ECON 102-E

Group 5
“The Tragedy of the Commons”

Final Outline:

1. Introduction (Kenneth)

A. Overview of “The Tragedy of the Commons”

2. Ice breaker Activity (Kenneth)

A. The Poker Game

3. Definition (Kenneth)

A. Goods

1. Characteristics of goods.

2. Types of goods

B. What is considered the “tragedy”?

C. What is considered the “commons”?

D. What are the conditions for tragedy of commons to occur?

E. What is tragedy of the common

4. History (Patriz)

A. William Forster Lloyd (first to conceptualize the economic theory)

B. The Tragedy of the Commons by Garrett Hardin

5. Examples in Filipino Setting (Nelson)

A. Shortage of Water Supply in Metro Manila (Angat Dam Case)

B. Traffic Congestion

C. Deforestation

D. Water Pollution

6. Counter measures/Solutions that helps prevent “tragedy of the commons” (Ruby)

 A. Governing the Commons: The Evolution of Institutions for Collective Action
by Elinor Ostrom
7. Summary (Patriz)
8. Conclusion (Kenneth)
9. Q&A (All reporters)

Group Members:
Amora, Ruby Lorelie
Caorte, Maria Patriz
Silawan, Nelson Anthony
Tillo, Kenneth

References:

Darmouth College. (2023). Social-Ecological Systems Meta-Analysis Database: Theory. Retrieved from
https://sesmad.dartmouth.edu/theories/54

Williams, J. (2018). Elinor Ostrom’s 8 rules for managing the commons. Retrieved from
https://earthbound.report/2018/01/15/elinor-ostroms-8-rules-for-managing-the-commons/

I. Introduction
A. Overview of “The Tragedy of the Commons”
● The tragedy of the commons is a problem in economics that occurs when
Individuals neglect the well-being of society in the pursuit of personal gain.
Discussion: Common resources are nonexcludable. Hence, it is available to
everyone. Consumers in an unregulated market do not have incentives in
consuming as much goods they want regardless of its cost to others. That is why,
for personal gain, they will consume too much of this good.
● Over-consumption and ultimately depletion of the common resource, to
everybody's detriment.
 Discussion: This concept is just the same as what was mentioned above.
Overconsumption is done because of personal gain and absence of
consideration of its effect on others. This action results in the depletion of goods,
which poses a great cost to society.
● For a tragedy of the commons to occur a resource must be scarce, rivalrous in
consumption, and non-excludable.
Discussion: Tragedy of the commons occurs when a certain goods has no
unlimited supply. Moreover, it must be a common good - meaning rivalrous in
consumption and non-excludable. These characteristics of goods will be much
explained later on.
● Solutions to the tragedy of the commons include the imposition of private
property rights, government regulation, or the development of a collective action
arrangement.
Discussion: Shown here are some of the solutions or interventions that can be
imposed to solve the concerns of the tragedy of the commons. This will also be
further discussed later on, and many other solutions will be explained.
II. Ice breaker Activity
A. The Poker Game
Instructions:
1. There will be at least one round in the game or as many rounds as the game
master desires.
2. Players will behave as though they are consumers of specific goods (chips).
3. A total of 15 chips will be placed at the center by the game master.
4. In each round, a player may or may not choose to pick chip(s) (note: each player
may only have a maximum of 3 chips).
5. Chips will be replenished in accordance with the amount taken after each round.

