Strategic Exploitation of a Common Resource under Environmental Risk

We study the effect of environmental risk on the extraction of a common resource. Using a dynamic and non-cooperative game in which an environmental event impacts both the renewability (the future quantity) and the quality of the resource, we show that the anticipation of such an event has an ambiguous effect on present extraction and the tragedy of the commons. On the one hand, a risk of a reduction in the renewability induces the agents to extract less in the present. On the other hand, a risk of a deterioration in the quality of the resource induces the agents to extract more in the present. We then establish a negative relation between conservative behavior and the tragedy of the commons. In particular, when environmental risk induces conservation (when the risk of less renewability is more important than the risk of quality deterioration), there is a larger decrease in present harvesting under social planning than in the non-cooperative game, and the tragedy of the commons is worsened. The reason is that in a non-cooperative game agents do not internalize the risk that too much extraction creates for others, and, thus, decrease their own extraction too little. The social planner does internalize the effect of conservation on all agents, and decreases harvesting more than in the non-cooperative game, which reduces the risk for the whole group of agents. This disparity in conservation leads to a worsening of the tragedy of the commons in addition to overexposure to the risk of less renewability in the non-cooperative game.Common resource, Conservation, Dynamic games, Environmental risk, Non-cooperative games, Renewable resource exploitation, Stochastic games, Strategic interactions, Tragedy of the Commons, Uncertainty.

The Parched Earth of Cooperation: How to Solve the Tragedy of the Commons in International Environmental Governance

This article proposes a way to strengthen international environmental agreements, such as the Paris Agreement and the Kyoto Protocol. Multilateral environmental agreements such as these are extremely fragile. At the heart of the problem is what is known as the tragedy of the commons—a unique dynamic that viciously sabotages cooperation. The cause of this tragedy is that no one can trust that other actors will conserve the common resource, which triggers a race to the bottom—a race to deplete. Global warming and our inability to halt it is perhaps the ultimate example of a tragedy of the commons on a truly massive scale. On a domestic level, the tragedy of the commons is easily solved through regulation. However, on a supranational level, where there is no overarching authority, governance mechanisms tend to collapse. The hard truth is that without robust enforcement of some kind, international cooperation is extremely difficult to maintain. This article proposes the following idea: governments joining (or already party to) an agreement, contribute an upfront deposit to an international regulatory body (the Commons Management Fund (“CMF”)) with the understanding that their contribution will be forfeited if they fail to honor their treaty commitments. The idea, while ostensibly simple, is deceptively complex. The focus is not the penalty, but rather the ability of governments to credibly signal commitment. In game theory, credible signaling can prevent a tragedy of the commons by generating confidence that everyone will stick to their commitments. The CMF is designed to exploit this effect. Now, more than ever, a solution to the tragedy of the commons on a supranational level is desperately needed—the CMF is such a solution

Reconfiguring Household Management in Times of Discontinuity as an Open System: The Case of Agro-food Chains

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.This article is based upon a heterodox approach to economics that rejects the oversimplification made by closed economic models and the mainstream concept of ‘externality.’ This approach re-imagines economics as a holistic evaluation of resources versus human needs, which requires judgement based on understanding of the complexity generated by the dynamic relations between different systems. One re-imagining of the economic model is as a holistic and systemic evaluation of agri-food systems’ sustainability that was performed through the multi-dimensional Governance Assessment Matrix Exercise (GAME). This is based on the five capitals model of sustainability, and the translation of qualitative evaluations into quantitative scores. This is based on the triangulation of big data from a variety of sources. To represent quantitative interactions, this article proposes a provisional translation of GAME’s qualitative evaluation into a quantitative form through the identification of measurement units that can reflect the different capital dimensions. For instance, a post-normal, ecological accounting method, Emergy is proposed to evaluate the natural capital. The revised GAME re-imagines economics not as the ‘dismal science,’ but as one that has potential leverage for positive, adaptive and sustainable ecosystemic analyses and global ‘household’ management. This article proposes an explicit recognition of economics nested within the social spheres of human and social capital which are in turn nested within the ecological capital upon which all life rests and is truly the bottom line. In this article, the authors make reference to an on-line retailer of local food and drink to illustrate the methods for evaluation of the five capitals model

