A Century of Progress, Problems

• Author: Robert N. Stavins
• Position: Albert Pratt Professor of Business and Government at the John F. Kennedy School of Government, Harvard University, and Director of the Harvard Environmental Economics Program
• Pages: 16-16

Page 16 ❧ THE ENVIRONMENTAL FORUM Copyright © 2011, Environmental Law Institute®, Washington, D.C. www.eli.org.

Reprinted by permission from The Environmental Forum®, July/August 2011

By Robert N. Stavins

A Century of

Progress, Problems

As the f‌irst decade of the 21st cen-

tury comes to a close, the problem

of the commons is more important to

our lives — and more central to eco-

nomics — than a century ago when the

f‌irst issue of the American Economic Re-

view appeared, with an examination by

Professor Katharine Coman of Welles-

ley College of “Some Unsettled Prob-

lems of Irrigation.” Since that time, 100

years of remarkable economic progress

have accompanied 100 years of increas-

ingly challenging problems.

As the United States and other econ-

omies have grown, the carrying capac-

ity of the planet has become a greater

concern, particularly for common-

property and open-access resources. In

an article that appears in the 100th an-

niversary issue of the Review, I focus on

some important, unsettled problems of

the commons.

Within the realm of natural re-

sources, there are special challenges

associated with renewable resources,

which are frequently characterized by

open-access. An important example

is the degradation of f‌isheries. Critical

commons problems are also associated

with environmental quality, including

the ultimate commons problem of the

21st century, climate change.

Small communities frequently pro-

vide modes of oversight and methods

for policing their citizens, but as the

scale of society has grown, commons

problems have spread. In some of these

cases, no over-arching authority can of-

fer complete control, rendering com-

mons problems more severe.

Although the type of water alloca-

tion problems of concern to Coman

have frequently been addressed by

common-property regimes of collective

management, less easily governed prob-

lems of open access are associated with

air and water quality, hazardous waste,

species extinction, stratospheric ozone,

and the stability of the climate.

Economic theory — by focusing on

market failures linked with incomplete

systems of property rights — has made

major contributions to our understand-

ing of commons problems and the de-

velopment of prudent public policies.

As our understanding of the commons

has become more complex, the design

of economic policy instruments has

become more sophisticated, enabling

policymakers to address problems that

are characterized by uncertainty, spatial

and temporal heterogeneity, and long

duration.

But commons prob-

lems have not dimin-

ished. While some have

been addressed suc-

cessfully, others have

emerged that are more

important and more

dif‌f‌icult. Fortunately, environmental

economics is well positioned to of‌fer

better understanding and better policies

to address these ongoing challenges.

A century of economic growth and

globalization have brought unparal-

leled improvements in societal well-be-

ing, but also unprecedented challenges

to the carrying capacity of the planet.

What would have been in 1911 incon-

ceivable increases in income and popu-

lation have come about and have greatly

heightened pressures on the commons,

particularly where there has been open

access to it.

e stocks of a variety of renew-

able natural resources, including water,

forests, f‌isheries, and numerous other

species of plant and animal, have been

depleted below socially ef‌f‌icient levels,

principally because of poorly def‌ined

property rights regimes. Likewise, the

same market failures of open-access —

whether characterized as externalities or

public goods — have led to the degra-

dation of air and water quality, inap-

propriate disposal of hazardous waste,

depletion of stratospheric ozone, and

the accumulation of greenhouse gases.

Over this same century, econom-

ics has gradually come to focus more

and more attention on these commons

problems, f‌irst with regard to natural re-

sources, and more recently with regard

to environmental quality. Economic re-

search within academia and think tanks

has improved our understanding of the

causes and consequences of excessive

resource depletion and environmental

degradation, and thereby has helped

identify sensible policy solutions.

Conventional regulatory policies,

which have not accounted for eco-

nomic responses, have been excessively

costly, inef‌fective, or even counter-

productive. e problems behind what

Garrett Hardin characterized in 1968

as the “tragedy of the

commons” might bet-

ter be described as the

“failure of commons

regulation.” As our un-

derstanding of the com-

mons has become more

complex, the design of

economic policy instruments has be-

come more sophisticated.

Problems of the commons have

not diminished, and the lag between

understanding and action can be

long. While some commons prob-

lems have been addressed successful-

ly, others continue to emerge. Some,

such as the threat of global climate

change, are both more important

and more dif‌f‌icult than problems of

the past. Fortunately, economics is

well positioned to of‌fer better under-

standing and better policies to ad-

dress these ongoing challenges.

e problem of the

commons is more

important than 100

years ago

Ro ber t N . St avi ns is the Albert Pratt Profes-

sor of Business and Government at the John

F. Kennedy School of Government, Harvar d

University, and Dir ector of the Har vard En -

vironmental Economics Program. He can b e

reached at rob ert_stavins@har vard.edu.

A E P