The Commons: Tragedy or Triumph; B. Yandle

by Bruce Yandle I n the summer I watch ruby-throated hum mingbirds fly and hover near a feeder that my wife, Dot, carefully fills with nectar and hangs in view of our kitchen window. The store-bought nectar is colored red, since peo ple think that hummingbirds find that color attractive. Business around the feeder picks up fol lowing rains that wash away the birds' natu rally provided food. It is then that the feeder becomes crowded and a hummingbird strug gle ensues. Almost always, there is at least one bird that attempts to control access to the feeder-what naturalists sometimes call a dominant male. The dominant male seeking to maintain control will fly rapidly to the feeder, place his beak into the small openings for a quick draft of nectar, and then fly to a nearby perch where he vigilantly monitors the feeder. When other birds attempt to feed, he quickly tries to inter cept and force them away from the stock of sweet food. But while he engages in dogfights with one bird, another often swoops in and takes its fill.

The feeder is a commons, but not just for hummingbirds. Bees are attracted to it as well, Bruce Yandle is Alumni Distinguished Professor Economics at Clemson University and senior associ ate at PERC. This article is based on a paper pre sented at a November 1998 UCLA colloquium on Health, the Environment, and Development. Thefirst section is taken from his book Common Sense and Common Law for the Environment (Rowman & Lit tlefield Publishers). 30 and oddly enough, they can drive off the larg er hummingbirds. So even if the dominant bird is able to deflect competition from other members of the species, that is not enough to protect the nectar, and the defense itself is costly in energy burned. The feeder contents are never secure. Hummingbirds have no way to stake a claim to the feeder. So far as we can tell, hum mingbird communities have no constitution that reflects socially evolved rules for estab lishing a social order. Most likely, a long process of adaptation and selection has gener ated a hummingbird capable of living in a world where nourishment is a common-access resource, a commons. Hummingbirds live a life of flight, engaging in a constant search for nourishment to feed their high-energy lives and, at times, fighting for temporary control over valuable resources.

Human Commons We all know the tragedy of the commons story. Wonderfully written by Garrett Hardin in 1968, the highly stylized rendering is about a pasture devoid of rules, customs, or norms for sharing.! It is open to all comers. In this never-never-land, shepherds logically add sheep to their flocks as long as doing so adds an increment of gain for the particular flock. Uncoordinated in their effort, and unaware of the effects of their individual actions on oth ers, the unconcerned shepherds collectively destroy the pasture. What could be a story of plenty, if only the shepherds understood, turns into a story of poverty. The passive shepherds are like hummingbirds. As Hardin artistically puts it: "Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limitin a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in freedom of the commons."

Garrett Hardin's words beautifully bundle aspects of an endless human struggle to form communities, accumulate wealth, and improve well-being. With that phrase-tragedy of the commons-the essence of the challenge hits us squarely between the eyes: When there are no property rights-formal or informal-that limit use of a scarce natural resource, human action leads inevitably to untimely resource depletion and destruction. But people are not hummingbirds. People can build institutions that take the edge off frantic commons behavior. People have unwritten and written constitutions that help to establish social order. People can and do accumulate wealth. People communicate, invent lines of kinship, and develop customs, traditions, and rules of law that limit anti social behavior. People define, enforce, and trade property rights. People can and do avoid the tragedy of the commons. Indeed, instead of living with tragedies, people triumph over the commons. But the triumphs are never per fect or complete. There is always another commons to manage.

The Ascent of Man I wish to put forward the notion that encounters with the commons form the fun damental stimulus that yields, instead of tragedy, what we today call civilization. The ascent of man from a primitive existence with no wealth accumulation to life as we know it is fundamentally a story about triumph over, not tragedy of, the commons. Let me explain. Our very existence as human beings is defined by evolved institutions for avoiding tragedies. We have names, which serve the economic purpose of identifying us as parties to contracts and agreements. Those names, 31 first and last, form webs of communication that reduce the social cost of assigning responsibilities and liabilities. They enhance truth-telling and promise-keeping; they raise the cost of engaging in antisocial behavior. They limit a tragedy of the commons. We have abstract symbols of ownership deeds, titles, and contracts-that define spheres of autonomous behavior. We speak of our homes, our cars, our clothes, our families, and our pasture. Even language has evolved to provide a possessive form that accommodates triumph over the commons.

