Image by Momentmal from Pixabay
Inspiration for this series of posts comes from a great podcast called Planet Money that’s produced by NPR. This summer, Planet Money produced a series of podcasts called “Planet Money Summer School“. It inspired me to do some blog posts dedicated to those topics!
This is part 4 in my series called “Economics 101”. If you’re interested, you can start with
- Part 1- Sunk Costs and Opportunity Costs
- Part 2 – Supply and Demand
- Part 3- Elastic and Inelastic Demand
In this post, I’m going to talk about an economic concept called “tragedy of the commons”.
What is the tragedy of the commons?
A “tragedy of the commons” situation occurs when there is a) a shared-resource system and b) individual users deplete the resource through their shared action. To make this a little easier to understand, here are a few examples:
- All the farmers for a city graze their sheep in the same field. Eventually, if no one takes care of the field, or makes sure the sheep alternately graze elsewhere, then no one’s sheep will be able to use the field at all.
- A town shares a well that everyone has to use. But the water is a limited resource that will eventually run out.
Usually, another part of this scenario is that some people benefit more than others – those who are using more water or have more sheep, for example.
So why should I care?
You may be thinking that you’re not a farmer or someone who shares a well – so how could this possibly impact me? However, we all do share some common resources – like clean water – that there’s only so much to go around. That’s why there are watering bans in the summer when we don’t get a lot of rain.
So if some people are selfish and still water their lawns or wash their cars daily, then there may not be enough water to go around for people who truly need it to support their livelihood or simply to meet their daily needs.
How does society deal with this?
Usually, society deals with this in one of two ways:
- Regulatory – laws or by-laws are crafted to ensure no one person or company can over-consume a resource.
- Collective agreement – if several people or companies need to share a resource, they work out an agreement on how to each only use their fair share.
Have you ever been in this kind of situation?
Ever run into a tragedy of the commons situation in real life? Let me know about it in the comments!
