What are Common Pool Resources?
- Also known as common access resources or common property resources.
- They are resources that are rivalrous but non excludable.
- Theoretically all common pool resources could be factors of production.
Examples
- Fish, clean air, lakes and rivers, forest, fertile soil
Features of Common Pool Resources
Rivalrous
- A good when consumed, cannot be consumed by another person.
- For example: When one uses fertile soil, there are fewer spots for others to farm.
Non-Excludable
- A good that someone cannot be excluded or prevented from using. Goods that have no price and are available to use without payment.
- For example: For example clean air.
- It would be very difficult to charge a price for common pool resources, resulting in overuse and over-consumption which could lead to severe environmental impacts in the long run.
Tragedy of the Commons
- The tragedy of the commons is the consequence of everyone acting in their own self-interest when using common pool resources.
- Without intervention, it leads to the eventual complete depletion of the common pool resource.
Example
Cattle farmers all take their cattle to graze in the same grassy field. Acting in their own self interests, the cattle farmers will take more and more cattle to graze as each cattle increases their revenue. However, this will lead to the eventual depletion of the resource due to soil degredation. None of the cattle grazers take this problem into account until it occurs.
Some cattle herders might realize this however, and take less cattle to graze in order to prevent degradation of the soil. This leads to the "free rider problem" where others will take advantage of the cattle herders who chose not to bring extra cows. If acting rationally, cattle herders will thus not chose to withdraw their cattle.