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Excerpts from Elinor Ostrom

16-Jun-2010 [398]

• Excerpts from Nobel Prize-winning economist Elinor Ostrom's book, Governing the Commons

Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press, 1990.

p. 13-14: Analysts who find an empirical situation with a structure presumed to be a commons dilemma often call for the imposition of a solution by an external actor: The “only way” to solve a commons dilemma is by doing x....Instead of there being a single solution to a single problem, I argue that many solutions exist to cope with many different problems. Instead of presuming that optimal institutional solutions can be designed easily and imposed at low cost by external authorities, I argue that ‘getting the institutions right’ is a difficult, time-consuming, conflict-invoking process.

p.22: An assertion that central regulation is necessary tells us nothing about the way a central agency should be constituted, what authority it should have, how the limits on its authority should be maintained, how it will obtain information, or how its agents should be selected, motivated to do their work, and have their performances monitored or sanctioned.

p.29: The central question in this study is how a group of principals who are in an interdependent situation can organize and govern themselves to obtain joint benefits when all face temptations to free-ride, shirk, or otherwise act opportunistically. Parallel questions have to do with the combination of variables that will (1) increase the initial likelihood of self-organization, (2) enhance the capabilities of individuals to continue self-organized efforts over time, or (3) exceed the capacity of self-organization to solve common pool resources ["CPR"] problems without external assistance of some form.

p. 51: "Institutions" can be defined as the sets of working rules that are used to determine who is eligible to make decisions in some arena, what actions are allowed or constrained, what aggregation rules will be used, what procedures must be followed, what information must or must not be provided, and what payoffs will be assigned to individuals dependent on their actions (E.Ostrom, 1986a). Working rules are those actually used, monitored, and enforced when individuals make choices about the actions they will take (Commons, 1957). Enforcement may be undertaken by others directly involved, agents they hire, external enforcers, or any combination of these enforcers. One should not talk about a "rule" unless most people whose strategies are affected by it know of its existence and expect others to monitor behaviour and to sanction nonconformance. On other words, working rules are always monitored and enforced, to some extent at least, by those directly involved. In any repetitive situation, one can assume that individuals come to know, through experience, good approximations of the levels of monitoring and enforcing involved.

Working rules may or may not closely resemble the formal laws that are expressed in legislation, administrative regulations, and court decisions. Formal law obviously is a major source of working rules in many settings, particularly when conformance to them is actively monitored and sanctions for noncompliance are enforced. When one speaks about a system that is governed by a "rule of law," this expresses the idea that formal laws and working rules are closely aligned and that enforcers are held accountable to the rules as well as others. In many common pool resource setting, the working rules used by appropriators may differ considerably from legislative, administrative, or court regulations (Wade 1988). The difference between working rules and formal laws may involve no more than filling in the lacunae left in a general system of law. More radically, operational rules may assign de facto rights and duties that are contrary to the de jure rights and duties of a formal legal system. My primary focus in this study will be on the de facto rules actually used in CPR field settings, in an effort to understand the incentives and consequences they produce.

Governing the Commons

P. 90 Table 3.1 Design principles illustrated by long-enduring CPR institutions

1. Clearly defined boundaries Individuals or households who have rights to withdraw resource units from the CPR must be clearly defined, as must the boundaries of the CPR itself. [common property as opposed to “open access”]

2. Congruence between appropriation and provision rules and local conditions Appropriation rules restricting time, place, technology, and/or quantity of resource units are related to local conditions and to provision rules requiring labor, material, and/or money.

3. Collective-choice arrangements Most of the people affected by the rules can participate in modifying the operational rules.

4. Monitoring Monitors, who actively audit CPR conditions and appropriate behaviour, are accountable to the appropriators or are the appropriators.

5. Graduated sanctions Appropriators who violate the operational rules are likely to be assessed graduated sanctions (depending on the seriousness and context of the offense) by other appropriators, by officials accountable to these appropriators, or by both.

6. Conflict-resolution mechanisms Appropriators and their officials have rapid access to low-cost arenas to resolve conflicts among appropriators or between appropriators and officials.

7. Minimal recognition of rights to organize The rights of appropriators to devise their own institutions are not challenged by external government authorities.

For CPRs that are parts of larger systems: 8. Nested enterprises Appropriation, provision, monitoring, enforcement, conflict resolution, and governance activities are organized in multiple layers of nested enterprises.

California water

P.116 [The West Basin Water Association] provided a continuous open forum for discussion of al major steps taken in West Basin bvy producers And Representatives of various local, regional, and state public agencies. The resources of the association frequently were used to obtain and make available the best possible technical information about the basin. Extensive minutes were kept for all West Basin Water Association meetings as well as the meetings of the Executive Committee and most of the working committees of the association. Those files were open to all members, as well as to others interested in gaining information about past decisions, technical data, and studies of benefits and costs of alternatives. A weekly newsletter was dispatched to all members from 1946 through 1954. The motto of the newsletter, according to its editor, was “let there be no surprises, pleasant or unpleasant” (Fossette and Fossette, 1986, p.57). The practice of obtaining the best information available and disseminating it widely increased the degree of understanding and level of cooperation among the participants.

