Economics Nobel and the Environment

Ms. Ostrom "challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized," the Nobel judges said. "Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, [Ms.] Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories. She observes that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest, and she characterizes the rules that promote successful outcomes."
Via Environmental Economics, which posts multiple times on the significance of this year's Nobel Prize selection for, well, environmental economics.

I found this particularly interesting:
One thing that I think is most interesting about Ostrum's work is that where common property regimes work well they are often enforced with very strong social sanctions and/or coercion. The notion that somehow in the absence of markets or government intervention we might get some sort of Kumbuya agreement- a favorite fantasy of some leftist critiques of markets- is not supported by the facts. Instead, complete social ostracization and even physical violence are often necessary in order to enforce common property rules. Bottom line: managing common resources is very hard no matter what institutions are in charge.
I often think of property rights and the rule of law (including safety from violence and intimidation) as an underappreciated prerequisite for well-functioning markets. (E.g. for libertarians who more or less advocate the abolition of government - who do you think will keep people from stealing your stuff? Maybe you with a gun, but that imposes enormous transaction costs that would greatly impeded the much-lauded efficiency of markets.) But this is almost a bizarre inversion - that it may be the very threat of violence (albeit controlled by strictly-observed social convention) which allows certain communities to manage their common resources in an effective way.

No comments:

Post a Comment