Top-down government regulation of common-pool resources has failed

New report advocates decentralising common-pool resources

A new report details a lecture by the late Nobel Prize winner Elinor Ostrom. Professor Ostrom was the first woman to win a Nobel Prize in Economics, and this was one of the last lectures she gave. With contributions from leading environmental experts, Christina Chang, Mark Pennington and Vlad Tarko, this publication sets out how only the use of specific and local solutions can ensure that resources such as fisheries are properly managed.

The key findings of the research are:

  • Rules imposed from above and from the outside, such as by government agencies, are unlikely to be successful. In developing a viable approach to the management of environmental resources, it is important that a resource can be clearly defined and that the rules governing the use of the resource are adapted to local conditions.
  • For as long as the EU continues with a centralised model for managing fisheries, there remains the potential for an environmental catastrophe.
  • Government regulation of common-pool resources, such as fisheries, is expensive, counter-productive and damaging.

The publication recommends:

  • Local solutions to local problems. This is the best practice for managing environmental resources. Those most knowledgeable about these resources should be empowered to develop their own solutions.
  • Government regulation can never be ubiquitous. It is important that any regulation is flexible to allow for suitable solutions to be implemented.
  • Government intervention, if necessary, must take account of existing grassroots efforts. In the case of EU fisheries, the EU needs to look for locally sustainable answers. For example, rather than monitoring the amount of fish caught - almost impossible to measure - local enforcement could aim to monitor the technology used.

The European Union’s Common Fisheries Policy provides a good example of where Ostrom’s theories could be applied to avert environmental ruin. Government regulation has led to troubling environmental outcomes such as overfishing and the dumping of dead fish back into the ocean.

Those who work within the fishing industry have the best working knowledge of fishing practises. It is in their best interests to maximise their own profits whilst maintaining sustainable fisheries.

Commenting on the research, Prof Philip Booth, Editorial Director at the Institute of Economic Affairs, said:

"Elinor Ostrom's groundbreaking case-study work demonstrated how communities themselves could best manage natural resource problems such as fisheries. As she points out in this publication, there are many lessons for the UK - not least in relation to the appallingly mismanaged Common Fisheries Policy of the European Union. Ostrom's work - for which she won the Nobel Prize in economics - was grounded in practical reality, unlike that of many economists. It should not be ignored as politicians look for solutions to environmental problems."

Notes to Editors:

To arrange an interview about the publication please contact Stephanie Lis, Communications Officer: slis@iea.org.uk or 07766 221 268.

This report, The Future of the Commons – Beyond Market Failure and Government Regulation,is taken from a lecture delivered by Elinor Ostrom to the Institute of Economic Affairs at its 2012 Hayek Memorial Lectureon 29 March 2012. It can be downloaded at www.iea.org.uk.

Prof Elinor Ostrom (1933-2012) was Distinguished Professor and Arthur F. Bentley Professor of Political Science at Indiana University. In 2009 she became the first woman to be awarded the Nobel Prize in Economics. The award recognised her pioneering work on the governance of common-pool resources.

This research also features contributions and commentary from three environmental experts: Christina Chang (Lead Economic Analyst at CAFOD), Mark Pennington (Professor of Public Policy and Political Science at King’s College, University of London) and Vlad Tarko (George Mason University).

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.

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