Human behavior in the context of water scarcity

2017 Spring.Includes bibliographical references.This dissertation in comprised of three chapters which use microeconomic principles and empirics to examine human behavior in the face of water scarcity. Chapter one uses an experiment to investigate the effect of threshold uncertainty on common pool resource (CPR) consumption decisions. Chapter two uses latent class analysis to endogenously identify unique household classes with respect to their water use decisions under various price and weather scenarios. Chapter three directly compares the residential water consumption decisions of households motivated primarily by social and environmental outcomes with households primarily motivated by cost and convenience. The overall goal of my work is to elucidate the behavior and motivation that leads to particular consumption decisions in the presence of water scarcity. Chapter one explicitly models a CPR in which uncertainty around a tipping point—stock level below which the resource is destroyed—can engender two distinct Nash Equilibria (NE), both of which lead to a Tragedy of the Commons. We theoretically and empirically test how differing levels of uncertainty around the location of this tipping point affects individual and group consumption choices. Our results suggest that the presence of uncertainty increases the likelihood that individuals choose the NE consistent with resource destruction (even though it is an inferior NE) and to ignore potential impacts on resource stocks. However, conditional on choosing the superior NE, increased uncertainty does not affect consumption rates in the experiment. In addition, we introduce tax and fine policies and find that they reduce overall consumption rates and the probability that individuals choose to destroy the resource. Chapter 2 and 3, do not explicitly model scarcity, but they examine household water consumption in the arid southwest where water scarcity is a pervasive concern. Both chapters two and three use data from Fort Collins Utilities to investigate household heterogeneity and water consumption decisions. Chapter 2 uses a finite mixture model to endogenously identify distinct water use patterns. Estimated price elasticities are consistent with previous literature and range from -0.1 in the spring for the unresponsive class to -0.8 in the summer for the responsive class. We find significant evidence that households classes exist and can generally be broken into high responsive and low responsive classes. Our results also suggest that changes in precipitation will have little effect on demand, but a 2 degree temperature increase will increase residential water demand throughout the city by approximately 5%. Lastly, chapter two investigates the burden of price increases and weather shocks across household class and income level. We find that the vast majority of water reductions due to price increases come from middle and high income homes. Chapter three is similar to chapter two in motivation, but distinct in methodology. Chapter 3 poses and attempts to answer a simple question: do households primarily motivated by environmental and social (E&S) consideration consume water differently than households motivated primarily by cost and convenience (C&C)? Results strongly indicate that E&S consumers use less water than (C&C) consumers. Results also suggest that E&S motivated households consume significantly more water as temperatures rise. However, there is no statistical difference between E&S and C&C consumers in their responses to changing price and precipitation

Using qualitative models to define sustainable management for the commons in data poor conditions

Acknowledgments This work was funded by the University of Aberdeen and Scottish Natural Heritage (SNH) and their support is gratefully acknowledged. We thank MASTS (the Marine Alliance for Science and Technology for Scotland) for their role in funding this work and B. Leyshon and F. Manson (SNH) for fruitful discussion.Peer reviewedPostprin

Public policy that does the right thing rather than the wrong thing righter

Motivated by the reprisal of ‘wicked problems’ in Australian public policy discourse we make the case for understanding climate change adaptation, water and river managing, and other complex, uncertain, natural resource issues as ‘wicked problems’. This ‘framing’ of social planning dilemmas dates back 40 years yet public policy practitioners still do not seem well equipped in terms of understandings and practices to engage with these situations and to effect systemic improvements. Drawing on a decade of research in Europe we make the case for investing in social learning as an alternative governance mechanism and as a form of praxis for managing in ‘wicked problem’ situations. We outline our main research findings to explain how we understand and enact social learning. In doing so, we also draw on the Open University UK’s 35 years of experience of teaching systems thinking and practice for managing ‘wicked problems’. We conclude by opening up an invitational space to explore the commonalities and differences in research on social learning with that on deliberative practices and governance

Spatial and Temporal Modeling of Community Non-Timber Forest Extraction

This paper examines the interaction of spatial and dynamic aspects of resource extraction from forests by local people. Highly cyclical and varied across both space and time, the patterns of resource extraction resulting from the spatial-temporal model bear little resemblance to the patterns drawn from focusing either on spatial or temporal aspects of extraction, as is typical in both the modeling and empirical literature to date. Combining the spatial-temporal model with a measure of success in community forest management.the ability to avoid open-access resource degradation.characterizes the impact of incomplete property rights on patterns of resource extraction and stocks. Key words: Spatial and temporal modeling; renewable resources; non-timber forest products; common property resources