DISCUJSSION PAPER                        (. 6)U5
Report No.:
The Management of Comnmon Property Resources:.
Collective Action as an Alternative to
Privatization or State Regulation
by
Robert Wade
Research UTnit
Agricul7ture and Rural Development Department
Operational Pol4cyr Staff
World Bank
May 1986
The views presented here are those of the author(s), and they shiould mot
be interpreted as reflacting.those of the World Bank.



The author is a staff member of the World Bank. dowever, the World Bank
does not accept responsibility for the views expressed herein which are
those of the author and should not be attributed to the World Bank or to
its affiliated organizations. The findings, interpretations, and
conclusions are the results of research supported in part by the Bank; they
do not necessarily represent official policy of the Bank. The designations
employed and the presentation of material in this document are solely for
the convenience of the reader and do not imply the expression of any
opinion whatsoever on the part of the World Bank or its affiliates
concerning the legal status of any country, territory, area or of its
authorities, or concerning the delimitation of its boundaries, or national
affiliation.



Abstract
When will villagers come together to supply themselves with goods
and services that they all need but could not provide for themselves
individually? In what circumstances will those who face a potential
'tragedy of the commons' be able to organize a system of rules by which the
tragedy is averted? Can locally-based collective action be a viable way to
manage common property resources? Many writers on collective action and
common property are sweepingly pessimistic about the ability of the people
who face problems of common property resources to organize sustainable
patterns of use for themselves. Some are inclined to favor privatization
of the commons as the only viable solution; others, the imposition of state
regulation. This paper shows, with reference to Prisoners' Dilemma, Garett
Hardin's 'tragedy of the commons', and Hancur Ulson's 'logic of collective
action', that the analytical basis for this pessimism is weak in many
situations of village-based common property resource use. There can thus
be no general presumption that the collective action route to common
property resource management will fail, any more than there can be a
g rieral presumption that it will work. The paper suggests a number of
factors to do with characteristics of the resources, the user group, and
group-state relations, on which the chances of success depend.



ThiE MA2NAGEkSNT OF COkIMON PROPERTY RESOtRkES:
COLLECTIVE ACTION AS AN ALTERNATIVE TO PRIVATIZATION OR STATE itEGULIATIUN
Robert Wade*
When will vllagers come together to supply themselves with goods
and services that they all need buc could not provide for themselves
individually? In what circumstances will those wno face a potential
'tragedy of the commons? be able to organize a system of rules by which the
tragedy is averted?
Many writers on collective action and common property are
inclined to think that the circumstances are very limited. A long line of
collective action cheorists has been concerned to elaborate the proposition
that people placed in a situation in which they could all benefit from
cooperation will be unlikely to cooperate in the absence of an external
enforcer of agreements. An equally long line of theorists on property
rights has argued that common property resources are bound to be
over-exploited as demand rises. The only solution is private enclosure
according to some theorists, or state regulation according to others.' In
Robert Smith's words, 'it is by treating a resource as a common property
that we become locked in its inexorable destruction' (1981:465).
* Economist, Agriculture and Rural Development Department, The World bank,
and Fellow, Institute of Development Studies at the University of
Sussex. This paper is based on a forthcoming book, Village Polities:
The Management of Common Property Resources in South India, Cambridge
University Press. I am gratetul to Richard Klmber, Ford =unge, Hans
Binswanger, and especially to Elinor Ostrom for discussions on various
points of the argument.



-2-
My own research findings from South India are difficult to
reconcile with these arguments. Within one small area, I found that some
villages have developed a more sophisticated set of arrangements for
regulating canal irrigation and grazinIg (and for supplying other public
goods as well) than has been reported previously in the literature on
Indian villages. Other villages nearby, however, show no sign of these
arrangements. The research results have been reported at length elsewhere,
and will not be repeated here (Wade, forthcoming -a and -b). Here the aim
is to show why the theories of collective action and common property to
which I referred are not appropriately applied to village resource
situations like those of the Indian villages; and to specify the questions
which need to be answered in order to judge the likelihood that peasant
villagers will be able to sustain locally-based rules of restrained access
to common property resources. The dismal frequency of degraded grazing
commons, despoiled forests, over-exploited groundwater and depleted
fisheries shows only too clearly that collective action cannot be presumed
to be always a viable route for common property resource management. On
the other hand, as I shall show, there are no good analytical reasons for
presuming that it will generally fail.
Common property and common-pool resources
Exclusive possession (freehold) is one extreme on a continuum of
property rights. No property, as in ocean fisheries or the atmosphere, is
the other extreme.   In between lies common property, where the rights to
exploit a resource are held by persons in common with others. These rights



