Common-Pool Resource
What is Common-Pool Resource?
A common-pool resource is rival but non-excludable, one person's use reduces what's left, but it's hard to stop anyone from using it.
Fisheries, forests, and groundwater are examples. Because users can't be excluded, they tend to be overused (the tragedy of the commons). Solutions include quotas, property rights, and community management.
Common-Pool Resource: a worked example
A village lake is open to any boat. With two boats the season's catch is 720 fish, so each boat lands 360. Add two more boats and the total rises only to 960 fish, because four boats crowd the same stock, so each boat now lands 240. Running a boat costs the equivalent of 200 fish. A fisher deciding whether to launch weighs his own expected 240 fish against his 200 fish cost, so he launches. The village sees something else. The two extra boats added 240 fish in total, only 120 per boat, well under the 200 fish each boat burns. Net catch after costs falls from 720 minus 400, or 320 fish, to 960 minus 800, or 160 fish. Every entrant collects 40 fish for himself while destroying 80 fish of value for the village. Entry stays privately rational and socially wasteful until the average catch is bid down to the 200 fish cost.
The mistake students make with common-pool resource
The frequent error is calling a common-pool resource non-rival and filing it with public goods, since both are non-excludable. Rivalry is what separates them: a fish someone nets is gone, while one more person watching a fireworks display takes nothing from anyone else. The consequence differs too. Public goods are underprovided because people free ride on paying, while common-pool resources are overused because nobody bears the full cost of the unit he takes. On a free response question, write rival and non-excludable, then predict overuse, never underprovision.
Common-Pool Resource questions
Which goods count as common-pool resources?
Ocean fisheries, groundwater aquifers, shared grazing land, hardwood forests, and a congested road all qualify, because each is depleted or degraded by use yet stays open to anyone. Ask two questions of any candidate. Does one person's use leave less for the next user, and can a would-be user be kept out? A yes then a no puts the good in the common-pool box. Renewable resources belong here as readily as exhaustible ones, since a fish stock can be drawn down faster than it regrows.
Why does the tragedy of the commons happen?
The tragedy of the commons happens because each user weighs his private gain from one more unit against his private cost and ignores the loss he imposes on other users. A rancher adding a cow to shared pasture keeps the whole cow but bears only a sliver of the thinner grass. Since nobody can be excluded, no single user can protect the stock through restraint alone, so the resource is drawn down well past the level that would maximize its long run value.
How do quotas fix a common-pool resource?
Quotas restore excludability by assigning a legal right to a fixed share of the harvest. Once a boat owns a claim to a set tonnage, the future value of the remaining stock shows up in the value of that claim, so the owner stops racing rivals to catch fish first. Community rules, licenses, and tradable permits work the same way, converting an open access resource into one where the user who depletes it pays for the depletion.
Related terms
Common comparisons
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