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Sunday, November 30, 2014

Elinor Ostrom and her 8 principles of Managing A Commons

Elinor Ostrom was a Nobel Prize winning economist who did extensive work on the reality & concept of the Commons. She died in 2012. This post is technical and is meant for wonks and for later reference. I'll be citing it in future posts. [Obituary in New York Times]

The Economist writes a report on her that notes:

"IT SEEMED to Elinor Ostrom that the world contained a large body of common sense. People, left to themselves, would sort out rational ways of surviving and getting along. Although the world's arable land, forests, fresh water and fisheries were all finite, it was possible to share them without depleting them and to care for them without fighting. While others wrote gloomily of the tragedy of the commons, seeing only overfishing and overfarming in a free-for-all of greed, Mrs Ostrom, with her loud laugh and louder tops, cut a cheery and contrarian figure.[The Economist]

Elinor Ostrom did the work that is necessary for real progress. Where others prefer to make heros of heels, mythologize reality and form conclusions and then look for justifications, she used scientific method to analyze reality and draw generalizations that would help confront it. When premises didn't hold, she re-examined them. And the null hypothesis myth of a "tragedy of the commons" turns out to be such a myth.

Years of fieldwork, by herself and others, had shown her that humans were not trapped and helpless amid diminishing supplies. She had looked at forests in Nepal, irrigation systems in Spain, mountain villages in Switzerland and Japan, fisheries in Maine and Indonesia. She had even, as part of her PhD at the University of California, Los Angeles, studied the water wars and pumping races going on in the 1950s in her own dry backyard."[The Economist]

She saw examples of how folks used common resources well, and how they used them badly. But she saw commonalities for when it was used well:

All these cases had taught her that, over time, human beings tended to draw up sensible rules for the use of common-pool resources. Neighbours set boundaries and assigned shares, with each individual taking it in turn to use water, or to graze cows on a certain meadow. Common tasks, such as clearing canals or cutting timber, were done together at a certain time. Monitors watched out for rule-breakers, fining or eventually excluding them. The schemes were mutual and reciprocal, and many had worked well for centuries. [The Economist]


"Best of all, they were not imposed from above."

What works best of all is local governance, not central governments:

"Mrs Ostrom put no faith in governments, nor in large conservation schemes paid for with aid money and crawling with concrete-bearing engineers. “Polycentrism” was her ideal. Caring for the commons had to be a multiple task, organised from the ground up and shaped to cultural norms. It had to be discussed face to face, and based on trust. Mrs Ostrom, besides poring over satellite data and quizzing lobstermen herself, enjoyed employing game theory to try to predict the behaviour of people faced with limited resources. In her Workshop in Political Theory and Policy Analysis at Indiana University—set up with her husband Vincent, a political scientist, in 1973—her students were given shares in a notional commons. When they simply discussed what they should do before they did it, their rate of return from their “investments” more than doubled." [The Economist]

The key here is the principle of subsidiarity, but not in the top down hierarchical (and bureaucratic manner) that modern governments have organized by since the days of the Assyrian Empire, but this concept of "polycentrism" is the notion that local people know what is best for local assets and need to be respected.

“Small is Beautiful” sometimes seemed to be her creed. Her workshop looked somewhat like a large, cluttered cottage, reflecting her and Vincent's idea that science was a form of artisanship. When the vogue in America was all for consolidation of public services, she ran against it. For some years she compared police forces in the town of Speedway and the city of Indianapolis, finding that forces of 25-50 officers performed better by almost every measure than 100-strong metropolitan teams. But smaller institutions, she cautioned, might not work better in every case. As she travelled the world, giving out good and sharp advice, “No panaceas!” was her cry.

I suspect her worldview was as informed by the "Small is Beautiful" book by EF Schumacher as mine has been. [Economist] Indeed she was part of a tag team with her husband Vincent Ostrom who died in 2012

8 Principles for Managing a Commons


Ostrom has 8 principles:


Ostrom Principle:The principles restated:
Principle 1:  Well-defined boundaries
Principle 2:  Congruence between appropriation and provision rules and local conditions
Principle 3:  Collective-choice arrangements: Representation and Participation in rules and decision making
Principle 4:  Locally representative Monitoring Officers
Principle 5:  Graduated sanctions; measured and just sanctions for misbehavior.
Principle 6:  Conflict-resolution mechanisms; informal adjudication locally and formal adjudication of disputes available
Principle 7:  Recognition of rights; those involved in managing something have a stake in it that needs to be respected. And people have a right to self government.
Principle 8: Nested enterprises

Principle 1. Define clear group boundaries.

