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Unit 5 · Topic 5.1

5.1 The Tragedy of the Commons

The tragedy of the commons happens when a shared resource that no one owns or manages is overused, because each user gains from taking more while the damage is spread across everyone. It explains overgrazing, overfishing and pollution, and why rules, ownership or community management are needed.

Key terms

  • tragedy of the commons
  • shared resource
  • overexploitation
  • negative externality

What the tragedy is

A commons is a resource that many people can use but no one owns or controls, like an open pasture, an ocean fishery, a groundwater aquifer or the air. The idea was made famous by ecologist Garrett Hardin in a 1968 essay.

Picture a pasture shared by several herders. Each herder gets the full profit from adding one more cow. But the cost of that cow, a little less grass for everyone, is shared by all the herders. So each herder has a reason to keep adding cows. When everyone does that, the pasture is overgrazed and becomes useless to all of them. Each person acting in their own short-term interest leads to an outcome that's bad for everyone, including themselves.

Real-world examples

  • Overfishing: fish in open ocean waters belong to no one, so each fishing fleet catches as much as it can before others do.
  • Overgrazing on public or communal rangeland.
  • Groundwater depletion: many farms pump from the same aquifer, and each benefits from pumping more.
  • Air and water pollution: a factory saves money by releasing pollution into the shared air or river, while the harm is spread among many people.
  • Space debris and greenhouse gas emissions: even the atmosphere and Earth's orbit can act as a commons.

Negative externalities

A negative externality is a cost of an activity that falls on people who aren't part of it and aren't paid for it. When a factory pollutes a river, the people downstream who get sick or lose fishing income bear a cost the factory didn't pay. Because the polluter doesn't pay the full cost, it has little reason to reduce the harm. Externalities are a big reason commons get overused.

Solutions

The common thread: overuse ends when users face limits or bear the costs of their choices.

  • Government regulation: limits on fishing catches, grazing permits, pollution standards and pumping limits.
  • Private ownership or assigned rights: when someone owns a resource, they have a reason to protect its long-term value. Some fisheries give each boat a share of the total catch, which removes the race to fish first.
  • Taxes and fees: charging users for the damage they cause (like a pollution tax) makes them pay for the externality.
  • Community management: political scientist Elinor Ostrom, who won the 2009 Nobel Prize in economics, showed that many local communities manage shared forests, fisheries and water successfully for centuries using their own rules, monitoring and penalties.
  • International agreements: for global commons like the atmosphere and the high seas, countries must cooperate through treaties.

Worked examples

Try each one yourself first, then open the solution.

  1. Example 1

    Why each herder adds a cow

    Ten herders each graze 10 cows on a shared pasture that can support 100 cows. Each cow is worth 1,000 dollars when the pasture is healthy. Adding one more cow lowers the value of every cow on the pasture by 10 dollars because there's less grass. (a) How much does a herder gain by adding one cow? (b) How does the total value of all cows change?

    Show the solution
    1. Step 1: (a) The herder gains a new cow worth 1,000 − 10 = 990 dollars.
    2. Step 2: But each of the herder's own 10 original cows loses 10 dollars: 10 × 10 = 100 dollars lost.
    3. Step 3: Net gain to that herder = 990 − 100 = 890 dollars. Adding the cow pays off for that herder.
    4. Step 4: (b) Before: 100 cows × 1,000 = 100,000 dollars. After: 101 cows × 990 = 99,990 dollars.
    5. Step 5: The total falls by 10 dollars. The herder gains, but the group loses, and the other nine herders absorb most of the cost.

    Answer: (a) The herder gains 890 dollars. (b) The total value drops by 10 dollars, so the group is worse off. When every herder reasons the same way, the pasture is overgrazed.

  2. Example 2

    Proposing a solution

    Fishing boats from several towns catch cod in the same bay, and the cod population has fallen by half in ten years. Identify the problem and propose one solution, explaining how it works.

    Show the solution
    1. Step 1: The cod are a shared resource that no single town owns, so each boat benefits from catching more before others do: a tragedy of the commons.
    2. Step 2: Solution: set a total allowable catch based on how many fish the population can replace each year, and divide it into shares for each boat.
    3. Step 3: This works because the total catch can't exceed what the population can sustain, and boats no longer need to race each other.

    Answer: It's a tragedy of the commons; a science-based catch limit divided into individual shares would keep the catch within what the cod population can replace.

Common mistakes

  • Thinking the tragedy happens because people are careless or evil. It happens because the incentives reward each individual for overusing a shared resource.
  • Applying it to resources someone owns and manages. The tragedy is about unmanaged shared resources.
  • Proposing vague solutions like ‘people should use less’. Name a specific policy, like quotas, permits or fees.

On the exam

  • Free-response questions may describe a shared resource and ask you to identify the tragedy of the commons and propose a solution. Name the resource, explain the incentive and give a specific fix.
  • Use the term negative externality when describing pollution costs borne by others.

Connected topics

Videos

  • APES Video Notes for 5.1 - Tragedy of the Commons

    Jordan Dischinger-SmedesWatch on YouTube (opens in a new tab)

  • APES Unit 5.1: Tragedy of the Commons

    Matthew CopeWatch on YouTube (opens in a new tab)

  • What is the tragedy of the commons? - Nicholas Amendolare

    TED-EdWatch on YouTube (opens in a new tab)

  • Tragedy of the commons | Consumer and producer surplus | Microeconomics | Khan Academy

    Khan AcademyWatch on YouTube (opens in a new tab)

  • 5.1 Tragedy of the Commons

    Mrs. Campbell's APESWatch on YouTube (opens in a new tab)

Check yourself

4 questions on 5.1 The Tragedy of the Commons. Pick an answer to see if you got it, and why.

Question 1 of 4

Fishers from several towns share an ocean bank that no one owns or regulates. Each fisher catches as many fish as possible, and the fish population declines. Which policy would most directly address the cause of this problem?

Question 2 of 4

A factory releases smoke into the air. People living downwind have more asthma attacks and pay higher medical bills, but the factory doesn't pay any of those costs. This situation is best described as

Question 3 of 4

Dozens of farms pump irrigation water from the same aquifer, and the water table has dropped steadily for 30 years. Each farmer knows the aquifer is shrinking but keeps pumping. Which statement best explains this behavior?

Question 4 of 4

Which statement best explains why a privately owned pasture is often less likely to be overgrazed than a pasture shared by a whole village?

0 of 4 answered