Through recorded history, there have been many occasions when states and communities have exceeded the boundaries of resources available to them, often with dramatic consequences. Exhaustion of food supply and resultant famine has been, at times, one of the great drivers of social change and in some cases civilisational collapse, for example. At no time throughout history has there been such pressure on resources as at present, however. The increasing population and demand for goods and services has led to pressure on nearly all of our fundamental resources, from soil to forests to fresh water.
At the heart of this problem is that for much of the world, these basic resources are not owned by any individual or corporate entity; they are termed a ‘public good’. Paying to preserve such goods comes at a cost for any individual, either person or state; and other individuals can benefit from others paying for preservation at no cost. Thus a rational individual has no incentive to preserve such resources.
A clear statement of the problem is laid out in a paper by the economist Garrett Hardin, published in Science magazine in 1968, titled “The Tragedy of the Commons”. Hardin describes a simple scenario, where farmers graze their cattle upon a shared pasture. The pasture can only contain a certain number of cows, but an individual herder knows that by including more cows than their ‘fair share’, they can obtain a greater marginal benefit, while the penalty of overuse is shared amongst all of the other farmers (and thus the farmer gains more than is lost, even as the other farmers suffer). Thus, the rational choice for all farmers is to increase their own herd “without limit” – and thus all will suffer from total overgrazing and possible collapse of the pasture ecosystem.
This is a well known problem, and while some have pointed out that there are aspects of the theoretical model that don’t always fit with reality, it has become an important complication for policy-makers to deal with at many levels. Politically, it is often incumbent upon a government to police these shared resources and punish those taking more than their fair share, to ensure that the rational choice is to only take the fair share. Unsurprisingly, government wielding power to punish those taking more than their fair share is often associated with a left-wing position, and can clash with prevailing neoliberal economic paradigms; as a result, such laws are often highly controversial.
Are there other ways to prevent resource exhaustion without government intervention? A key part of these questions, that I feel is perhaps increasingly relevant today, is the availability of information for decision makers within this process. On a long-term basis, the farmer definitely wants to avoid the pasture being stripped bare, but in the scenario described above, there isn’t sufficient information to gauge how taking more than a fair share will influence the outcome. Let’s break this down.
– The farmer knows the value of adding one more cow to the herd, and more broadly we could describe this as ‘the cheaters’ benefit’. In cases where resources are stretched, this is likely to be the best known factor – at least for the individual. If instead of cows we think of fresh water, each individual company or person could put some value on the benefit they’d get from an extra amount.
– How many farmers are involved? This is also likely well known, but it is an important value so that we can estimate what a fair share is.
– How many cows can the pasture sustainably feed? This is called the ‘carrying capacity’, and here we’re beginning to find pieces of the puzzle that are not so well known. Perhaps for a pasture this could be clear, but what if instead we’re talking about a mineral like iron ore? How much is available, and how many applications can it support? Or what about fresh water? What amount of water can we use that doesn’t deplete the stock we have? These questions are certainly fraught, and research to find the answers has contributed greatly to the sustainability goals laid out by the UN.
– What is the penalty for overuse? This is shared amongst all the herders, but each individual must build it into the calculation for how much they will lose. This factor might increase non-linearly with an increase in overuse, and could worsen with time. The worst outcome is a total depletion of the resource, but over what timescale does this arise? A total collapse of the pasture would mean no benefit at all for any cows – and thus the predicted losses would be infinite.
– How do each of these factors affect one another, and how do they change over time? The long term cost-benefit analysis of the choice to take an unfair amount necessarily has to incorporate these changes.
Naturally, scientific research could help us fill in these gaps and allow each stakeholder to make a better decision as to the cost-benefit analysis, particularly on long time scales. Since we’re talking about the availability of information, it’s important to note that making such research open access would certainly be a huge help in such situations.
Let’s say that the farmer now has the information I’ve described above. What choice should they make now about how many cows to add to the field? A rational decision may still encourage some cheating, depending on how long a timeline they are interested in. At a long timescale, any overuse of a resource leads to benefit dropping to zero (and as such losses become theoretically infinite) but if they’re only interested in a ‘short-term-buck’ then perhaps some cheating might still be rational.
There’s a big component of the calculation the farmer is still missing, however. Each herder doesn’t know what the others are going to do (in economic terms, this means the information is still ‘imperfect’). What if you knew whether every other farmer was planning on cheating, or is already cheating? How would this change your calculation?
From a simplistic viewpoint, one could argue that “because my neighbour is cheating, I should cheat too, to avoid falling behind them”. But how does this play in a game theory perspective? At some point in time, the penalty for cheating becomes intolerable for some or all participants, and fair play becomes the better option. If you know that everyone else is cheating, and you know that cheating will only serve to make you worse off (let’s say you know one more cow will mean that the pasture will be stripped bare within a year), then fair play is the only good option left for you.
This scenario is perhaps too prosaic to be helpful at this point; a real example will better illustrate the issues at stake. The rate at which the seas are rising as a result of climate change can be considered to be a ‘public good’ of this sort, since nobody owns the whole ocean and ice-caps, but carbon emissions from all actors will affect it. Each individual country produces a certain quantity of emissions that to some degree will affect the rate at which the sea level changes. Landlocked countries may not see the short term penalty of this, and as such their rational action (at least in the context of sea level change) may be to continue to emit high levels of carbon.
For a low-lying coastal state, the maths is very different, of course – a reduced emissions regime is the only rational choice they can make, regardless of what others do, to prevent total inundation by rising seas. To be able to make these decisions today, these countries rely on knowledge of what other states are planning or are currently attempting; in the case of carbon emissions, these data are available and relatively reliable, but for other under-risk resources such information may be lacking; and as such, overuse may proliferate.
Laying out questions of sustainability in such stark, economic terms may either be old news to some researchers, or totally miss the human side of these environmental issues for other advocates. The point, for me, though, is to highlight the importance of increased information for the individual systems (drawing somewhat on my interest in informational asymmetry and open access research) as a potential motivator to decrease resource overuse. This doesn’t require state intervention (other than perhaps to fund the research itself) and doesn’t necessarily call for a change in moral codes; it’s simply that in the context of game theory, moving closer to perfect information can affect the rational choice made by a self-interested actor.
Improving the availability of information is a widely prevailing trend at present, too. Open access research is becoming more and more significant in academia, while Google have made vast quantities of data free to the public (and more importantly easily accessible). Moreover, some might suggest that Blockchain-type technology could offer a trustworthy way to account for emissions and fair usage between multiple parties using a shared resource (i.e. a Blockchain ledger of who is using a fair amount and who isn’t – that key final bit of information). In combination, these potential trends could help address the broader issue of usage of common-pool resources. Using insights from the psychology of delayed gratification we might also look for ways to more effectively weigh our cost-benefit in favour of future generations; doing so might give us a fighting chance of attaining sustainability goals that may otherwise be out of reach.