P. 125 Instead of perceiving itself as an active policing agency, the watermaster service tries to be a neutral, monitoring agency. Because anyone who possesses a legal water right can initiate a court action to enforce compliance to the judgments, the watermaster does not need to initiate punitive actions against nonconformers. As expressed by an official of the watermaster service in 1960,

It is our policy not to take any affirmative actions against any party since this would place us in the position of being an active party in the action. Our policy has been to inform the active parties of any infringement and leave affirmative action up to them. We want to gain as much voluntary cooperation as possible.

In the early years of the West Basin agreement, for example, the Moneta Water Company began to withdraw more than its allocation. After a couple of years, it was obvious that the overextractions were not accidental. In addition to listing Moneta’s withdrawals in the tabular material included in all the reports, the watermaster devoted several pages in an annual report top the recent activities of the company. The company began to comply with the judgment soon after the publication of those facts.

P. 128 The new Water replenishment District Act authorized citizens located in southern California to create a new district after they had (1) obtained signatures from at least 10% of the registered voters residing within the boundaries of the proposed district, (2) proposed specific limits on the taxing power of the new district, (3) received agreement from the Department of Water Resources that the area included within the boundaries of the new district would be benefited by inclusion, and (4) received a majority of positive votes in a special election held to consider the creation fo the new district. A district, once created, was given a wide diversity of powers to raise revenue through a pump tax and, to a limited extent, through a property tax and to undertake actions to replenish a groundwater basin.

p. 135 In addition to the public [replenishment] districts, private water associations remain active in each of the basins. Public officials are asked to make frequent reports to the regular meetings of the water associations. The water engineers of the private and municipal agencies who attend these meetings tend to ask tough questions and want reasoned answers. They have access to independent information about conditions and are not satisfied by stylized responses that provide little information. Many of the individuals who are elected to office in the public districts have been active in water associations for many years. Their tenure in public office tends to be long, and normally they are active in one or another public or private role for a quarter of a century. This brief sketch of the patterns of relationships among public enterprises illustrates how a governance system can evolve to remain largely in the public sector without being a central regulator. Aspects of both private and governmental activities are involved in all these basins. Some scholars have characterized the assignment of well-defined rights to the flow of a CPR as “privatization.” Given that the water rights held by water producers are no entirely separable from land and are well-defined, a market for water rights has evolved in each of these basins, and rights are actively transferred. But that is only part of the story. No one “owns” the basins themselves. The basins are managed by a polycentric set of limited-purpose governmental enterprises whose governance includes active participation by private water companies and voluntary producer associations. This system is neither centrally owned not centrally regulated.

P. 213 The oversight of local and state officials to ensure equitable solutions was an important factor in reaching those solutions. Given the heterogeneity of interests, the lack of accurate information about the groundwater basins, the large number of participants, the relatively high discount rates, the unwillingness of participants to rely on voluntary reciprocity, and the high transformation costs, it is highly doubtful that had these CPR appropriators faced an indifferent political regime they would have been able to supply new institutions to solve the difficult problems facing pumpers in Raymond, West, and Central basins. The failure of the Mojave pumpers to achieve similar success helps to illustrate that even given such a political regime, successful resolutions of difficult problems are not guaranteed.

p.156 Sri Lanka has an extensive system of income-redistribution policies that bring central officials into direct contact with citizens on a frequent basis. Even though Mawelle is a relatively isolated village, villagers find themselves having to seek permission from central authorities located in Hambantota for many aspects of daily life:

They must visit the District Revenue Office to obtain a rice ration book and the Police for a license to tap toddy. Chits to buy a variety of goods ranging from cement to extra food for a daughter’s wedding are issued by the Government Agent. The Fisheries Department controls the sale of fishing gear and engine parts, while a number of consumer staples including rice, condiments, textiles and kerosene are sold through state-run co-operative stores, In every case the villager is confronted by a shortage of goods, long slow-moving queues, and supercilious clerks. Yet despite the centralized control of goods and services, government agencies have few direct contacts with the village. [Alexander, 1982, p.31] …..The villagers’ own rotation system was codified in 1933, prior to the dramatic economic changes that would alter the incentives from all participants, and the villagers lost their right to change their own rules to adjust to the rapid change on the value of fish.

P. 164 Because of the general personnel structure for Sri Lankan public officials – and especially irrigation engineers – few incentives exist for Irrigation Department staff to devote much time and energy to an attempt to enhance the operation and maintenance of canal systems such as the Kirindi Oya project. Recruitment is based primarily on educational qualifications and passing scores on examinations. Promotion and advancement are based almost entirely on seniority, with little crossing-over between professional and non-professional ranks. Irrigation engineers strongly identify with the civil-engineering profession, in which esteem derives largely from designing and constructing public works, rather than operating and maintaining them. Engineers make more money when they are assigned to construction projects than they do when assigned to operating and maintenance duties.

P.176 The extension of Canadian authority [the 200-mile limit for offshore fishing] also led Canadian fishery planners to believe that they were then “in a position to ‘rationalize’ all aspects of the fishing industry including the inshore and processing sectors” (Matthews 1988, p.8).