We write and observe contracts, wills, and marriage agreements that define relation ships, identify turf, and conserve wealth. We accept evolved bodies of law and law enforcement activities to assure the integrity of our agreements. We carry papers that enable us to acquire property, extinguish debt, cross borders, drive vehicles, and communi cate effectively with strangers. And we have locks, keys, walls, fences, brands, and encryp tion devices, all this in an effort to avoid a tragedy of the commons. Property rights define who we are and what we have. Property rights guard others from our unwanted advances and prevent us from contributing to a tragedy of their commons. Avoiding a tragedy of the commons is cost ly. The benefits must be large. How has it worked out? Mankind has tri umphed over the path to ruin on the com mons. Relative to that dewy time when nomadic tribes lived on the commons, we in the Western world live in a veritable Garden of Eden. The pastures are green. The sheep are fat. The clothes racks are full. Where property rights flourish, the choice of food is almost endless. We travel with ease to the four corners of the earth. We communicate elec tronically at practically no cost. Where is the tragedy of the commons?

The tragedy is found where for reasons hav ing to do with power, intolerance, or cost, human beings have not yet defined private property rights. Or, as we shall see, where evolvingproperty rights encouragedby man the institution builder have been destroyed. What was once a triumph can become a tragedy.

32 THE FREEMAN/IDEAS ON LIBERTY • APRIL 1999 Tragedies Observed and Avoided It is not difficult to find places where the institution builders have failed. Listen to the description of the situation of the world tiger population. "At the start of the twentieth cen tury, wild tigers were widely distributed throughout Asia, ranging as far west as Turkey, as far north and east as southeastern Russia, and as far south as the Indonesian islands of Java and Bali. There may have been as many as 40,000 tigers in India alone, and the total population may have numbered 100,000 animals. Today, the largest estimate is that the total number of wild tigers is between 4,800 and 7,300."2What explains the demise? The same author provides an answer: "Command and control prescriptions for sav ing the tiger have largely failed because the people who actually determine the destiny of wild tigers have few incentives to save them.

... We must convert live tigers from liabilities into assets." In short, property rights must be defined. How might that be done? Consider the description of elephant populations in Kenya and Zimbabwe: In Kenya "poaching has reduced the number of elephants from 65,000 to 19,000 over the last 10 years. To stop the killing, conservation groups . . . called for a ban on the trading of ivory. But the evidence strongly suggests that the ban will only accel erate the destruction of African elephants. In Zimbabwe . . . where ivory trading is legal, the elephant population has thrived, growing at a rate of five percent a year."3 Why? "In Zimbabwe the revenue from the tusks and hides and a portion of the money made from selling hunting permits go to nearby commu nities."4 In short, ordinary people on the ground have a property interest in the ele phants. They protect their assets. What about fisheries? How can we avoid a tragedy of the commons there? Long before the Europeans arrived on the scene in the Pacific Northwest, Native Americans had figured it out. Small tribes in what is now Washington State had salmon fishing rights.

Don Leal tells us that "in some cases, the tribe owned the rights; in others, families or individuals or a combination owned the rights."5 And what happened when the Europeans arrived? You guessed it. Leal tells the story this way: "Instead of recognizing the well defined and enforced fishing rights, the U.S. government allowed newcomers to place nets across the mouth of the Columbia. This quickly depleted salmon runs, so traps and weirs were banned-only to be replaced by purse seine boats powered by internal com bustion engines. The race to catch salmon moved to open waters. Ironically, from the country where private property is considered sacrosanct came a socialistic legal system dri ven by politics and military power."6 What had been private property was turned into a commons. What had been an institution builder triumph became a political tragedy. But how can property rights to fish in the high seas be defined? Consider the story of Michael Markels, president of Ocean Farm ing, Inc. Ocean Farming is in the business of fertilizing the seas to enhance the growth of phytoplankton, which in turn nourishes fish production. Based on actual experiments, Markels estimates that with continuous fertil ization about one thousand tons of catchable fish per square mile can be produced each year. "Therefore, 100,000 square miles offer tilized ocean should produce about 100 mil lion tons of fish per year, about equal to the current annual world fish production."? So what? Is this all hypothetical?