-3-
may take a variety of forms: they may allow unlimited exploitation for
those within a specified group (as in commercial fisheries under national
jurisdiction, until recently), or they may stipulate limits on exploitacion
for each user (as is commonly the case for commercial fisheries today, or
as in 'stinting' of a grazing commons).
It is helpful to distinguish between the type of property right
and the type of resource, to allow for the fact that the same type of
resource may be exploited under a range of property rights. Our interest
is in those resources that might be called 'common-pool' resources.
Common-pool resources are to be understood as a sub-set of public goods (as
that term is used in economics). All public goods have the property that
many can use them at the same time, because exclusion is difficult. But
some public goods yield infinite benefits, in the sense that if A uses more
there is no reduction in tLne amount available for others (light houses and
weather forecasts, for example). Common-pool resources, by contrast, are
public goods with finite, or subtractive benefits; if A uses more, less
remains for others, Common-pool resources are therefore potentially
subject to congestion, depletion, or degradation: use which is pushed
beyond the limits of sustainable yields (Blomquist and Ostrom 1985, Randall
1983).
Groundwater is an obvious example: it can be used jointly (many
can use the same groundwater basin simultaneously), and the cost of
excluding a landowner above the basin would be very high; also, use is
subtractive in the sense that water applied to A's land is not available
for B's land. So when water is scarce, depletion of the groundwater table
is likely. Canal irrigation water meets the same common-pool criteria, as



-4-
does unfenced grazing land. Unfenced forestry land is still another
example of the type. These three resources--water, grazing, and
trees--form vital parts of the livelihoods of large sections of the
population in developing countries, and the issue of how to prevent their
over-exploitation as population grows is of great importance for
development policy.
The prevailing view can be stated as follows: If a group of
people are placed analytically in a situation where they could mutually
benefit if all adopted a rule of restrained use of a common-pool resource,
they will not do so in the absence of an external enforcer of agreements.
Each individual has an incentive to ignore the social costs of his resource
use for fear that others will capture the benefits of the resource before
he can. The lack of exclusion from the resource thus creates an incentive
for a rate of aggregate use which exceeds the pnysical or biological
renewal of the resource (Ostrom 1985b).
Far-reaching proposals for institutional change in the management
of common-pool resources have been justified by this kind of argument
(Ostrom 1985a, Runge 1986). According to one school, the establishment of
full private property rights over the commons is a necessary condition for
avoi ding the tragedy (Demsetz 1967, North and Thomas 1977, Johnson 1972,
Picardi and Siefert 1976). According to another, only the allocation of
full authority to regulate the commons to an external agency--usually
meaning the state--can hope to succeed (Ophuls 1973, £hrenfeld 1972,
Carruthers and Stoner 1981, Hardin 1968). For proponents on both sides,
the policy issue is simply how to get the desired change accomplished with
the least opposition from those involved.



