What is Tragedy of the Commons?

Robinhood Learn
Democratize finance for all. Our writers’ work has appeared in The Wall Street Journal, Forbes, the Chicago Tribune, Quartz, the San Francisco Chronicle, and more.

The Tragedy of the Commons shows why unregulated shared resources — such as fishing grounds — have a tendency to be over-exploited, leading to their collapse.

🤔 Understanding the Tragedy of the Commons

The Tragedy of the Commons illustrates why certain resources collapse because of over-exploitation. Collapse may occur if the resource is finite and is a common-pool resource — which means it’s difficult, if not impossible, to restrict access. The crash occurs because rational actors pursuing their self-interest will maximize their use of the resource. Early actors secure all the benefits of exploiting the good, but everyone shares the costs. To prevent collapses, many governments enact regulations, such as bans on pollution or overfishing. Governments may also encourage private ownership. People are less likely to overuse resources they privately own because they will bear all the costs.


When Europeans arrived in North America, an estimated 5 billion passenger pigeons roamed the skies. They traveled in vast flocks, sometimes numbering in the millions or even hundreds of millions. In 1871, over a hundred million passenger pigeons nested in Wisconsin alone. At one point, passenger pigeons were possibly the most abundant bird in the world.

By 1914, the last passenger pigeon died in captivity. What happened? A Tragedy of the Commons. People assumed that passenger pigeons were so bountiful that they could never be over-exploited. The pigeons were tasty and people killed them for food.

With the expansion of the railroad and the invention of the telegraph, professional hunters began following the flocks of pigeons around the country. The hunters used guns, nets, and even corn poisoned with whiskey to kill the pigeons. Hunters also went after pigeons in their breeding grounds, disrupting their reproductive cycle.

These activities drove the passenger pigeon to extinction.


The Tragedy of the Commons is like a Jenga tower…

Pull out too many blocks, and the tower will fall. Likewise, if a commons is over-exploited, it will collapse. A commons is a shared-resource that people can access and use for their benefit. It’s in the interest of actors (such as companies or individuals) to exploit the resource as much as possible. Yet since everyone is overusing the resource, it’ll eventually collapse.

Ready to start investing?
Sign up for Robinhood and get your first stock on us.
Sign up for Robinhood
Certain limitations apply

The free stock offer is available to new users only, subject to the terms and conditions at rbnhd.co/freestock. Free stock chosen randomly from the program’s inventory. Securities trading is offered through Robinhood Financial LLC.

Tell me more…

What is the Tragedy of the Commons?

The Tragedy of the Commons was first outlined by William Forster Lloyd, a British economist. Lloyd wanted to know why the cattle in British common pastures were so scrawny and found that overuse of common grazing lands meant there wasn’t enough grass for all the cows to eat.

The ecologist Garrett Hardin later popularized the concept in a 1968 article “The Tragedy of the Commons” in Science Magazine. To illustrate the commons, Hardin urged readers to “Picture a pasture open to all.” Self-seeking herders lived in this meadow and had unrestricted access to it. Hardin assumed that each herdsman is a rational being and seeks to maximize their personal gain.

When a herder adds an animal to his herd he enjoys all the positive utility. He can sell the livestock for money or consume the meat. Yet when the cow grazes in the pasture, it leaves less grass for others to eat. This creates a negative utility that affects every herder. The costs of this negative utility are “socialized” — meaning all the herdsmen must bear the costs.

So, when someone adds an animal, they reap all the benefits. Meanwhile, everyone shares the negative utility. Each herder, acting in his or her own interest, will maximize their herd by adding more cows. Eventually, there won’t be enough grass for the cattle to eat, leading to their downfall.

The collapse of the pasture isn’t in the long-term interest of the herdsmen. Some individuals may realize this and try to limit their herds. But some ranchers will still try to increase their herds. If they don’t, others will add animals to secure the benefits of more animals for themselves.

What was Hardin’s argument?

Hardin used the Tragedy of the Commons to argue that people would have a lot of children, leading to overpopulation. The parents would enjoy the gains of bigger families, such as extra labor power for farming. Society would share the costs, such as less space to live in and the need to grow more food.

Hardin also argued that we’d foul “our own nest” with pollution. Absent regulation, it’s cheaper to dump contaminants into the environment than it is to clean them up. A factory, for example, would rather release toxic chemicals into a river than safely dispose of them. The contaminants might poison nearby residents, including employees. Society would share the costs, while the factory enjoyed the savings.

Ultimately, Hardin’s argument about the uncontrollable increase in the human population turned out to be wrong. In many developed countries, children are a “cost,” rather than a benefit. Parents have to clothe, feed, and care for their kids, who add little economic value to the family during childhood.

But while Hardin’s argument may not be correct in terms of human reproduction, other commons do follow the pattern he saw. A resource may collapse if access is unregulated, and total supply is limited.

What are some historical examples of the Tragedy of the Commons?

The decline of the Grand Banks cod grounds off the east coast of Newfoundland, Canada is one of the most well-known collapses in history. At one point, the Grand Banks teemed with fish, allowing countless people to work as fishermen for hundreds of years.

Fishing technology advanced dramatically in the mid-20th century. By using radar, sonar, and other technologies, fishermen could pinpoint large schools of cod. This allowed them to cast their nets with precision. As catch sizes increased, so too did the size of the trolleys.

This led to overfishing. By 1992, the biomass of the codfish schools in the Grand Banks had shrunk to 1% of its peak levels. Many fishermen lost their jobs. Researchers found that there were almost no cod old enough to spawn (reproduce). The Canadian government suspended the cod industry indefinitely.

