. . . and other sad tales

Once upon a time, there was a lovely village

With a lovely commons where the sheep grazed . . .

Happily . . . and produced happy wool. And the village

was happy.

And happy sheep made great wool.

But as more and more sheep joined the commons

The Commons was overused.

The grass ran out.

and tragedy ensued.

The sheep suffered.

And eventually the sheep produced no wool at all. Brrrr.

Understanding the problem . . .• Say 10 owners each turned out 10 sheep to

graze in a commons that has a carrying capacity of 100 sheep.

• As long as the owners don’t exceed the carrying capacity, each sheep fleece will bring $100 in the market, or $10,000 total.

• But if one owner decides to add 1 extra sheep, the carrying capacity of the commons has been exceeded and all the sheep will suffer

• For the owner of 11 sheep, his revenue will be greater. That single owner gains.• However, the total value of the sheep for all

owners will fall. The whole group loses.

What did the villagers miss?

• The villagers should have known that the “Commons” was a common resource.

• As such, it was a rival good, meaning that one person’s (or sheep’s) use diminished another’s enjoyment of it.

• Common resources are always subject to overuse--people (and sheep) are, after all,

MAXIMIZERS.

Other tragedies of the commons: Ocean fishing

Bluefin Tuna Decline 1995 – 2012 (projected)

Buffalo nearly became extinct by 1900. What prevented their extinction?

More importantly, why have cattle never been threatened with

extinction?

Other common resource tragedies:• Carolina Parakeet- Eastern US’s only

parrot• Blast fishing in the Tongan Islands • The Amazon rainforests

In every decision we must consider the impact on the next seven generations -The Iroquois Confederacy

Last of the species died in the Cincinnati Zoo in 1918.

Every minute 149 acres of rainforest are cut down.

Blast Fishing not only decimates fish populations but destroys the habitats as well.

McDonald's at one time was importing 15 million pounds of this type of fish (Hoki). It is now at around 11.5 million.