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Theories of collective action
Our problem--to define the conditions under which a set of
common-pool resource users may agree to follow a rule of restrained use
without an external enforcer of the agreement--may be considered a
sub-problem of the theory of public goods, which is a sub-theory of the
theory of collective action. The terms 'collective action' and 'public
goods' are closely related. Collective action is action by more than one
person directed towards the achievement of a common goal or the
satisfaction of a common interest (that is, a goal or 4nterest that cannot
be obtained by an individual acting on his own). If the common goal or
common interest is characterized by infinite benefits and nonexclusion, the
achievement of that common goal or interest means that a public or
collective good has been provided. Thus, the collective action might be
'formulation of a rule of restrained access to a common-pool resource and
observance of that rule', and the public good might be the situation of
sustainable exploitation that results.
Much of the pessimism about the practical viability of collective
action in the use of common-pool resources stems from the conclusions of
several theories of collective action. One theory is the Prisoners'
Dilemma model of strategic choice.   Another is Garrett Hardin's 'tragedy of
the commons'. A third is Mancur Olson's 'logic of collective action',    I
now show why these theories are inappropriate for many (but not all)
situations of common-pool resource use.



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Prisoners' Dilemma
The parable of Prisoners' Dilemma is well-known, and need only be
summarized briefly here. Two suspects are being separately interrogated
about a crime they jointly committed. They know that if they both stay
silent they will receive a light prison sentence. If one stays silent
while the other confesses the first will receive a long prison sentence
while the other goes free. O  f both confess they both receive a medium
prison sentence. Each person can choose only once--which means that if one
chooses to stay silent while the second confesses the first cannot then
confess upon learning of his sentence. This is what creates the dilemma.
Their joint interest is for both not to confess (that is, for them to
'cooperate' with each other). but the outcome is that both confess (both
'defect'). From the point of view of either one of them, staying silent
while the other confesses would give the worst outcome, and confessing at
least ensures that this outcome is avoided while it also opens the
possibility that the confessor will go free if the other stays silent. In
this single-period game the choice of best strategy is made regardless of
the expected choice of the other player, and that is the important point
for our purpose. Confessing is, in other words, the 'dominant' strategy.
This parable extends to common-pool resource use by regarding the
choice as being either to cooperate with others in a rule of restrained
access or to not cooperate. The argument is that each individual has a
clear preference order of options:
(i) everyone else abides by the rule while the individual enjoys
unrestrained access (he 'free rides' or 'shirks');



-7-
(ii) everyone, including himself, follows the rule ('cooperates');
(iii) no one follows the rule;
(iv) he follows the rule while no one else does (he is 'suckered').
Given this order of preferences, the stable group outcome is the
third-ranked alternative:   unrestrained access to all in the group.    Fromn
the more desirable second-ranked alternative, each individual has an
i'ncentive to cheat and go for nis first ranked alternative (restrained
access by all except him). Even if it then turns out that no one else
follows the rule, his cheating at least ensures that he avoids his own
worst alternative--following the rule while no one else does (being the
sucker). In other words, mutual rule-bound restraint is not a stable
equilibrium, because each individual will try to cheat regardless of what
he expects others to do.
In this situation the only solutions are either coercion from
outside the group to force people to reach and maintain the social optimum
(second preference), or a change in the rules from outside the group to a
private property regime.
Prisoners' Dilemma has exercised a continuing fascinat"on on
social theorists because it appears to provide a solid basis for an
profoundly disturbing conclusion--that rational people cannot achieve
ratinal collective outcomes. It seems to be applicable to all situations
in which it is possible for some to refuse to cooperate while others are
willing to cooperate.
However, two key assumptions must hold if a situation is to be
plausibly modeled as a Prisoners' Dilemma and if, therefore, the



-8-
pessimistic conclusions of Prisoners' Dilemma are to be applied to it.     The
first is that the players choose in ignorance of each other's choices.     The
second is -hat each player chooses only once before the payoffs are
received, and so cannot change his mind upon finding out what the other has
done (Wagner 1983). The first assumption has the important implication
that the players cannot negotiate among themselves to change the rules of
the game, so as to secure more desirable collective outcomes. The changes
in rules must come, if at all, from outside the group.
These assumptions clearly fit the core parable, where the two
suspects have no communication, no pre-existing ties, no L4afia-like code of
honor, no expectations of future interaction, and each knows that if he
remains silent (cooperates) while the other confesses (defects) he will not
have another opportunity to confess. The same assumptions may also make a
useful first approximation to situations of industrial pollution, depletion
of ocean fisheries, or some cases of deforestation, for example. In such
situations, monitiring the compliance with a rule of restrained access is
difficult; so any one would-be polluter or ocean fisherman or tree user can
calculate that his own cheating will not be noticed, and equally that were
he to comply with the rule others would make the same calculation and
therefore cheat, leaving him as the sucker.
Where, however, the situation is an enduring or recurrent one,
the logic changes. If the players in a Prisoners' Dilemma know that the
game will be played repeatedly into the future, the chances that they will
cooperate today in the hope that others will then do so are much higher
than where the game is played only once (Axelrod 1981). This is true even



