedy of the Commons

To what extent is climate change a result of the “Tragedy of the Commons” and how best might governments mitigate this problem?

William Foster Lloyd coined the term the ‘Tragedy of the Commons’ in 1833. His hypothetical situation envisaged a shared resource gradually depleted by human actions, solely for their own interest. In particular, Lloyd used the example of ‘The Commons’ which is an area of land shared by local communities to graze their cattle. If each herdsman acted according to their rational self-interest, then this would result in over-grazing by the community and the deterioration of the land they relied on. In short, contrary to the dictum of Adam Smith (who thought that by giving everyone freedom to produce and exchange goods as they pleased, that those people’s natural self-interest would ultimately promote greater prosperity), people following their own self-interest can result in situations that are detrimental to their individual and collective welfare. This scenario, where people following their own self interest results in negative effects for all, can also be applied to climate change.

Although the original example of this tragedy (overgrazing of cattle) is dated, its principle can be easily applied today, due to the growing and developing global population which is depleting the earth’s natural resources. There are many examples of this, such as de-forestation (which has a huge effect on our environment), animal species extinction, and what is probably the most important, as Jouni Paavola also says, climate change. Governments, companies and individuals, with their desire for profit, have been exploiting resources such as fossil fuels, which contribute to global warming, from a common-pool resource (Earth), for short term economic gain – just as the herdsmen did on the Commons. This mirrors the thoughts of Robert McLachlan that self-interest would result in the depletion of freely available shared resources, causing increasing carbon dioxide emissions. In doing so, these governments, companies and individuals have failed to understand the consequences of their actions on our shared environment.

During the 25 years between 1990 and 2015, global annual carbon emissions have risen by around 60%. This is largely the result of over-consumption by the wealthy few. According to Oxfam, during the last 25 years, the richest 1% of the global population have been responsible for more than twice as much emissions as the poorest 3.1 billion people. In this example the 1% acted solely in their own self-interest, just like the herdsmen, using more than their fair share and causing the depletion of Earth’s natural resources for short-term economic benefit but also significant external harms. Robert McLachlan discusses how self-interest will deplete a freely available shared resource, against each of the parties’ long term interest thus showing how there is an inextricable link between overconsumption leading to climate change as a result of the Tragedy of the Commons.

The question, therefore, is how to tackle this. There are a number of different ways that Governments might address this, and Gissurarson explains what we can learn from Iceland and New Zealand who have managed to overcome similar ‘Tragedy of the Commons’ situations. Regulatory frameworks can be useful – however, to be most effective, these should be international in nature, as with the example of the Paris Agreement. In short, to a large extent, climate change is a result of the “Tragedy of the Commons”, but this can be tackled in a variety of ways, most important of which is international regulations.

Elinor Ostrom argued that privatisation wasn’t the answer for fair management of resources, but that people & communities must create their own laws and institutions that will actually allow for the sustainable and equitable management of resources. Gissurarson explains how Iceland and New Zealand found a solution to the “Tragedy of the Commons’ in the fishing industry giving us a useful insight in to how best approach our climate crisis. Large parts of the ocean have become a wilderness, with little of it cultivated or sensibly managed. The Sunken Billions, estimates that economic losses in marine fisheries resulting from poor management, inefficiencies, and overfishing add up to at least $50 billion a year.

In the 1980’s Iceland and New Zealand applied what is now regarded as one of the best solutions to the Tragedy of the Commons: a system of individual transferable quotas (‘ITQ’s) for fishing rights. Without regulation, companies would seek to maximise profit, resulting in too many boats and the over exploitation of the ocean. In Iceland and New Zealand this was eventually achieved by restricting the rights to harvest fish to those who had already assumed the risk of investing and running the fisheries by buying their quota. Each fisherman would have the right to harvest a certain proportion of the total allowable catch. Those who wanted to exit the industry could do so by selling their quota. The end result was that the number of boats was reduced to the point where there would be the most profit for the allowable quota, without exploiting the ocean.

Robert McLachlan also discusses what governments can do to prevent such problems emerging more frequently. He explains how these issues can be approached in four steps of increasing effectiveness: compensating for the damage; ameliorating that which is damaged; preventing the damage to be occurred; and systematically changing the mode and process of problem solving or redefining the problem in a new way.

Examples of these four steps include replacing fossil fuel infrastructure with new green infrastructure, or introducing international treaties like the Paris Agreement, in order to limit and reduce global CO2 emissions. At a national level, governments can do a lot to mitigate the problem through taxes & incentives. For example by increasing tax on diesel cars and  by making electric vehicles less expensive to run, or by encouraging the use of only renewable energy in homes, they can reduce our carbon footprint.

The UN says that ‘domestic regulations’ are essential, and by introducing them like they did in New Zealand and Iceland, they could stop the over exploitation of resources.  Carbon taxes on large companies that contribute significantly to global warming will accelerate the process of their investing in new technology, increasing the use of alternative green sources of energy. Carbon trading schemes (ETS) can also be a cost-effective way of reducing emissions. These serve as market driven schemes to discourage pollution, and to allow polluters to easily and efficiently contribute to environmentally friendly projects in compensation for the pollution that they cause. These work by governments setting allowances or permits for each unit of emissions; companies that do not have enough permits would either have to cut back on their emissions or buy more permits, at additional expense. Research has shown that this system has helped to drive innovation in low-carbon technologies. The European Union Emissions Trading System, which limits more than 11,000 heavy users of energy, ensures that carbon emissions decline by 2.2% a year from 2021.

The Tragedy of the Commons results in humans over-extracting resources from the Earth, maximising their own individual utility at the expense of the collective welfare. The result is that it takes the earth 1.75 years to remove our annual emissions resulting in the accumulation of a carbon debt and ultimately leading to the total depletion of the world’s resources. The high rates of climate change cannot be blamed entirely on ‘the Tragedy of the Commons’, but the ‘tragedy’ is culpable to a large extent. There are grounds for optimism, however, as shown by government action in Iceland and New Zealand. Their experience shows that domestic and international regulations can and have helped align individual and collective interest to mitigate the problems of climate change and must continue to do so.

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