Explanation: The game is simply an illustration of what happens when there is an

overconsumption of common resources. When the players are rational, of course they
would maximize the maximum number of cheaps they are allowed to get, even if that is
not what they only need. If this event happens, the common resource that is supposed
will last in the long run will only be available otherwise. This is because this over
consumed good is slowly depleting.
III. Definition
A. Goods
are items that benefit the lives of those who consume them in some way.
1. Characteristics of goods
a. Rival goods
A rival good is a type of product or service that can only be
possessed or consumed by a single user. When a good is rival in
consumption, it may be subject to strong demand and fierce
competition—factors that tend to drive up prices (Investopedia,
2022).
b. Nonrival goods
Nonrival goods are defined as public goods that are consumed
by consumers but whose supply is unaffected by consumption. In
other words, when a person or group of individuals consumes an
item, the quantity of that commodity that is accessible for use by
others remains unaffected. Non-rivalrous goods can therefore be
used again without fear of running out of stock (Investopedia,
2022).
c. Excludable goods
An excludable good can be limited in terms of who can and
access the good. Excludability is generally on a scale. That is,
there are varying degrees to which the producer, owner, or
governing body of a good may selectively limit access to or
consumption of the goods.
d. Nonexcludable goods
Nonexcludable goods are goods that people cannot be excluded
from consuming, so that it is difficult or impossible to charge for its
use.
Free-rider problem - These refer to people who won't pay
for their own consumption since they have no incentive to
do so; instead, they'll "free ride" off of those who do.
2. Types of goods
 a. Private goods
Private goods are those whose ownership is restricted to
the group or individual that purchased the good for their own
consumption. A private good is not shared with anybody
else, but can be sold along with transferring rights to use or
consume it (Investopedia, 2022).
b. Artificially goods
Also known as club good or natural monopoly good is a
good that is virtually unlimited in terms of the quantity
available but those who do not belong to the club that
provides the good can be excluded from using the good
(Energy Education, n.d.).
c. Public goods
A public good is a good or service that is offered to all people in a
society. These services are typically provided by governments,
and taxes are used to cover all of their costs (Investopedia, 2022).
d. Common goods
A common good is non-excludable just like a public good which
means everyone has access to it. A common good, however, is
rivalrous. That means that when someone uses a common good,
it depletes the supply. A public good is non-rivalrous, which means
that an individual using it doesn't deplete it (Study.com, n.d.).
B. What is considered the “tragedy”?
Tragedy is an occurrence that results in significant harm, destruction, or struggle,
such as an unfortunate occurrence, unlawful activity, or natural disaster.
C. What is the Tragedy of the commons?
The tragedy of the commons is an economic problem in which every individual
has an incentive to consume a resource, but at the expense of every other
individual—with no way to exclude anyone from consuming (Investopedia Team,
2022).
D. What are the conditions for tragedy of commons to occur?
● Resource must be scarce
● Resource is rivalrous
● Resource is nonexcludable

IV. History
A. William Forster Lloyd (first to conceptualize the economic theory)
B. The Tragedy of the Commons by Garrett Hardin

Pat Script:

Basically, how did the tragedy of the commons, as a concept, was developed by these two
people and what did these two people have said about the concept “Tragedy of the Commons”
1. The Tragedy of the Common was first conceptualize in 1832 by the British Economist
William Foster Lloyd at Oxford University

2. However, the “Tragedy of the Common” as a concept became popular only after 130 years,
when Garret Hardin published an essay about it.

3. Garret Hardin is not an economist, but an American Ecologist. Most of his works are about
overpopulation; more on warning people about population growth.

4. That’s why, actually, his article is more of the environment aspect. Let us know how is that
after our discussion.

5. The “Tragedy of the Common” is like this:

a. Picture a pasture open to all

b. Since the resource is free for use by everyone

c. It is to be expected that herdsmen will try to keep as many cattle as possible

on the common; which is the pasture

Common-pool resources yield finite flows of benefits, where it is difficult and costly to
exclude potential users

In this case, the common-pool resource is the pasture, it is…

6. A. Every herdsman will seek to maximize their respective gain

b. he will ask himself "What is the utility to me of adding one more animal to my herd?", he may
came up with two components, one negative and one positive; that is:

i. the function of the increment of one animal: that herdsmen receives the
proceeds of selling one additional animal; which is the positive component, his utility could be
increased by positive 1 for every animal

ii. the negative component is the function of additional overgrazing created by

one more animal. HOWEVER, the effect of overgrazing are shared by all the herdsmen;
REMEMBER HA NA HINDI LANG SHA ANG HERDSMAN, BUT EVERY HERDSMAN
THINKING IS GANTO that is, if overgrazing (which one of the possible tragedy brought by this
could be erosion) happens, not only him will suffer, but all herdsmen who use that pasture

So, by adding one additional animal, his possible outcome could be a positive utility of 1 and a
negative utility of a fraction of 1; IT IS NOT 1 or near 1 since all of the herdsmen will suffer the
overgrazing.

7. Base from the component of partial utilities, it would be rational for the herdsmen to add
one animal. Eventually this will become 2, then 3, then 4, and so on.
8. This is where tragedy happens, if every person is driven by the idea that an additional use
of a resource increases his or her utility.

