# Understanding the Tragedy of the Commons in Economics: Causes and Solutions

## What Is the Tragedy of the Commons?

The tragedy of the commons unfolds when individuals prioritize personal gain over community welfare, depleting shared resources like water and land. Without exclusive claims to these resources, people exploit them, leading to underinvestment and eventual depletion. This economic theory, introduced by Garrett Hardin, warns of societal harm from unregulated consumption and highlights overpopulation as a historical example. Understanding its causes and solutions can guide more sustainable resource management.

### Key Takeaways

*   The tragedy of the commons describes an economic problem where individuals overuse a shared resource, depleting it at the expense of society.  
    
*   Common resources, like land and water, lack exclusive ownership, which often leads to overconsumption and resource depletion.  
    
*   Garrett Hardin highlighted the tragedy of the commons using historical examples of overgrazed land and depletion of shared resources.  
    
*   Key solutions include government regulation, private property rights, and collective management to prevent overuse and sustain resources.  
    
*   Historical instances, such as the extinction of the dodo bird and the collapse of the Grand Banks cod fishery, illustrate the impact of unmanaged common resources.

![Tragedy of the Commons](https://www.investopedia.com/thmb/ZmAwGL9dxTuDsxAZzyq8dnPaRZw=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/tragedy-of-the-commons-c807f6c516ca4a729896ab5e8b17154f.jpg)

*— Investopedia / Julie Bang*

## Understanding the Economic Theory Behind the Tragedy of the Commons

The tragedy of the commons is an economic theory claiming that individuals tend to exploit shared [resources](https://www.investopedia.com/terms/c/common-resource.asp) so that demand outweighs supply, and it becomes unavailable for the whole.

In 1968 evolutionary biologist Garrett Hardin published "The Tragedy of the Commons" in the peer-reviewed journal _Science_, which addressed the growing concern of overpopulation. Hardin used an example of sheep grazing land, taken from the early English economist William Forster Lloyd.

Grazing lands that are held as private property are prudently used by the landholder to preserve the land and the health of the herd. Common grazing lands become over-saturated with livestock because the food the animals consume is shared among all sheepherders. Hardin equated his point to humans who over-consume the commonly accessible scarce resource, making it harder to find.

## The Role of Supply and Demand in the Tragedy of the Commons

The tragedy of the commons occurs when an economic good is [rivalrous](https://www.investopedia.com/terms/r/rival_good.asp) in consumption, non-excludable, scarce, and a [common-pool resource](https://www.investopedia.com/terms/c/common-pool.asp). Each consumer consumes as much as they can as fast as they can before others deplete the good, and no one has the incentive to reinvest in maintaining or reproducing the good.

*   Rival good: A rival good is one that only one person can consume and cannot be shared. All consumers are rivals competing for that unit, and each person’s consumption subtracts from the total supply of the good.
*   Non-excludable: A good is non-excludable when individual consumers are unable to prevent others from also consuming it.
*   Scarce: The good must be [scarce](https://www.investopedia.com/terms/s/scarcity.asp) since a non-scarce good cannot be rivalrous in consumption.
*   Common-pool resource: A common-pool resource functions as a hybrid between a public and private good because it is shared and available to everyone but also scarce, with a finite [supply](https://www.investopedia.com/terms/s/supply.asp). 

## Strategies to Prevent the Tragedy of the Commons

Institutions and technology influence how resources are shared and protected. Societies create rules for using resources and penalize overuse.

### How Regulations Can Mitigate the Tragedy of the Commons

Government rules and investments in resource conservation can stop overuse and keep resources available. Government regulation can limit how many cattle may graze on government lands or issue fish catch quotas.

Giving individuals ownership rights can turn a shared resource into a [private good](https://www.investopedia.com/terms/p/private-good.asp#:~:text=Private%20goods%20are%20those%20whose,to%20use%20or%20consume%20it.). Technologically it may mean developing a way to identify, measure, and mark units or parcels of the common pool resource into private holdings, such as branding cattle.

William Forster Lloyd argued for this around the time of the English Parliament’s Enclosure Acts, which stripped traditional common property arrangements to grazing lands and fields and divided the land into private holdings.

### Collective Approaches to Overcoming the Tragedy of the Commons

Economist [Elinor Ostrom](https://www.investopedia.com/terms/e/elinor-ostrom.asp) supported traditional rules where villagers and lords shared and managed grazing lands. Practices such as crop rotation, seasonal grazing, and enforceable sanctions against overuse and abuse of the resource meant collective action arrangements readily overcame the tragedy of the commons.

> **Fast Fact**
>
> Elinor Ostrom was the first woman, and one of just two women, to win the Nobel prize in economics.

[Collective action is used](https://www.investopedia.com/terms/f/freeganism.asp) where technical or natural physical challenges prevent the division of a common-pool resource into small private parcels by instead relying on measures to address the good’s rivalry in consumption by regulating consumption.

## Has the Tragedy of the Commons Led to Extinction of a Resource?

The extinction of the dodo bird is a historical example of the tragedy of the commons. An easy-to-hunt, flightless bird native to only a few small islands, the dodo was a source of meat for sailors traveling the southern Indian Ocean. Due to overhunting, the dodo was driven to extinction less than a century after its discovery by Dutch sailors in 1598.

## Where Is the Tragedy of the Commons Evident in Industry?

Before the 1960s, the Grand Banks fishery off the coast of Newfoundland was abundant with codfish because the fishery supported all the cod fishing they could do with existing fishing technology while reproducing itself each year through the natural spawning cycle. However, advancements in fishing technology made it so fisherfolk could catch massive amounts of codfish unsupportable with natural replenishment. With no framework of property rights or institutional common regulation, the entire industry collapsed by 1990.

## How Is the Tragedy of the Commons Handled When Different Nations Share Resources?

Within individual countries, governments at the local level can manage shared resources with clear boundaries. At the international level, rules regarding shared resources are difficult to enforce across jurisdictions. When resources cannot be divided, international law regarding shared resources is essentially voluntary, according to the economist Scott Barrett at Columbia University. 

## The Bottom Line

The tragedy of the commons highlights the detrimental effects of individual self-interest on collective resources, leading to overconsumption and depletion. Common resources, like water or land, are rivalrous in consumption, non-excludable, and scarce, making them vulnerable to overuse. To mitigate this issue, regulatory solutions like government intervention and private property rights, as well as collective action, are crucial. Understanding the tragedy of the commons can help guide effective resource management and conservation strategies.

> **Article Sources**
>
> 1.  Scientific American. "[The Tragedy of the Tragedy of the Commons](https://blogs.scientificamerican.com/voices/the-tragedy-of-the-tragedy-of-the-commons/)."
>     
> 2.  American Association for the Advancement of Science. "[The Tragedy of the Commons](https://science.sciencemag.org/content/162/3859/1243)."
>     
> 3.  The Nobel Prize. "[Elinor Ostrom—Facts](https://www.nobelprize.org/prizes/economic-sciences/2009/ostrom/facts/)."
>     
> 4.  Panorama. "[How Humanity First Killed Dodo, Then Lost It as Well](https://m.theindependentbd.com/arcprint/details/40404/2016-04-12)."
>     
> 5.  National Park Service. "[The Grand Banks: Where Have All the Cod Gone?](https://www.nps.gov/common/uploads/teachers/lessonplans/Overfishing--The-Grand-Banks-Collapse-pdf.pdf)"
>     
> 6.  Earth.org. "[What Is the Tragedy of the Commons](https://earth.org/what-is-tragedy-of-the-commons/)?"