Understanding the problem . . .• Say 10 owners each turned out 10 sheep to
graze in a commons that has a carrying capacity of 100 sheep.
• As long as the owners don’t exceed the carrying capacity, each sheep fleece will bring $100 in the market, or $10,000 total.
• But if one owner decides to add 1 extra sheep, the carrying capacity of the commons has been exceeded and all the sheep will suffer
• For the owner of 11 sheep, his revenue will be greater. That single owner gains.• However, the total value of the sheep for all
owners will fall. The whole group loses.
What did the villagers miss?
• The villagers should have known that the “Commons” was a common resource.
• As such, it was a rival good, meaning that one person’s (or sheep’s) use diminished another’s enjoyment of it.
• Common resources are always subject to overuse--people (and sheep) are, after all,
MAXIMIZERS.
Buffalo nearly became extinct by 1900. What prevented their extinction?
More importantly, why have cattle never been threatened with
extinction?
Other common resource tragedies:• Carolina Parakeet- Eastern US’s only
parrot• Blast fishing in the Tongan Islands • The Amazon rainforests
In every decision we must consider the impact on the next seven generations -The Iroquois Confederacy