The article "Ecology and Society" [] defines these 8 principles with some detail.

Actual wording: "Well-defined boundaries"
“This principle, as Agrawal (2002) notes, originally stipulated the presence of well-defined boundaries around a community of users and boundaries around the resource system this community uses. Each component helps to internalize the positive and negative externalities produced by participants, so they bear the costs of appropriation and receive some of the benefits of resource provision. Each component was coded separately, with community boundaries coded as principle 1A and resource boundaries coded as 1B (Table 3). There was strong evidence for 1A and moderate evidence for 1B. Pinkerton and Weinstein (1995:25), for example, state, “Exclusion of outsiders from fishing space was the main mechanism used by the villagers to control fishing effort. This is one of the most common and universal mechanisms found in community-managed inshore fisheries.” []

This principle is key to providing orderly and fair access and usage of a common resource.


Principle 2. Match rules governing use of common goods to local needs and conditions.

Actual Wording: "Congruence between appropriation and provision rules and local conditions"

The principle restates why we need to have local government involving locals. Ostrom uses technical language to note:

"Ostrom’s (1990:92) second design principle refers to the “congruence between appropriation and provision rules and local conditions.” Like the first principle, this principle stipulates two separate conditions that Agrawal (2002) recognizes. The first condition is that both appropriation and provision rules conform in some way to local conditions; Ostrom emphasizes local conditions of the CPR, such as its spatial and temporal heterogeneity. The second condition is that congruence exists between appropriation and provision rules. We found very strong empirical evidence for both principles." [Ecology and Society Article]

To use legal language local rule is necessary to governing any well managed commons, and that includes local government of neighbhorhoods and business branches. These observations support the principle that local representative (Republican) government should be a right.

Principle 3. Ensure that those affected by the rules can participate in modifying the rules.

This too supports the notion that local government should be representative, "with consent of the Governed". Ostrom writes:

Principle 3: Collective-choice arrangements
"Ostrom (1990:90) states, “most individuals affected by the operational rules can participate in modifying the operational rules.” This principle is in the spirit of a large amount of literature on the importance of local knowledge in natural resource management (e.g., Berkes et al. 2000), in which local users have first-hand and low-cost access to information about their situation and thus a comparative advantage in devising effective rules and strategies for that location, particularly when local conditions change." [Ecology & Society]

Principle 4. Make sure the rule-making rights of community members are respected by outside authorities.

Ostrom's Principle 7: Minimum recognition of rights
In the University article this is labeled as 7 and it "stipulates that external government agencies do not challenge the right of local users to create their own institutions. An external government agency imposing its own rules on a community managing a CPR may suffer from a government failure of the kind discussed by Hayek (1945) and Scott (1998) if the externally imposed rules do not correspond to local conditions." [Ecology and Society Article]

These principles imply that both outside authorities and internal authorities must be accountable to the people of the community.

Principle 5. Develop a system, carried out by community members, for monitoring members’ behavior.

Ostrom: Monitoring
"Principle 4A stipulates the presence of monitors, whereas 4B stipulates the condition that these monitors are members of the community or otherwise accountable to those members. Monitoring makes those who do not comply with rules visible to the community, which facilitates the effectiveness of rule enforcement mechanisms and informs strategic and contingent behavior of those who do comply with rules. Empirically, principle 4A was moderately well supported, whereas 4B was very strongly supported by the case data."

Now "Monitors" is essentially two roles; that of enforcing order, and that of adjudicating minor disputes.

"Monitors may not perform satisfactorily if they do not directly benefit from improved resource conditions. Thus, it may be important that monitors are accountable to those who most depend on the resource. Gautam and Shivakoti (2005), who studied two forest systems located in the Middle Hills of Nepal, found that the ability of local users to oversee monitors’ performance affected resource conditions. In Jylachitti Forest, local users hired two people for regular monitoring and paid them through contributions from each member household. In Dhulkhel Forest, guards were also hired, but they were paid by local authorities. Whereas Jylachitti local users were engaged in supervising the guards’ performance in controlling timber extraction levels, this was not the case in Dhulkhel, where overextraction was becoming an issue by the end of the study." [Ecology and Society Article]

Monitors have to be of the community and benefit in some way from performing their jobs.