if the rules of each round of the game are consistent with the two key
assumptions stated earlier; so that each player continues to make his
choice in ignorance of what the other players have chosen in that round,
and finds out what they did only when the payoffs are received.
If, in addition, we assume that the players learn quickly what
the others have chosen and can alter their own choice before the payoffs of
each round are received, then the rational strategy is--in sharp contrast
to the simple Prisoners' Dilemma--one of conditional cooperation, or
'cooperate first, defect if the other defects--or more simply pu-, 'no
first cheat'.
If, further, we assume that the players are able to negotiate
changes in the rules of the game among themselves, then one likely rule
change is the introduction of penalties for violating agreements. The
effect of such penalties is to reinforce the tendency towards cooperacion.
So with these new and by no means unrealistic assumptions it
begins to seem that rational individuals can, afterall, achieve rational
collective outcomes. But what constitutes rational choice-making is now
much more complex than in Prisoners' Dilemma.    Here the rational individual
must calculate the consequences of his own attempt to free ride (cheat or
defect) on the extent of free riding by others in the group. If his own
free riding is noticed and if others retaliate by themselves attempting to
free ride, there may be no public good to free ride upon, in which case
free riding is not a rational strategy even for a strictly self-interested
individual. 'Cooperate first and defect if the other defects' is the more



rational strategy. But if there are many players even this may not be
rational, for the consequence of mass retaliatory defection may again be to
stop provision of the public good. hYere the players have an incentive to
respond to signs of noncooperation by cooperating to increase each other's
incentive to cooperate, through exhortation and stiffer penalties for
noncooperation. In this more complex situation considerations of morality,
power), and loyalty also intrude as checks on free riding, as when people
choose not to free ride even when they know that others are cooperating
because to do so would run against moral standards of 'do not take
advantage of others in the group' or expose them to reprisals from outside
the game (reprisais based on property or caste relations, for example).
Rawls (1971) has shown analytically how the compliance of one individual to
a code of conduct can reinforce others in behaving likewise.
F'ree riding, in this view, remains a possibility, but not, as in
Prisoners' Dilemma, an imperative (Runge 1984, Kimber 1981, Sugden 1984,
Snidal 1985). Institutions which give people the assurance that if they do
comply with the rules they will not be the sucker--that those others who do
not comply will be punished--greatly increase the chances of voluntary
compliance. This is important, because the law as a mechanical
barrier--whether local law or national law--can be effective when only a
tiny minority of the population is likely to break it. Most of the
observance of rules has to be more voluntary, because the cost of
enforcement when large numbers of people comply involuntarily (through a
calculus of evasion and punishment) is likely to be prohibitively high.



How does all this relate to village resource use? In the typical
village, the context of common-pool resource use resembles more closely che
assumptions which lead rational choice-makers to cooperate than it
resembles the assumptions of Prisoners' Dilemma. That is, village
common-pool resource use should usually be modeled as a recurring game, in
which the possibility of undetected free riding is fairly low, and in which
the villagers generally do have some control over the structure cf the
situation in which they find themselves.    Insofar as this is true, rational
choice-making is different in village resource use from what is rational in
anomic situations like the Prisoners' Dilemma parable. In villages
rational individuals can (subject to other conditions to be discussed)
voluntarily comply with rules of restrained access.
The main exception occurs when some people in a village become
desperate. They may then contemplate short-run strategies which they would
not contemplate in normal times. They may be tempted to be the first
cheater. For example, when a severe drought struck the Indian village
whose common-pool resource institutions provided the empirical starting
point for this critique, there was a real danger that many people would
start to calculate that those who did not break the irrigation rules first
would not get any water (would be the suckers), as rule violation reached
such a level as to make detection and punishment impossible. In other
words, there was a danger that some people's perception of the situation
would change to resemble a Prisoners' Dilemma. It was just at that time
that the village council2 increased the number of water guards and sent
repeated warnings to the village populace via the village crier that no one