Now, the cod population is rebounding, but authorities still prohibit commercial fishing. As codfish numbers shrank, however, the shrimp population boomed. Many fishers began hauling in shrimp. Now, shrimp levels are shrinking because of commercial fishing and the increasing number of cod — which eat the shrimp.

Over-exploitation has driven countless other species to extinction. When Europeans settled in North America, some pioneers hoped to find sizable amounts of precious metals. But gold and silver were in short supply, so settlers found another valuable resource: fur.

Sea mink fur was especially sought after. Sea minks were large minks that lived near water. Hunters killed them with zeal, digging them out of burrows, using traps, and setting dogs on them. This led to a tremendous boom in the North American fur industry but eventually drove the sea minks to extinction.

The depletion of ozone levels is another example of the Tragedy of the Commons. In 1985, scientists published a study showing that there was an enormous hole in the ozone layer. Researchers realized that CFC chemicals — commonly used in aerosol cans and refrigeration — contributed to the reduction of ozone. Fortunately, tight regulation of CFC chemicals and other efforts have allowed ozone levels to recover.

What are modern examples of the Tragedy of the Commons?

Many scientists agree that global warming is a serious threat. As temperatures increase, it could cause many ecological problems. Oceans could rise, ice may melt, weather will be less predictable, droughts may become more common. The atmosphere is a shared resource. Every country, company, and person has access to it. Throughout most of history, authorities didn’t regulate air contaminants. The U.S. federal government first introduced regulations with the Air Pollution Control Act of 1955.

There is evidence that some energy companies knew about climate change before it became widely known to the public. Yet these businesses continued to pump greenhouse gasses into the atmosphere — profiting as they did so.

Human civilization may bear the costs of climate change for decades or centuries. Future generations and countries across the world may have to mitigate and reverse the effects of global warming by taking dramatic action — such as outlawing traditional combustion engines.

Many rainforests are becoming tragedies of the commons. At least 17% of the Amazon rainforest has already been cleared, and millions of acres are lost each year. In Malaysia and Indonesia, vast tracts of rainforest are cleared to make way for palm oil plantations. Now, orangutans, among other species, are losing their habitats and becoming endangered.

Traffic jams are another more immediate example of a collapse. In the United States, access to most streets is unregulated. Anyone with a license can hop in their car and drive on the vast majority of American roads. Unfortunately, during peak times, such as rush hour, the number of cars may overwhelm the public infrastructure. As a result, roads will become congested.

So, if you’ve sat through a traffic jam, you have likely experienced a momentary collapse of a commons.

What causes the Tragedy of the Commons?

The resource in question must be non-excludable, meaning it’s impossible or difficult to restrict access. These resources are also called common-pool resources.

Resources also need to be in a state of “scarcity” (limited in supply). A global collapse of sunlight is unlikely because supply is essentially unlimited. The atmosphere, however, is a scarce resource because it cannot absorb infinite amounts of carbon without affecting global ecology.

Consumption also needs to be rivalrous — meaning when a party consumes the good, it prevents others from simultaneously using it. While the supply of light may be virtually unlimited, access to land is rivalrous. If you position a solar panel in a certain spot, you’re consuming space. Someone else can’t plant a panel in the same place unless they first remove yours.

Limited resources and excessive demand may cause commons to collapse. It’s in every actor’s individual, short-term interest to maximize exploitation before the shared resource collapses. So, if actors are selfish and act rationally, it may be impossible to avoid the Tragedy of the Commons.

How can we prevent the Tragedy of the Commons?

Regulations are one solution for preventing the collapse of a commons. Pollution controls, toll fees, even taxes (e.g. a carbon tax), restrict the consumption of resources.

Governments aren’t the only authorities that impose regulations. If cattle herders limit the size of their herds and adhere to the agreement, they may achieve sustainability — using resources without compromising the ability for future generations to meet their needs.

Another method is private ownership. People are more likely to take care of a resource if it’s private property. This is because they must bear the full cost of the collapse. If a pasture is divided into privately-held parcels of land, for example, herders might not overexploit it. Why? If their personal grazing land collapses, they will bear the costs, not the other herders.

What are the solutions for the Tragedy of the Commons?

If a commons has collapsed, exploitation must be reduced or halted. The Grand Bank cod population off of Canada is recovering because authorities banned industrial cod fishing. We might slow or reverse global warming by reducing greenhouse gas emissions and planting more trees (which consume CO2).

Sometimes, however, recovery is all but impossible. There’s no practical way to bring extinct animals back to life. In regards to climate change, some scientists worry that the Earth might be passing a point of no return — meaning it’ll be impossible to mitigate global warming.

Governments may also encourage the private ownership of certain resources. By fencing off pastures and giving herders private land, it may be possible to prevent overuse. With private property, the negative utility of overuse typically isn’t socialized.

As for pollution, many governments have now enacted anti-pollution regulations. If a company pollutes the environment, it may have to pay for cleanup and could be subject to hefty fines.

Ready to start investing?
Sign up for Robinhood and get your first stock on us.Certain limitations apply

The free stock offer is available to new users only, subject to the terms and conditions at rbnhd.co/freestock. Free stock chosen randomly from the program’s inventory. Securities trading is offered through Robinhood Financial LLC.


Related Articles

You May Also Like

The 3-minute newsletter with fresh takes on the financial news you need to start your day.
The 3-minute newsletter with fresh takes on the financial news you need to start your day.

© 2021 Robinhood. All rights reserved.

This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals. Information is from sources deemed reliable on the date of publication, but Robinhood does not guarantee its accuracy.

Robinhood Financial LLC (member SIPC), is a registered broker dealer. Robinhood Securities, LLC (member SIPC), provides brokerage clearing services. Robinhood Crypto, LLC provides crypto currency trading. All are subsidiaries of Robinhood Markets, Inc. (‘Robinhood’).