"We have already seen that people prefer to spend more time negotiating consensus than establishing and imposing sanctions. Solidarity in this case cannot simply be interpreted functionally as being directly about cooperation over the mechanisms of water resource management. It is comprised of complex networks of cooperation based on family structure, labour-sharing arrangements and numerous interrelated associational activities such as church groups, savings clubs, and income-generating groups. The village apparently most successful at collective action regarding water supplies was also remarkable for its other cooperative activities, for its success in agricultural production and for the frequency and cheerful creativity of its public social occasions. Cleaver (2000:374)." [Ecology and Society Article]

Complex networks collaborate and when they do that bonds societies and is not just a business decision.

Principle 6. Use graduated sanctions for rule violators.

(Study Principle 5): Graduated sanctions
Principle 5 stipulates the efficacy of graduated sanctioning systems. Sanctioning deters participants from excessive violations of community rules. Graduated sanctions progress incrementally based on either the severity or the repetition of violations. Graduated sanctions help to maintain community cohesion while genuinely punishing severe cases; they also maintain proportionality between the severity of violations and sanctions, similar to the proportionality between appropriation and provision rules from principle 2.

Fairness means that you have to give people a chance to participate and measure punishments.

Principle 7. Provide accessible, low-cost means for dispute resolution.

[Principle 6 in study]: Conflict-resolution mechanisms
"Principle [7] states that systems with low-cost conflict resolution mechanisms are more likely to survive. Conflict over an exhaustible resource is inevitable in CPR management, necessitating the presence of established mechanisms for conflict resolution to maintain collective action. This principle was moderately well supported by the empirical data. In the acequia irrigation communities in northern New Mexico, for example, there is a long history of recourse to external court systems under different national regimes to resolve inter-community conflicts. Several agreements reached by territorial probate courts more than 100 years ago are the basis for functioning, modern water-sharing agreements today (Cox 2010)."

The purpose of conflict resolution is to "de-escalate" situations and make sure that the system functions in a win/win manner and is not a win/lose conflict situation.

Principle 8. Build responsibility for governing the common resource in nested tiers from the lowest level up to the entire interconnected system.

Study Principle 8: Nested enterprises
"Principle 8 states that in successful systems, “governance activities are organized in multiple layers of nested enterprises” (Ostrom 1990:90). As for principle 7, which also deals with cross-scale institutional factors, the empirical evidence for principle 8 was moderately supportive."

The idea that power should be centralized is so obviously counter-functional but in most actual governments is subverted by ambitious authorities. The best way to adjudicate this is to ensure that smaller systems are part of larger systems and that the relationships between the parties are well enough defined so that each party involved doesn't have incentive or time to infringe on others.

"Many scholars, particularly those focusing on pastoral and irrigation systems, have stressed the importance of nesting smaller common-property systems in larger and still larger ones, given the high probability that the social systems have cross-scale physical relationships when they manage different parts of a larger resource system and thus may need mechanisms to facilitate cross-scale cooperation (Lane and Scoones 1993, Niamir-Fuller 1998). Part of the motivation for this principle, then, relates to principle 1 (user and resource boundaries) and is stated by Hanna et al. (1995:20) as: “It is important to ensure that a property rights regime has clearly defined boundaries, and that to the extent possible, those boundaries are consistent with the natural boundaries of the ecological system.” It is not just user and resource boundaries that are important; a match between these boundaries may be important as well, and institutional nesting is an important way to accomplish this in many situations." [Ecology and Society Article]

This nesting is necessary in order to maintain proper relationship boundaries and reemphasizes importance of establishing clear ones in the first place. It is a principle of Federalism at it's best.

"One additional clarification regarding principle 8 is that the nesting may occur either between user groups and larger governmental jurisdictions, or between user groups themselves. Many traditional irrigation systems, for example, contain multiple levels of organization that mirror the branching properties of an irrigation system (Coward 1977). This is somewhat different from co-management arrangements between user groups and a larger government body, described in extensive publications (Berkes and Folke 1998, Berkes 2002, Yandle 2006, Cinner et al. 2009). Intercommunity connections can be thought of as horizontal linkages, whereas connections between multiple jurisdictional levels can be thought of as vertical linkages. It is our understanding that, when she formulated this principle, Ostrom (1990) was referring to vertical linkages. We would generalize principle 8 to include both horizontal and vertical linkages because they may accomplish similar functions." [Ecology and Society Article]

Ostrom is laying out a design for confederation, collaboration, constitutionality and republicanism that we need to pay attention to.

Further reading:
Nobel Prize Page
Obituary in New York Times
She taught in Indiana.
I think I met her but I'm not sure. We lost a lot of people in 2011-2012
Paper that illustrates her 8 principles authored by 3 of her students:

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