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was to interfere with the work of the village's common irrigators.
Violators were subject to stiff fines, and exposed to loss of social
reputation through having to plead their case in public before the
council. All this activity by the council can be understood as an attempt
to assure irrigators that rule breakers would not get away with it, so
there would be no sucker's payoff; the situation would not be allowed to
become a Prisoners' Dilemma.
gardin's tragedy of the commons
Although Hardin does not use the Prisoners' Dilemma, his argument
shares the same assumptions and can be formally represented as a variant of
the simple model (Dawes 1975). Accordingly our treatment of it can be
limited to those points of the argument which are least appropriate to
village situations.
Hardin begins by asking the reader to imagine a finite pasture
'open to all'. Each herdsman is assumed to be a rational utility maximizer
who receives positive utility from selling his own animals and negative
utility from overgrazing. When the aggregate of all herdsmen's activities
begins to exceed the sustainable yielc of the pasture, each herdsman is
still motivated to add more and more animals since he receives all of the
proceeds from his extra animals and only a partial share of the additional
cost resulting from his own over-grazing. The denouement is appalling:
'each man is locked into a system that compels him to increase his herd
without limit--in a world that is limited.    Ruin is the destination towards
which all men rush, each pursuix,> his own best interest in a society that



-13-
believes in the freedom of the commons' (1968:1244). Hardin finds the only
viable solutifn in 'mutual coercion, mutually agreed upon', by which
restrained access can be enforced.   He takes for granted that this must be
done through the state apparatus--in other words, by an authority external
to those directly affected by the commons.
Just as Prisoners' Dilemma assumes that each participant has no
information about the other's choice, so Hardin's parable assumes that the
individual herder has no information about the aggregate state of the
commons and its nearness to the point of collapse. This assumption permits
Hardin to have the herder make a decision just prior to collapse that is
against his own self-interest--to add another animal thereby precipitating
the collapse, with the consequence that he, as well as the others, loses
all. At issue is the amount of information people have about the larger
situation in which they operate (Kimber 1983). Empirically, there may be
situations of extensive common grazing lands used by scattered communities
which come close to the information assumption of Hardin's model; and ocean
whaling prior to the International Whaling Convention may be another case
in point. But the information assumption often does not make sense where
resource, group, and state characteristics are as described later for the
usual Asian village situation. here monitoring the condition of the
commons, and of cheating, is frequently quite easy.
Similarly, just as Prisoners' Dilemma says nothing about how the
calculations are affected by different absolute values of the payoff, so
Hardin's parable does not distinguish between commons where the resource i.s
vital for the individuals' survival, and those where it is not. It is more



-14-
likely that Hardin's relentless logic will operate where the resource is
not vital than where it is (Kimber 1983).    Where survival is at stake, the
rational individual will exercise restraint at some point.
Finally, hardin, like many others who argue that common property
resources are bound to be depleted without effective state regulation,
fails to make the distinction between situations of no property and
situations of common property. He begins his argument by assuming 'a
pasture open to all'. The case is quite different where a joint ownership
unit exists, and access is open only within the bounds of this unit. Here
the chances of getting compliance with rules of restrained ac-ess are much
better. Yet Hardin and others, by ignoring the dietinction,
inappropriately generalize their results for no property to cover common
property as well. Peasant cases of successful common-pool resource
management all involve common property rather than no property.
Ulson's logic of collective action
Mancur Olson's 'logic of collective action' can be seen as
another variant of Prisoners' Dilemma, although Olson himself does not use
it in his exposition. His core proposition is this: 'unless there is
coercion or some other special device to make individuals act in their
common interest, rational, self-interested individuals will not act to
achieve their common or group incerests' (1971:2). That is, interest group
membership, in the sense of contributions to a group objective, must be
accounted for not by the rational, self-interested choice of individuals,



