The Hindu Business Line : Nobel laureate Ostrom’s lessons for India

The work of the Economics Nobel laureate Elinor Ostrom has lessons for Indian States on how to manage common property resources by relying on the stakeholders themselves, and not on central authorities or governments.

K.G. Kumar

Last week the American social scientist Elinor Ostrom became the first woman to win the the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel awarded by the Royal Swedish Academy of Sciences, more popularly known as the Nobel Prize in Economics.

As the first woman to bag the prize in its 40-year history (the Economics Nobel was instituted in 1968), Ostrom’s name and fame will undoubtedly be carved indelibly into human memory.

But the even more gratifying tribute to this 76-year-old social scientist, the Arthur F. Bentley Professor of Political Science and Professor at the School of Public and Environmental Affairs at Indiana University, is that her work on analysing economic governance, especially the “commons”, swings the spotlight on to communities as those who can successfully manage common property or common-pool resources such as fisheries, forests, grazing systems, wildlife, water resources, irrigation systems, agriculture, and land tenure and use, among others.

Unconventional theory

The Royal Swedish Academy of Sciences awarded the Economics Nobel to Ostrom “for her analysis of economic governance, especially the commons.”

An official press release noted: “Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by Central authorities or privatised. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, 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 characterises the rules that promote successful outcomes.”

The problem of managing common-pool resources is something that Kerala – and all other States in India – have long had to tackle.

Witness the conflicts that have arisen in Kerala over extracting and protecting natural resources such as fisheries, groundwater resources and forests. Where common property is poorly managed it can be overexploited, leading to depletion of the resource, as in the case of overfishing or pollution of lakes and streams.

In her 1990 book ‘Governing the Commons’, Ostrom noted that earlier work by economists offered three dominant models of collective behaviour, namely, (i) the tragedy of the commons; (ii) the prisoners’ dilemma; and (iii) the logic of collective action.

Free-rider problem

These earlier models of collective behaviour assume a free-rider problem where there is little trust, with everyone looking out for themselves. (‘Free riders’ are those who consume more than their fair share of a public resource, or shoulder less than a fair share of the costs of its production.) Ostrom demonstrates what happens when participants in a common property resource do not act as free riders but instead trust one another and cooperate to achieve a better outcome for all.

Ostrom’s work shows that commonly owned resources can be preserved and managed by stakeholders as well as – or better than – by governments or through systems of private ownership, like ‘catch shares’ or individual transferable quotas (ITQs).

The conventional wisdom of management of common property resources draws on a seminal 1968 article by Garrett Hardin, titled ‘The Tragedy of the Commons’.

Ostrom and four colleagues noted in a 1999 article in Science that Hardin concluded, from a look at fisheries’ history, that “the users of a commons are caught in an inevitable process that leads to the destruction of the very resource on which they depend.”

In an interview to the Editor-in-Chief of Nobelprize.org, the official Web site of the Nobel Foundation, Ostrom used the example of lobster fishermen in Maine, in the US. “In the 1920s, they almost destroyed the lobster fishery,” she noted. “They regrouped and thought hard about what to do and over time, developed a series of ingenious rules and ways of monitoring that have meant that the lobster fishery in Maine is among the most successful in the world.”

“There are many other small to medium-sized groups that have taken on the responsibility for organising resource governance,” she added. “We’ve studied several hundred irrigation systems in Nepal. And, farmer-managed irrigation systems are more effective in terms of getting water to the tail end, higher productivity, lower cost, than the fancy irrigation systems built with the help of Asian Development Bank, World Bank, USAID etc. So, what we have is many local groups are very effective, but that it’s not universal.”

Clearly, considering Kerala’s considerable natural resources and biodiversity, there is much to learn from Ostrom’s work in how to effectively manage them. The recent displeasure among fishworkers’ groups in Kerala over the Centre’s proposed marine fisheries legislation is a case in point. While there is no universal solution, as Ostrom points out, there is much to benefit from relying on the innate collective wisdom and capabilities of the stakeholders of common property resources.

The writer can be contacted at kgkumar@gmail.com

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