What Is a Common Resource?
A common resource (or the "commons") is any scarce resource, such as water or pasture, that provides users with tangible benefits but which nobody in particular owns or has exclusive claim to. A major concern with common resources is overuse, especially when there are poor social-management systems in place to protect the core resource.
A common resource may also go by the term open-access resource.
- A common resource is one that can provide benefit to society but which is not owned by anybody in particular.
- Because anybody can enjoy its use in common, the risk of over-consumption and ultimate depletion of common resources is a big concern.
- This concern has been formalized under the concept of the "tragedy of the commons."
Common Resources Explained
Common resources are those that no one individual or organization can lay claim to. These may include public spaces (such as parks or nature preserves), certain natural resources (such as fish in the sea), and so on.
Overuse of common resources often leads to economic problems, such as the tragedy of the commons, where user self-interest leads to the destruction of the resource in the long term, to the disadvantage of everyone.
The tragedy of the commons is an economic problem in which every individual has an incentive to consume a resource at the expense of every other individual with no way to exclude anyone from consuming. It results in over-consumption, under-investment, and ultimately depletion of the resource. As the demand for the resource overwhelms the supply, every individual who consumes an additional unit directly harms others who can no longer enjoy the benefits. Generally, the resource of interest is easily available to all individuals; the tragedy of the commons occurs when individuals neglect the well-being of society in the pursuit of personal gain.
History for Context
A little history can provide us some context. Although technically created by Garrett Hardin, "the tragedy of the commons," originated with Adam Smith, who many credit as the father of economics. Smith's seminal work focused on the interplay of individuals and private economic agents exploiting scarce and rival common resources (environmental) for their own rational, self-interested purposes, leading to over-production and, ultimately, the possibility of an irreversible depletion of limited resources.
The root of this dilemma stems from insufficient and poorly protected property rights, which in the 18th-century were ill-defined and impossible to enforce (by today's standards). As the theory goes, because consumers do not own common goods, they have little incentive to preserve or multiply them. Rather, there is an incentive to extract maximum personal utility or benefit while you still can.
An obvious and poignant implication yet today are cracks in capitalist systems. To Smith's dismay, his "invisible hand" doesn't always reach for self-interested, rational actions to socially optimal outcomes, rather, as illustrated by the tragedy of the commons, market failures and the inefficient allocation of scarce resources is an unfortunate reality.