Millennium Post

A tragedy of the Commons

Overconsumption of public goods coupled with under-investment in management and conservation of the same highlight a grave policy challenge that is yet to be appropriately addressed

A tragedy of the Commons

In these Columns last year, I had argued that there are three crises facing the world today viz., the economic/financial crisis, the climate change crisis and the trade crisis. These were in the nature of global 'commons' and had arisen because of the undersupply of global public goods. It was therefore, heartening to note that the recent issue of The Economist (September 14 to 20, 2019) invoked Elinor Ostrom, the Nobel Prize Winner in Economics in 2009, and argued that common property management could be an efficient alternative to privatisation and nationalisation of public resources (Full disclosure: The Late Elinor Ostrom was one of my Doctoral Thesis Advisors).

Indeed, this debate over the best way to manage public resources resonates with many of the public policy challenges faced by developing countries in general and India in particular. The instances where public resources have been subjected to overconsumption are many – road space, river water, clean air, groundwater, fisheries, forest and even electromagnetic spectrum. In India, the issue of water (river water and groundwater) is serious enough to have prompted the creation of a new Ministry (Jal Shakti Ministry). This is because the public good dilemma plays out starkly in the case of water, where there is an overconsumption of public resources but less than the desired investment in management and conserving the resources. We will briefly discuss these dilemmas in three areas viz., water, air and forest. In the latter part of the article, we will attempt to provide possible ways to address the issues arising out of these public policy dilemmas.

Water

It is no secret that river waters in developing countries are highly polluted and are plagued by low oxygen content and overload of pollutants. Even in developed countries, major initiatives have been taken to manage and maintain their rivers. In China, the government has undertaken many steps to clean the Yangtze River and Lake Tai. Similarly, the World Bank initiative SAWI (South Asia Water Initiative) works in three river basins (Indus, Ganges and Brahmaputra) and the Sunderbans on regional water issues. It took 20 years (1970-90), five countries and $50 Billion to clean up the Rhine. Similarly, seven countries including Germany, Romania and Ukraine set aside their differences and set up the Danube Commission in 1948 to manage and improve navigation and ensure good health of the River. Again, Thames bore the brunt of the industrial revolution in the 19th century until it was declared biologically dead by the Natural History Museum. Only sustained efforts over the next 50 years cleaned up the Thames. The US had a similar experience with the Hudson in New York City. The Australian Government set up an independent statutory agency, namely, the Murray-Darling Basin Authority in 2007 to manage the basins of the two rivers.

In India, ambitious plans to not only clean our rivers but also provide piped drinking water to all households have been drawn up. The formation of the Jal Shakti Ministry by merging the Ministry of Water Resources, River Development and Ganga Rejuvenation and the Ministry of Drinking Water and Sanitation was the right institutional response to manage such a complex problem. Many other initiatives in India such as the Jal Shakti Abhiyan, National Mission for Clean Ganga, (and the Namami Gange Project under this Mission), groundwater management, floodwater management in rivers, etc., will go a long way in addressing these issues. The National Ganga Bill, 2019, likely to be introduced in the current session of the Parliament, has proposed high fines and strict measures for polluting the river. The offences have been proposed to be cognizable and non-bailable. Even the state governments have undertaken various projects for groundwater rejuvenation and water conservation all over the country. But the scheme that has attracted the maximum attention is the Namami Gange Project which was also showcased in the recently concluded World Water Week in Sweden. It is a multi-agency project with stakeholders ranging from various Ministries of the Central government and relevant state governments. Many countries have also conveyed interest in collaborating in this massive project. As is well known, the project covers a range of activities such as sewage treatment, river surface cleaning, encouraging bio-diversity, monitoring effluents, managing agricultural waste, etc., along the 2500 km long Ganga. All in all, rejuvenation of a river is a classic 'Commons' or public goods problem, with attendant problems such as free-riders and collective action dilemmas. The response also has to be multi-layered and involving multiple agencies and all stakeholders most importantly, the people.