Ocean Farming has now entered into a con tract with the Republic of the Marshall Islands giving the firm an option on up to 800,000 square miles of deep ocean. "Once fish harvesting begins, Ocean Farming will pay RMI $3.75 per square mile of ocean optioned or 7 percent of the value of the catch, whichever is more."8 In effect, 800,000 square miles of the Pacific Ocean has now been privatized. Ocean Farming can charge other companies to fish the waters, and the firm has agreed to allow artisanal fishing to continue. Or consider the effort to conserve salmon made by Orri VigfUsson in his native Iceland. 9 Concerned about the systematic decline of the ocean salmon population in the face of rising Orri Vigfusson demand for salmon sport fishing, VigfUssonin 1989 formed the North Atlantic Salmon Fund. Fishermen in Icelandic waters owned quota or rights to fish for salmon. VigfUsson began purchasing those rights and retiring them. His organization now owns the rights to 4,000 metric tons of quota from the high seas, which represent 95 percent of the exiting quota. The result: the demise of the salmon is ended, highly profitable sport fishing is flourishing, and the tragedy of the commons has been avoided. Oddly enough, VigfUsson'sefforts to introduce a similar approach in New England, where unsuccessful efforts to restore wild salmon have been underway for 140 years, fell on deaf ears. Some might describe the New England situation as a tragedy of the commons. It is not. It is a tragedy of failed institution building.

Water and Air Pollution What about water and air? Can the institu tion builders help us avoid a tragedy of the commons for these unowned resources? The answer is clearly yes, they can help, but the solutions are never perfect. For centuries before anyone in the United States thought much about environmental quality, our common law defined and protect ed the environmental rights of ordinary peoTHE COMMONS: TRAGEDY OR TRIUMPH? 33 ple.tO Enforced by judges in courts across the land, common law protected the right of downstream property owners to receive water and air in undiminished quality for reasonable use. At common law, rivers could not be treat ed as open sewers if doing so imposed costs on downstream rightholders. Industrial plants could not blow smoke and emissions onto the land and property of ordinary people. The record is filled with cases, here and in Cana da, decided under English common-law tradi tions: where farmers sued industrial plants and won; where citizens of one state sued pol luters in another state, and won; and where common-law judges ordered polluters to clean up or shut down. There are also cases where this did not happen, where judges turned away from property-rights enforce ment and behaved as policy makers. But when the judges got it wrong, their decisions affect ed a small number of people, not an entire nation. This, of course, changed with the advent of legislation.

Prior to the passage of federal pollution control statutes, every major city in the Unit ed States had taken steps to define public property rights to air quality. Many states, including California, had taken a river-basin approach to the management of water quality, this in addition to the use of common law. Multi-state compacts were forming. By the 1960s, environmental quality was improving rapidly in many locations. The property rights institution builders were on their way to avoiding a tragedy of the commons. Common law was converting the commons to private property. This was changed with the passage of fed eral legislation that effectively nationalized air and water quality in the United States. What was becoming private property was made public property, almost a commons. The new system of command-and-control regula tion allowed polluters to operate legally if they had a permit. With permits in hand, new polluters could enter already crowded river basins. The new regime provided political access to industries and municipalities that hoped to postpone the day of reckoning in common law courts. Environmentalists ran interference, since they typically preferred 34 THE FREEMAN/IDEAS ON LIBERTY • APRIL 1999 political solutions to remedies based on prop erty rights, markets, and the rule of law. A tri umph on the commons was reversed. Tragedy once again reared its head.