9. Eventually, ruin is our destination

"fouling our own nest," so long as we behave only as independent, rational,free-enterprisers

10. Hardin regarded this as unlimited wants in an unlimited world

11. Basically, that is how Gardin present a visualization of the concept

12. In the remaining part of his essay, he already talked about the solution to the tragedy.

13. In the remaining part, it is very observable that he is an ecologist since most of what he said
are regarding the overpopulation, and that as the main factor to the tragedy of the commons.

14. Further, he also explained about another example of a tragedy of the commons (btw, one
reporter will discuss more examples, but in general, not from Hardin’s)

15. So, yes, Hardin also commented that the problem of ToTC reappers in pollution. But in this
case, the issue is not the “taking out something” from the common.

16. Rather, putting something in

17. For example, dangerous fumes into the air, distracting and unpleasant advertising signs
into the line of sight, waste into water

18. However, the same utility calculation as before; that is, “his share of the cost of the wastes
he discharges into the commons is less than the cost of purifying his wastes before releasing
them.”

"fouling our own nest," so long as we behave only as independent, rational,free-enterprisers

19. Hardin also presented some solutions to the problem (which by the way another reporter
will discuss more of the “solution” but in general knowledge, not just from Hardin’s

20. He presented some solutions such as taxation, privatizing properties,

21. But his main take on the most effective solution is to lesser the breeding; that is to cut out
the exponential increase of overpopulation.

22. He even argued that the problem of pollution, can yes be solve by letting the environment
purifies itself. But that is only possible to happen if the world is hundred of years less older,
that is; if the population is not that dense.

23. Eventually he ends his essay by concluding that

“the commons, if justifiable at all, is justifiable only under conditions of low-population density.
As the human population has increased, the commons has had to be abandoned in one aspect
after another.”

24. So, yes, his take on the main solution of the tragedy of the commons is to cut out population
breeding.

V. Examples in Filipino Setting

Concept of maximum sustainable yield yield & resource depletion

Resource Depletion occurs when the renewable and non-renewable natural resources
become scarce because they are consumed faster than they can recover. The term resource
depletion is commonly associated with water usage, fossil fuel consumption, trees and fishing.
The maximum sustainable yield (MSY) is defined as the largest yield one can harvest
from the resource over an indefinite period.

A. Shortage of Water Supply in Metro Manila (Angat Dam Case)

The National Capital Region uses a large amount of water, more than the cities’ water
suppliers can handle. In 2018, the 1,600 million litre per day (MLD) supply from Ipo
Watershed coursed through Manila Water was exceeded, with usage rates continuing to
increase. The first quarter saw usage reach 1,650 MLD, with the remaining 50 MLD
being sourced from La Mesa Dam. In total, Ipo Dam can supply approximately 4,000
MLD not accounting for water inefficiency, but the supply might not be enough, with
Metro Manila’s population slated to exceed 20 million by 2020.

Discussion: Ma coconsider na tragedy of the commons ang water shortage kasi merong
scarce ng common goods/resource which is ang water. Ang tragedy sa situation is nagkaroon
ng water shortage and ang commons is ang water. Reason for that is ang mga tao for their
personal interest or gain, sometimes ang oover consume ng water like 3-5 baldi ng water,
imagine ilang tao ang nag oover consumption without thinking the consequences sa future,
aabot talaga sa time na magkaroon ng tragedy of the commons in which ang lahat ng tao ay
mag suffer dahil sa personal na kagustuhan ng iilang mga tao.

B. Traffic congestion
Traffic congestion is one of the best-known modern examples of the tragedy of the
commons. As more people decide that roads and highways are the fastest way to travel
to work, more cars end up on the roads, ultimately slowing down traffic and polluting the
air.

Discussion: Ma coconsider na tragedy of the commons ang traffic congestion kasi, for
personal interest or gain ay sumasakay sila ng kotse siguro dahil very convenient sa
kanila and air-conditioned pa kaya di na nila naisipan mag commute, in which ang mga
kotse sa isang traffic ay nag aaccumulate sa carbon emission na nagsasanhi ng air
pollution. Dahil sa kagustuhan na sumakay sa kotse, ang lahat ng tao ay magdudusa sa
air pollution in which ma coconsider natin as tragedy of the commons.