Air

Air pollution in much of North India and particularly in the NCR region is a national health emergency in winter months. Again, this is because of a variety factors such as uncontrolled construction and road dust, the explosion of vehicle population in Delhi and NCR and finally, stubble burning in the neighbouring states of Punjab and Haryana. Again, this is a classic case of the tragedy of the commons where the air is a public good which is being overexploited but not enough has been done for managing the resource. A number of policy responses by the Executive (Odd-Even Scheme) and the Judiciary (The Supreme Court-appointed EPCA has been monitoring pollution levels and directing governments to take the necessary action as per the Graded Response Action Plan) have not been enough. The problem has remained intractable and is still looking for a solution. It has recently been pointed out that the toxic air in NCR is because of the over cropping of paddy in Punjab and Haryana (which are not traditional paddy cultivation states) because of an attractive MSP for paddy and free water and power for paddy cultivation. It has been suggested that if the attractive MSP for paddy is diverted to other crops which are less water-intensive, there would be no need for stubble burning and this would give a huge relief to the pollution levels in Delhi and NCR, at least on this count.

Forest

Forests have been an important part of the ecosystem even before the land was colonised by Homo Sapiens. The importance of forests has been underlined even in Hindu classic texts such as Ramayana and Mahabharata. However, with the British intervention from the 18th Century, management of forests began to be determined by European Tenurial concepts. In other words, forests were given on tenure to a chosen few to disburse patronage and favours, ignoring the rights of the tribals who had been living there for centuries. Even the management of forests that began with Sir Dietrich Brandeis, the first IG of Forests, in the late 19th Century, emphasised commercial forest management. It also barred local villagers from the reserved forest and protected the forest. Later, in independent India, the British system continued with forest becoming the property of the government and the 1952 Forest Policy Statement continued the emphasis on commercial exploitation of the forest. It was only in 1990 that the participation of the people was formalised through the Joint Forest Management (JFM) programme. However, deforestation had become a serious problem by then and JFM was a policy response to arrest this worrying pace of deforestation. While JFM, through innovative measures such as usufruct sharing and community participation in drawing up various Forest plans was a partial success in many parts of India, it was not an unqualified success everywhere. Again, we have seen the classic problem of the "commons" viz., overexploiting of the public resources but under-investment in management of conservation of the resources.

We have discussed how the tragedy of the commons and the free-rider problem has played out in areas of water, air and forest management. This is, however, true for other areas such as fisheries, road space and many other areas.

So, where do we go from here? There are no easy quick-fix solutions but light must be thrown on possible ways to address these dilemmas.

The Socio-institutional Theory of Common Pool Resource Governance: A few pointers

Garret Hardin in his paper in Science in 1968 had put forward his theory of "Tragedy of the Commons". He basically stated that if a pasture was made available to all the village herdsmen, it will inevitably be over consumed since there is no incentive for any herdsman to hold back his cattle from grazing. He applied this idea to human population growth and reiterated what Malthus had stated: that catastrophe was inevitable if there was no check on population growth. While Malthus and Hardin have turned out to be wrong in many ways, overexploitation of public goods is a real problem and this has played out in the areas of water, air and forest management that we discussed above.

Many of the policy responses to such public goods problems have been centralising the management in government hands or handing it to private property. However, some initiatives have invoked the participation of people (joint forest management) and public-private partnership (river cleaning).

In recent times, many public policy practitioners have argued that common property resources management may be an optimal way to deal with such public good dilemmas. We have to recognise that goods such as air, water and forest are non-excludable (we cannot exclude anyone from their consumption) and subtractable (one member's use of the resource will subtract from another's use).

In such a situation of non-excludable and subtractable goods, I have proposed the Socio-institutional Theory of Common Pool Resource Governance, where social and institutional factors affect the behaviour of individuals following rules and ultimately affect the common pool resource. I would like to discuss two central concepts in this theory, namely, the increase in social capital and the crafting of institutions with public participation. There will also be a discussion as to how these are relevant for overcoming the public goods dilemmas discussed above.

