Who was Elinor Ostrom?

Elinor Ostrom was an American political scientist, economist, and Nobel Laureate in the field of Economics. She is best known for her work demonstrating that common property can be effectively managed by locals, which runs contrary to the commonly held belief in another theory, called the “Tragedy of Commons”.

Tragedy of the Commons

Tragedy of the Commons is an economic idea according to which when there is a common good (or commons), that cannot be privately owned or shared, and is scarce, consumers will compete with one another to consume as much of it to maximise their utility to the detriment of other consumers. The classic example is of a common grazing field and a community of shepherds. In this scenario, each shepherd will try to maximise their utility from the field by keeping on increasing the size of their herd even though it means that the field will get depleted quickly because of overgrazing and the field is left in poorer condition for other shepherds. It also means no shepherd bothers trying to replenish the field because it is not guaranteed that they will exclusively reap the benefits of it as they do not privately own it.

Eventually, the field is depleted to the point where it is no longer viable for grazing, leaving all the shepherds worse off, and therein lies the tragedy.

Ostrom’s Self Organized Model

Contrary to this, Ostrom’s work, inspired by her field research in Nepal, Maine, Indonesia and Kenya, suggests that local groups are capable of managing common goods (or Common Pool Resources, CPR) and avoiding the Tragedy of the Commons.

Ostrom showed that small communities with strong social networks are capable of developing bottom-up governance structures that come up with rules and incentives that ensure the consumption of these CPRs remains sustainable and economically efficient.

Ostrom outlined some rules or preconditions that must be satisfied for the Self Organized model to work;

1. It should be clear who is entitled to use the commons.

2. Rules should be appropriate for the local setting, in other words, there is no universal set of rules appropriate for all commons.

3. People who follow the rules should be part of making the rules.

4. The rules need to be implemented properly, and for that the commons need to be monitored.

5. There should be a graduation in the punishment for those who break the rules.

6. There should be easy access to mediation and conflict resolution.

7. The rules need to be recognised by the local authority, whoever that might be.

8. A common that is not entirely under the control of the local community may require broader cooperation between communities.

Legacy

Ostrom was recognised for her novel approach and ideas informed by her field studies, that flew contrary to conventional economic wisdom by becoming the first woman ever to be awarded the Nobel Prize in the field of economics. Her work at the World Bank saw her working to take a similar self-organised, bottom-up approach to address climate change.