Complexity and sustainability

Elinor Ostrom, who in 2009 was the first woman to win the Nobel Prize for economics, is due to give one of the Oxford Amnesty lectures this year.  You can watch her Nobel lecture accepting her award here. Ostrom’s work over five decades has been to conduct a huge variety of studies of what she terms ‘common pool’ joint  economic undertakings, such as forests, farmland held in common, irrigation systems and even the provision of services in cities in the United States to better understand human behaviour. She has been concerned to develop better understanding of how common pool economic ‘systems’ might be managed more sustainably. Her conclusions are that complex economic interaction can more helpfully understood with painstaking empirical study, but that there are no simplistic answers. To echo the title of her Nobel lecture, complex economic interactions demand what she terms ‘polycentric governance’, which is beyond both state and markets.

For example, her response to earlier studies criticising the messiness of provision of government and other agencies in a city area led her to conclude that what mattered was not the consolidation of agencies to rationalise away the mess, but  overall performance. There is no one best way of organising ‘messy’ provision, which might be providing a good level of services for local citizens. For example, her in-depth studies of police departments in six metropolitan areas did not find a single instance where a large centralized police department outperformed smaller departments serving similar neighbourhoods in regard to multiple indicators. A mixed population of departments, both large and small, was what worked best, she concluded.

Her studies of common pool resources led her to develop a range of inter-disciplinary methods better to understand her objects of study, including agent-based models, which we have discussed in earlier posts.

Ostrom’s work challenges the orthodox polarities of either government or private sector imposed solutions on common pool problems. For example, a study she conducted comparing self-organised, farmer-managed resources showed that they were nearly twice as productive as similar government run schemes. Meanwhile, in another study, informal fishery groups allocated space, time, and technology to try to reduce over-harvesting. A study of irrigation systems in Nepal compared systems designed by engineers and run by government with those built and run by farmers. The farmer-systems were quite “primitive” in terms of construction, but they were able to: grow more crops, run their systems more efficiently, and get more water to the tail-end.

Her work demonstrates that it is important to have rules in managing common pool resources, but she also found an immense variety of rules in each other case studies she conducted. There is no one ideal solution for all circumstances, rather it is the ability to decide upon rules together, and to evolve them over time,  that is likely to bring about the best outcome.

Ostrom concentrated on understanding the principles and practices of successfully managed resources. The key ones are as follows:

  • Boundaries of users and resource need to be clear
  • There needs to be congruence between benefits and costs
  • Users have procedures for making own rules
  • Regular monitoring of users and resource conditions
  • There are graduated sanctions
  • User develop conflict resolution mechanisms
  • There is minimal recognition of rights by Government

Interestingly she found that when subjects make decisions anonymously with no communication the overharvest even worse that predicted. Critical for the productivity of common pool resources and the self-managed practices of managing them is constant communication, and through this, the generation of trust. Self-managed commons involve users taking a longer-term perspective, and are rooted in good communication and the reputation of those engaged in co-operating.

Ostrom concludes that resources in good condition have users with long term interests, who invest in monitoring and building trust. Governance processes work best if they are polycentric, rather than rationally optimised, and one size fits all panaceas are not to be recommended. Complexity, she argues, is not to be rationalised away or denied: rather it needs to inform how best to sustain our resources held in common.


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