PIM and Common Property Resources

Problems and solutions. Managing irrigation systems requires coordinating the actions of many users sharing the same resources of water and irrigation infrastructure. In many cases government intervention has unintentially undermined and discouraged local collective action by communities. Theories of common property resource management offer a way to understand problems of collective action and insights into how these can be overcome.

Problems of collective action. Many of the challenges of coordinating social action have been discussed in terms of a family of problems, with similar logical structures, that offer insights into dynamics that discourage or encourage collective action. In general these problems help to reveal why voluntary cooperation may fail or be difficult to arrange, unless suitable institutional arrangements can be arranged:

Tragedy of the commons. If each user of a pasture or other shared resource gains from increasing their indivdual use, while costs, such as degradation of the pasture, are spread across all users, then this creates incentives to overexploit the resource. In his original paper on the topic, Garrett Hardin suggested that government coercion was needed to overcome a "tragedy of the commons." Others argued that privatization to establish individual property rights would create a better match of costs and benefits. Scholars of common property have pointed out the many cases in which local communities have successfully created institutions for managing forests, pastures, fisheries, irrigation systems and other shared natural resources, often with limited or no government intervention. Hardin later amended his views to say the tragedy was a problem for "unmanaged commons"

Free riders and the logic of collective action. If users are to contribute to the provision of a collective good, such as an irrigation system, there is a risk that some may fail to contribute, taking advantage of those who do provide time, money and other inputs. If each user follows the logic of trying to gain benefits without contributing to the costs, then collective action will fail. Mancur Olson analyzed the logic of collective action in overcoming such "free-rider" problems, arguing that problems could be more easily overcome in small groups where actions were more visible. In some "privileged groups" some users, for example a large landowner in an irrigation system might have a large enough individual interest to provide the collective good based on their individual benefits. For larger groups, selective incentives, sanctions on shirkers or benefits available only to contributors, could create conditions that would make collective action successful. Larger groups could also be built out of federations of small groups. Free riding could be a problem not just for visible goods, such as building irrigation infrastructure, but also for services, including leadership. "Political entrepreneurs" can help organize collective action, but only if they have adequate incentives for carrying out such tasks.

Assurance. Water users may be willing to contribute to the maintenance of an irrigation system, or other shared resource, as long as they are confident that others will also contribute. All users may benefit if they can coordinate their actions. Institutional arrangements that make it easier to monitor the contributions of others, making sure that all are doing their share, can increase the effectiveness of collective action.

Holdout. One person may be in a position to block collective action, for example the owner of land across which an irrigation canal must pass. They may be able to leverage their position to extract a large portion of the benefits of collective action. Such problems may be overcome through local institutions, shaming those who act greedily and violate local norms, or through laws and procedures authorizing expropriation of land to obtain public benefits.,

Prisoner's dilemma. In the classic game theory fomulation, two prisoners are kept apart, and asked to confess. If both keep silient, there is sufficient evidence to sent them to jail for a less serious offense. If one informs but the other does not, then the informer can go free while the other serves a long sentence. If both confess, then both go to prison, but for less time than would one who kept silent while the other confessed. If each examines his best strategy, then the logical choice, the "prisoners' dilemma" is to defect and confess, even though both could be better off by remaining silent. In many real life situations, communication makes it possible to coordinate and avoid such dilemmas. If there is repeated interaction, then "tit-for-tat" type strategies of initially cooperating, but retaliating against those who defect while then being willing to cooperate again, turn out to be superior.

Public goods and common pool resources. In many cases it is difficult or impossible to exclude non-contributors from access to a good, such as water flowing in an irrigation canal, even though water taken by non-contributors subtracts from that available to other users. Looking at the feasibility of exclusion and how different users are rivals in consuming a resource, or need to act jointly to ensure that the resource is adequately available, helps illuminate the challenges involved in providing different goods, and why collective action may be necessary rather than being able to rely on the good being provided as private property. Irrigation water is often a common pool resource, divisible among users, but for which exclusion is difficult.

Externalities and transaction costs. Economists often discuss such problems in terms of externalities, where someone receives benefits without paying the costs, or suffers costs, such as pollution, while someone else gains. In terms of abstract theory, good information and clear assignment of property rights can enable those involved to arrange compensation. However, in practice, negotiating agreements, monitoring usage and contributions, enforcing penalties, and other transaction costs influence the feasibility of overcoming problems created by externalities. Furthermore, those involved face limitations in knowledge and ability to calculate the consequences of different choices, "bounded rationality" and may tend to "satisfice" accepting for satisfactory solutions, rather than insisting on maximizing their goals.

As can be seen, many of these problems are related. In game theory they can be represented with similar pay-off matrices. Institutional solutions typically require creating new incentives or penalties that will alter the structure of benefits and costs, and ensuring the violations will be detected and sanctions enforced. The broader conclusion is that collective action cannot always to be expected to emerge spontaneously, and specific institutional arrangements are often needed, that provide incentives and information to overcome problems of collective action.

Design principles for self-governance. Research on how communities have successfully managed common property resources such as irrigation systems, forests, fisheries and pastures has identified conditions that favor collective action. These have been summarized in design principles that affect the potential for collective action in irrigation management, and help point out ways in which conditions might be made more favorable (Ostom 1992):

• Clear boundaries
• Agreed rules
• Means to modify rules
• Autonomy / legal recognition by government
• Monitoring
• Sanctions
• Dispute resolution mechanisms
• Nested organizations
  
  

Sources for additional information:

1. The website of the International Association for the Study of Common Property (IASCP) contains a digital library of papers, conference proceedings, links and other information on management of irrigation and other common property resources, including a section on theory.
2. To play a version of prisoners' dilemma online see Serendip's Prisoners' Dilemma. See also an introduction and history, and links at Prisoners' Dilemma and Public Choice Theory.
3. Axelrod, Robert. 1984. The Evolution of Cooperation. New York: Basic Books. For a recent review of subsequent research on the topic, see Robert Hoffmann. 2000. Twenty Years on: The Evolution of Cooperation Revisited. Journal of Artificial Societies and Social Simulation vol. 3, no. 2.
4. Hardin, Garrett. 1968. The Tragedy of the Commons. Science (162):1243-1248. A later essay, Extensions of "The Tragedy of the Commons" includes a clarification that his critique concerns "unmanaged" commons.
5. Baland, Jean-Marie, and Jean-Philippe Platteau. 1996. Halting Degradation of Natural Resources: Is the a Role for Rural Communities? Oxford: FAO & Clarendon Press. Full text available online from FAO.
6. Olson, Mancur. 1971. The Logic of Collective Action: Public Goods and the Theory of Groups. Cambridge, MA: Harvard University Press.
7. Ostrom, Elinor. 1992. Crafting Institutions for Self-Governing Irrigation Systems. San Francisco: Institute for Contemporary Studies Press.
8. Additional documents can be found by searching this website, and through search engines such as Google.