Social Capital

Individuals are embedded in social networks within which they carry on their activities, be it economic exchange or interaction with neighbours. The term social capital was made fashionable by Coleman in 1990 and Robert Putnam in 2000, among many other social scientists (Granovetter, Lin, Ostrom, Oakerson, Levi). Basically, Coleman stated that social capital is the resource, real or potential, gained from relationships. It can appear in a number of forms such as trustworthiness, as a source of information in social relations (this lowers information costs) and effective sanctions (it lowers monitoring and sanctioning costs). Putnam, on the other hand, lamented the decline of social capital in America. He came to this conclusion by finding that membership to bowling league clubs was declining. He concluded that in politics, civic life, religious life and workplace, fewer Americans were joining associations and getting involved in face-to-face interactions with their neighbours. In short, networks amongst people, trust and increasing interaction raise the level of social capital.

In the three public good dilemmas above in the area of water, air and forest, we may keep this in mind while crafting policy responses. Indeed, Joint Forest Management succeeded in areas where there was a higher level of social capital. Similarly, complex programmes such as Namami Gange and implementation of policies for cleaner air would be far more successful if the people are involved in the plans, which in turn is possible by raising levels of social capital. Indeed, governments are doing so by invoking a sense of civic responsibility to the larger social good. This is amply clear in various advertisements brought out by the Delhi government in implementing the odd-even scheme and the Union government in its various programmes under the Clean Ganga Mission. However, this must underline all the projects, sub-projects or schemes being undertaken, whether they are town-centric pollution or industrial pollution. Raising social capital by raising inter-personal trust and involving social networks in the planning will go a long way in overcoming free-rider problems.

Institutions

The word institution can be interpreted in different ways when we are dealing with the problem of management of the common property. At a macro level, it can be interpreted as a body of knowledge. However, for our purposes, we will follow the interpretation of an institution as 'rules-in-use' that constrain behaviour. In other words, in the context of the present discussion, institutions are essentially rules that constrain the behaviour of individuals in respect of water conservation, air conservation and forest conservation. For example, the odd and even scheme is a rule that constrains the behaviour of individuals in respect of vehicles on the road, thereby, leading to the ultimate objective of controlling air pollution. Similarly, the Rs 100/quintal subsidy on not burning stubble is an institution constraining the behaviour of farmers, thereby, leading to lesser air pollution. Similarly, examples of water conservation and river cleaning programmes can also be thought of. The short point is that it is important for any policy to get the right institutions if it has to succeed.

Many of these themes have been explored in the research on New Institution Economics, (Elinor Ostrom, Oliver Williamson, Akerlof, Harold Demsetz, Mancur Olson, Douglass North, Gary Libecap) which has diverged from the traditional neo-classical paradigm in that it has relaxed the assumptions of zero transaction costs, full and perfect information and a perfect delineation of property rights. Even Kenneth Arrow, an eminent neoclassical economist, underlined the importance of trust in every commercial transaction.

Hence, given the non-excludable and subtractive nature of air, water and forest, the common property may be a more suitable governance infrastructure. In the area of the forest, this has taken the form of joint forest management with some success. However, in the area of water and air conservation, such institutional structures are evolving. It may be worthwhile to involve the community (possibly the RWAs in New Delhi) in bolstering the existing rules in respect of air pollution and similar arrangements can be initiated in the case of agricultural pollution of rivers (involve the Gram Sabhas) and urban waste (involve citizen forums such as RWAs of New Delhi), authorising them to impose penalties in case of violations. Similarly, in the case or river cleaning, it would be a good idea to bring on board the Town Chambers of Commerce and Industries and empower them to monitor effluent discharge and impose penalties in case of violation of rules.

Finally, raising social capital and crafting the 'right' institutions, ties in nicely with the 'sharing economy' and the 'circular economy'. As we know, the sharing economy involves the peer-to-peer sharing of idle resources to maximise their productivity (e.g. Uber, Airbnb etc). A higher social capital, which means greater peer-to-peer trust will both cause and affect the sharing economy. This will form a virtuous cycle and help in overcoming the dilemmas discussed above. Similarly, the circular economy aims to push renewable energy by minimising waste and pollution and involves systems thinking, where all actors are inter-connected.

Dr. Krishna Gupta is the Principal Resident Commissioner, Government of West Bengal. Views expressed are strictly personal

Krishna Gupta

Krishna Gupta

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