Managing Natural Resources

Economic activity, and human society generally, requires goods provided by surrounding ecosystems (such as clean water, air, crops, fish, and fuelwood). Despite the fragility of ecosystems and the utter necessity of these ecosystem services, human societies have tended to damage their surrounding environments even to the point of ecosystem collapse. An ownership problem can be responsible for these situations: the ecosystem (like the open ocean, or a lake, or a forest) is not owned by anyone, which means that no individual has an incentive to refrain from harvesting the resource to ensure its long-term sustainability. The result is a depleted fishery, or a polluted lake, or a denuded forestland, and the situation is referred to as the "tragedy of the commons."

In a situation where there is no private ownership of the resource, limiting harvests to a sustainable level by instituting quotas--either through the government or through local community management--can overcome the tragedy of the commons. As long as the resource is being harvested at a rate equal to its natural replenishment rate, then the harvesting is sustainable. Since the natural systems have growth rates that can vary with stock size, one policy question is what the optimal stock size (and subsequent replenishment rate) is in order to maximize the sustainable yield.

In the MV Sim, the village can institute family quotas for fishing and fuelwood collection in order to limits on the amount of fish caught and wood harvested.

For more information:

World Bank. World Development Report 2003: Sustainable Development in a Dynamic World.Washington, D.C.