P.177 [Re Newfoundland and Nova Scotia fisheries] Instead of finding means for strengthening locally evolved rules systems to ensure that access and use patters would continue to be controlled in those territories where effective rule systems had already been devised to match local environmental and technological systems, Canadian policy has been to develop one standard set of regulations for the entire coast…..Federal officials in Canada are not the only officials who have presumed the absence of local institutions for regulating CPRs and have taken actions that have either threatened or destroyed existing institutions.

P.182 In Chapter 1, I discussed three models that are used to justify the policy recommendation that external governmental authorities should impose solutions on individuals who jointly use CPRs: Hardin’s tragedy of the commons, the prisoner’s dilemma game, and Mancur Olson’s logic of collective action. All three models lead to the prediction that those using such resources will not cooperate so as to achieve collective benefits. Further, individuals are perceived as being trapped in a static situation, unable to change the rules affecting their incentives…..[p.183] The models described in Chapter 1 are not wrong. When conditions in the world approximate the conditions assumed in the models, observed behaviours and outcomes can be expected to approximate predicted behaviours and outcomes. When individuals who have high discount rates [??] and little mutual trust action independently, without the capacity to communicate, to enter into binding agreements, and to arrange for monitoring and enforcing mechanisms, they are not likely to choose beneficial strategies unless such strategies happen to be their dominant strategies. [??] …..Instead of being wrong, these are special models that utilize extreme assumptions rather than general theories. These models can successfully predict strategies and outcomes in fixed situations approximating the initial conditions of the models, but they cannot predict outside that range. They are useful for predicting behaviour in large-scale CPRs in which no one communicates, everyone acts independently, no attention is paid to the effect of one’s actions, and the costs of trying to change the structure of the situation are high. They are far less useful for characterizing the behaviour of appropriators in the small-scale CPRs that are the focus of this inquiry. In such situations, individuals repeatedly communicate and interact with one another in a localized physical setting. Thus, it is possible that they can learn whom to trust, what effects their actions will have on each other and on the CPR, and how to organize themselves to gain benefits and avoid harm. When individuals have lived in such situations for a substantial time and have developed shared norms and patterns of reciprocity, they possess social capital with which they can build institutional arrangements for resolving CPR dilemmas. When models that assume no communication and no capacity to change the rules are applied to the smaller-scale CPRs, they are applied out of their range. Applying models out of range can produce more harm than good. Public policies based on the notion that all CPR appropriators are helpless and must have rule imposed on them can destroy institutional capital that has been accumulated during years of experience in particular locations, as illustrated in the Nova Scotia fishery cases.

P.195 [Ideally (but rarely)] individuals do not behave opportunistically in order to try to obtain benefits greater than those obtainable through straightforward behaviour. This condition implies that individuals reveal their evaluations honestly, contribute to collective benefits whenever formulas exist for equitably assigning costs, and are willing to invest time and resources in finding solutions to joint problems.

P.210 Designing and adopting new institutions to solve CPR problems are difficult tasks, no matter how homogeneous the group, how well informed the members are about the conditions of their CPR, and how deeply ingrained are the general norms of reciprocity. Given the strong temptations to shirk, free-ride, and generally act opportunistically that usually are present when individuals face CPR problems, overcoming such problems can never be assured. No strong external pressures drive individuals toward positive solutions to such problems.

p.211 [in a situation where government is indifferent, CPRs will work best when] 1. Most appropriators share a common judgment that they will be harmed if they do not adopt an alternative rule. 2. Most appropriators will be affected in similar ways by the proposed rule changes 3. Most appropriators highly value the continuation of activities from this CPR; in other words, they have low discount rates…..

p.214 [In a situation where the regime is corrupt] It may be possible for local appropriators to create their own local institutions outside the legal framework. One would expect, however, that any set of local appropriators capable of accomplishing that difficult task would be very homogeneous, would have good information about their CPR and about the behaviour of their peers, would have very low discount rates, and generally would exhibit all of the desirable characteristics listed earlier in the extreme. A more probable result would be that experienced by the settlers in the Kirindi Oya irrigation system in Sri Lanka, where no one cooperated with anyone else, and all lived in a hydrologic nightmare.

p. 228 (endnotes) 29. The position of a cook seems strange, but at each of the major work seasons of the zanjera, all those working in the field are fed by the cooperative, which is one of the positive inducements used to encourage participation in the extremely difficult labor required by these systems. The cook is very important in this system!

30 I seriously doubt that the farmers would be willing to contribute this high a tax rate in monetary form, even if it were operating in a fully monetized economy. When a farmer contributes labour, he knows how the tax is being allocated, whether or not it is being used for the purpose for which it was levied. When a farmer contributes money, he may fear that it will be diverted to the pockets of bureaucrats or put to other uses beyond the purposes for which it was contributed. p.237 (endnotes) 47. All rules share a common syntax: Defined persons with particular attributes filling specific positions are (required, forbidden, or permitted) to take named actions under specified conditions.

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