C. Deforestation
 D. Water Pollution
As the number of households and companies increase and dump their waste into the
water, the water loses its ability to clean itself. This results in water that is toxic to wildlife
and the people that live around and rely on it.

Discussion: Very common na masyado ang water pollution as an example of tragedy of

the commons. Bakit nga ba ma coconsider ito na tragedy of the commons? Ang tragedy
sa situation is ang water pollution at ang commons naman is the water. Dahil sa
kagustuhan na magtapon na lang ng basura sa mga anyong tubig siguro dahil tinamad
magtapon sa basurahan, ang nangyayari halos lahat na ng mga tao ang nagdudusa
dahil sa mga irresponsible na mga tao.

Additional information: Actually madami pa na mga situation ang ma coconsider na tragedy of

the commons. Basta ma reach ito na condition na occurs when Individuals neglect the
well-being of society in the pursuit of personal gain and over-consumption and ultimately
depletion of the common resource, to everybody's detriment, ma coconsider na natin na tragedy
of the commons.

VI. Counter measures/Solutions that helps prevent “tragedy of the commons”

There are three fundamental ways to induce people who use common resources to internalize
the costs they impose on others. (Krugman, 2009)

■ Tax or otherwise regulate the use of the common resource

- use of a common resource can be reduced to the efficient quantity by imposing a
Pigouvian tax.
Pigovian taxes
- means of coping with a negative externality
■ Create a system of tradable licenses for the right to use the common resource
- The policy maker issues the number of licenses that corresponds to the efficient level of
use of the good.
- Making the licenses tradable assures that the right to use the good is allocated
efficiently—that is, those who end up using the good (those willing to pay the most for a
license) are those who gain the most from its use.
■ Make the common resource excludable and assign property rights to some individuals
- The essence of ownership of a good—the property right over the good—is that you can
limit who can and cannot use the good, and how much of it can be used.

Elinor Ostrom’s 8 rules for governing the commons

1. Commons need to have clearly defined boundaries
- who is entitled to access to what?
a. Actor group boundary clarity
- Clear boundaries between users and non-users ensures that users
receive the benefits of cooperating, and limits pressure on a commons.
b. Commons boundaries
- Clear resource boundaries helps to enable a common understanding of
what is being governed, and what the consequences of resource
extraction are.
2. Rules should fit local circumstances
- There is no one-size-fits-all approach to common resource management. Rules should
be dictated by local people and local ecological needs.
a. Social-ecological fit
- a fit between social and ecological conditions is important to ensure that the
physical particularities of a commons are taken into account in the development
of the institutional arrangements that govern its use
b. Proportionality (of costs and benefits)
 - when benefits received are proportional to costs incurred, users have a sense of
fairness that motivates them to cooperate with each other
3. Participation in rule making
- collective-choice arrangements that guarantee some level of political participation enable
users to adapt rules to local circumstances, and ensure a certain level of buy-in to the
resulting institutional arrangements
4. Commons must be monitored
- Once rules have been set, communities need a way of checking that people are keeping
them. Commons don’t run on good will, but on accountability.
a. Self monitoring
- Self-monitoring is important to ensure that some users don't cheat excessively
and overuse a commons
b. Environmental monitoring
- Environmental monitoring is important to ensure that institutional arrangements
can adapt to changing commons conditions
5. Self Sanctions
- Graduated self-sanctions are needed to deter rule-breaking without diminishing social
capital with excessive punishment
6. Conflict resolution
- Conflict resolution mechanisms are needed to resolve differences over rule-breaking so
that a community can move forward in a way that is considered fair and acceptable by
those involved
7. External recognition
- In nested systems, it is important that governmental bodies allow local resource users to
design their own institutions. This helps ensure that their is local buy-in to these
institutions, and that they are appropriate suited for the local environment.
8. Multiple levels
- In large, complex systems, it is seen as important for communal institutions to be nested
within a set of larger-scale institutional arrangements

Tragedy of the WATER DEFORESTATI Traffic WATER SUPPLY

Common POLLUTION ON Congestion SHORTAGE

Solution Tradable Imposing private Actor group Top-down

licenses property rights boundary clarity government
regulation
Environmental Commons
Self Sanctions
monitoring boundaries Multiple levels

Environmental Proportionality (of

monitoring costs and benefits)
VII. Summary

VIII. Conclusion

IX. Q&A