Principles of the Commons

Garrett Hardin’s 1968 essay, The Tragedy of the Commons, led many people to think that all commons are self-destructive. But Hardin’s essay was misleading.

Hardin assumed there’s only one kind of commons, the unfenced pasture or waste dump with no management system. In such a situation, overuse can lead to destruction.

What Hardin overlooked is that there are many kinds of commons and many ways to run them. For example, you can have a fenced commons with a gate-keeper, or fishing limits with licenses, or a cultural commons with infinite possibilities. There’s no tragedy inherent in these and many other commons. (See Working Models for a sampling of successful American commons.)

Still, the proper way to manage a commons isn’t always obvious. So let’s explore some basic principles, beginning with a look at standard business management.

There are two sets of rules for managing private assets. One applies to corporations, the other to trusts such as pension funds, charitable foundations and family estates.

The goal of corporate rules is to maximize short-term return to capital. The goal of trust rules is to preserve assets for the long term and assure that beneficiaries receive their due. It’s these latter rules that merit attention here.

Over centuries, several principles of trust management have evolved. These include:

• Managers have a fiduciary responsibility to beneficiaries. If a manager fails this obligation, s/he can be removed and penalized.
• Managers must preserve the principal. It’s okay to spend income, but don’t invade the corpus.
• Managers must assure transparency. Information about money flows should be readily available to beneficiaries.
  

As with private trusts, the goal of commons management is to preserve assets and share benefits. Hence, the basic principles of commons management are similar to those of private trusts.

Commons managers must, first and foremost, protect shared assets for the long term. They must also assure that the benefits flowing from the assets are widely shared.

Beyond these basic principles, specific rules for commons management vary from one commons to another. Broadly speaking, they depend on the level of use society wishes to allow or encourage.

If a commons needs to be off limits to all but the most non-invasive use — a wilderness area, for example — the guiding rule is, ‘No trespassing.’

If a commons has no inherent limits on use — like the Internet or the cultural commons — the guiding rule is, ‘The more the merrier.’ Use should be as free as possible, and management’s main job should be to minimize private toll booths.

If a commons can be used up to, but not beyond, some physical threshold — fisheries, aquifers and the atmosphere are examples — management’s job is to set and enforce sustainable use limits. In economic terms, its challenge is to live off income without diminishing capital.

In managing physically limited commons, it’s often desirable to cap total use and charge users a fee. Such caps and prices assure preservation, let markets sort out competing uses, and generate revenue for social and environmental needs.

Setting a total usage cap can be controversial. If the physical threshold is uncertain, a critical question is, "Which side should we err on?" Under the precautionary principle, if the potential harm from overuse is substantial (e.g. the polar ice caps could melt), the cap should be set with safety as the guide.

The process of protecting and sustaining a commons involves several steps. The asset must first be identified and given a legal and/or institutional structure. In some cases, usage caps and new kinds of property rights may be necessary. It may also be necessary to appoint trustees and acquire pre-existing property rights.

Once a commons is protected and given a proper management regime, markets can come into play.

Source: Friends of the Commons
http://www.friendsofthecommons.org/understanding/principles.html