On the frontispiece of Rachel Carson's epoch-making book, Silent Spring, one finds these words from Albert Schweitzer: "Man has lost his ability to foresee and forestall. He will end by destroying the earth." Such pessimism expressed by such an imminent and sensitive thinker gives us pause. What was Schweitzer thinking about when he uttered those words so many decades ago? And how is it that at least so far, his damning forecast has not come true? About a year ago, a colleague and I began an investigation of air and water quality for a sample of countries worldwide. 11 We gathered data on income, life expectancy, and property rights enforcement for 14 countries. Our results replicated previous work that showed a systematic relationship between improved environmental quality and incomes after a certain income threshold was passed. Our new finding was that where property-rights enforcement is stronger, environmental quali ty is better.

This work sheds light on mankind's strug gle to avoid the tragedy of the commons. It tells us that at very low levels of income, what might be called stage one, human beings can not afford to do much about property-rights enforcement and the commons. They live in a world where custom and tradition sustain them. As incomes rise and losses from the commons expand, stage two is entered. Fences go up, and rules are set for protecting the commons. Finally, in stage three, markets evolve along with rules of law that define spheres of private and public action. Private rights replace public control, and the triumph replaces the tragedy of the commons. Life for mankind began on a commons where tragedies were commonplace and the incentive to improve was powerful. Out of the struggle to survive and accumulate wealth evolved markets, property rights, and the rule of law-a triumph on the commons.

But just as bees compete with humming birds in the struggle to control access to nec tar, institution builders who seek to support markets and property rights compete with others who seek to redistribute wealth. Actions to redistribute wealth blunt the incen tive to protect property rights and create wealth. This converts triumph to tragedy. Human beings can and do avoid the tragedy of the commons. But doing so requires prop erty rights and markets, which must be defended if the triumph is to continue. D 1. Garrett Hardin, "The Tragedy ofthe Commons," Science (162) 1968, pp. 1243-48; it's available at http://www.cs.co10state.edu/ -heckendo/tragedy.html. 2. Michal t' Sas-Ro1fes, "Who Will Save the Tiger?" PERC Pol icy Series, PS-12, February 1998, p. 2. 3. Terry L. Anderson and Donald R. Leal, Free Market Envi ronmentalism (San Francisco: Pacific Research Institute, 1991), pp.67-68.

4. Ibid., p. 67. 5. Donald R. Leal, "Community-Run Fisheries: Avoiding the Tragedy of the Commons," PERC Policy Series, PS-7, September, 1996, p. 4. 6. Ibid. 7. Michael Marke1s, Jr., "Farming the Oceans: An Update," Reg ulation, Spring 1998, p. 10. 8. Ibid. 9. Orri VigfUsson, "How Markets Save Salmon," PERC Reports. September 1998, p. 9. 10. Roger E. Meiners and Bruce Yandle, "Common Law Envi ronmentalism," Public Choice (94), 1997, pp. 49-66. 11. Bruce Yandle and Xiang Dong Qin, Environmental Kuznets Curves, Property Rights and Learning" (Clemson, S.C.: Center for Policy & Legal Studies, 1998). We are helping FEE sell books over the Internet May We HelpYou? 3D RESEARCH http://fee.3dresearch.comweb@3dresearch.com (724)-776-7384 'Economics Second-Guessing the Market by John A. Sparks W e commonly think of people below the poverty line as the only beneficiaries of welfare. But poor families are not the sole recipients of government money. Some of America's largest and most successful compa nies get welfare checks just as certainly as do millions of single mothers. General Electric, GM, DuPont, IBM, and Armstrong World Industries are just a few of the firms that have garnered government grants provided through the Department of Commerce under some thing called ATP, Advanced Technology Pro gram. I The department has just approved another round of grants totaling $236 million for business-participants in 79 new research and development projects.2 The aim of ATP sounds laudable. It was created a decade ago to develop new techno logical ideas that could be used by u.s. busi nesses to make themselves more competitive on world markets. Under the program, firms file grant proposals with the National Institute of Standards and Technology (NIST), an arm of the Commerce Department. NIST selects the most promising proposals for federal money. Businesses winning grants must agree to risk some of their own money, usu ally an amount roughly equal to Uncle Sam's share.