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.
Key Takeaways
- 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 ultimatelydepletionof 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.
FAQs
Common resources are rival in consumption but not excludable. Examples include common grazing land, clean air, and congested roads. Because people are not charged for their use of common resources, they tend to use them excessively. Therefore, governments use various methods to limit the use of common resources.
How to solve the tragedy of the commons? ›
One such solution is the idea of using financial disincentives to prevent overconsumption. If the cost of depleting resources is prohibitive, to the point that the cost of using the resource outweighs the benefits, individuals will be less likely to deplete the resource to the point of collapse.
What is the definition and example of a common resource? ›
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.
What happens once it becomes obvious that a common resource is being overused? ›
Once it becomes obvious that a common resource is being overused, what happens? It continues to be overused because individuals have no incentive to reduce their use of the good.
What are the 3 most common resources? ›
Air: The atmosphere is a common resource that is available to all living beings on Earth. Public parks: Public parks are commons that are available for everyone to enjoy. Water resources: Rivers, lakes, and aquifers are common resources that are used for drinking, irrigation, and industry.
Which good is the best example of a common resource? ›
The best example of a common resource is: clean water. The best example of a good whose consumption is not excludable is: national defense.
What is the common resource problem? ›
A common resource or "commons" is any resource, such as water or land, that provides users with tangible benefits but which nobody has an exclusive claim. The tragedy of the commons is an economic problem where the individual consumes a resource at the expense of society.
What are examples of commons? ›
Traditional examples of commons include forests, fisheries, or groundwater resources, but increasingly we see the term commons used for a broader set of domains, such as knowledge commons, digital commons, urban commons, health commons, cultural commons, etc.
What is a good example of a tragedy of the commons? ›
In an unregulated environment, each commercial fishing fleet is incentivized to catch as many fish as it can sell to maximize profits. By the inexorable logic of the tragedy of the commons, more and more fishing fleets catch more and more fish until whole species are decimated and underwater ecosystems collapse.
What is the lesson to be learned from the tragedy of the commons? ›
The Tragedy of the Commons is a story with a general lesson: when one person uses a common resource, he diminishes other people's enjoyment of it. Because of this negative externality, common resources tend to be used excessively.
Common resources are non-excludable resources. This means that anyone can use them, so no one can be excluded from using them. This is important because for some resources, it is nearly impossible to regulate their use and some people might not be able to afford to partake.
How can the tragedy of the commons be avoided? ›
One way to try and prevent the tragedy of the commons is through infliction of punishment for over-consumption and/or encouraging under-consumption, thus selecting against over-consumers.
What happens if the use of a common resource is not regulated? ›
If there are no regulations on the resources, then the people will use more and more resources, leading to overuse of those resources, and the amount of that resource will decrease.
What is the main reason why the tragedy of the commons occurs? ›
The "Tragedy of the Commons" occurs when individuals overuse a shared resource for personal gain, leading to depletion. In the video, overfishing in a public pond illustrates this concept.
What are the characteristics of a pure private good? ›
Pure private goods are both excludable and rivalrous, where excludability means that producers can prevent some people from consuming the good or service based on their ability or willingness to pay and rivalrous indicates that one person's consumption of a product reduces the amount available for consumption by ...
What is the best example of a common property resource? ›
Community forests, pasture lands, village water bodies and other public spaces where a group larger than a household or family unit exercises rights of use and carries the responsibility of management are examples of common property resources.
Is rabbit fur a common resource? ›
Answer and Explanation:
Thus, the Sumatran tiger is a common resource of nature. b. The option is not true as, rabbit fur is not a common resource and it is a byproduct of the rabbit so, it is used for making various goods such as fur coats, etc.
Which is an example of a resource? ›
Anything that can be used to satisfy a need is a resource. Resources can be found all around us. Examples- air, water, car, train, forest, etc.
Which of the following is an example of a common pool resource? ›
Common-pool goods are typically regulated and nurtured in order to prevent demand from overwhelming supply and allow for their continued exploitation. Examples of common-pool resources include forests, man-made irrigation systems, fishing grounds, and groundwater basins.