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but by their being compelled or offered inducements to belong. (Tlhe
punishments and inducements must be 'selective' so that those who do not
contribute can be treated differently from those who do.) Without either
selective punishments or inducements, individuals will free ride, and the
public good will not be supplied or will be supplied in sub-optimal
amounts.
In other words, the theorem says that (1) voluntary collective
action will not produce public goods, and (2) collective action based on
selective (that is, excludable) positive or negative incentives may produce
public goods. Existing cases of common interest groups are thus to be
explained in terms of selective punishments or inducements. This argument
is stated without qualification at the start of Olson's book,
and its compelling simplicity has made it one of the touchstones of debate
on collective action questions. Later in the book, however, the argument
is restricted to 'large' interest groups only, in a taxonomy of 'small',
'intermediate', and 'large' groups. A 'small' group is one in which a
single individual has an interest in providing the public good irrespective
of the contribution of others. 'Intermediate' and 'large' groups are those
where no one individual has this interest and where some cooperation is
therefore necessary. Intermediate groups differ from large groups in that
the actions of a single member with regard to whether he contributes or not
are noticeable to others in an intermediate group, but not to others in a
large group. In Olson's words, an intermediate group is one 'in which no
single member gets a share of the benefit sufficient to give him an
incentive to provide the good himself, but which does not have so many



-16-
members that no one member will notice whether any other member is or is
not helping to provide the collective good' (1971:50). So intermediate
groups can detect free riding more readily than large groups can, because
'noticeability' is higher for intermediate groups than for large groups.
Olson argues that the likelihood of voluntary collective action
(without selective punishments or inducements) is high for small interest
groups, low for large ones, and indeterminate for intermediace ones.
However, he gives 1ittle guidance as to how to distinguish the three types
of groups on the ground. His own examples of large groups are
organizations like trade unions or professional associations with a widely
scattered membership, and against this standard, interest groups in peasant
communities are presumably typically intermediate groups. If so, the
implication is that Olson's theorem simply does not apply to the situation
of peasant villages (Ostrom 1985a).
Nornetheless it is worth drawing attention to two findings from my
study of collective action in Indian villages which run counter to the
spirit of Olson's argument, putting aside the difference In group size. My
study examined the institutions of collective action for resource
management in 31 irrigated vilites in a single district of South India.     I
was particularly interested in why some villages have an elaborate form of
organization for village-based common-pool resource management, while other
villages in the sample have none; only a few miles might separate a village
with a lot from one with none. The organization is entirely independent of
the state. I found that the main factor explaining the presence or absence
of collective organization is the net collective benefit of that action.



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This hardly seems surprising--it would be astonishing if it were not true.
Its interest comes from the failure of Olson's argument--as well as
Prisoners' Dilemma, Hardin's tragedy of the commons, and explanations based
on classic sociological variables--to explain the same pattern of
inter-village variation. Olson's argument would lead us to account for
non-cooperation in terms of free riding, and to account for cooperation in
terms of punishments or inducements which overcome free riding. Yet in
these villages selective inducements are completely lacking, and selective
punishments (as in fines or even social opprobrium) are present but are
hardly the central motivating factor. Presence or absence of selective
punishments cannot bear much weight in an explanation of variation, becween
villages. They are not the ingredient that ensures the provision of the
public good in the Olsonian manner.
In short, these villages exemplify the proposition that it is
possible for an interest group organization to emerge voluntarily and be
sustained largely voluntarily--that is, without selective benefits or
costs--if the net collective benefit is high enough. This runs counter to
the spirit of Olson's argument.
Indeed, one of .he main problems with Olson's argument is its
lack of attention to the size and nature of the collective benefit3--which
is congn-uent with Prisoners' Dilemma?s lack of attention to the absolute
value of the payoff and with ffardin's lack of attention to the vitalness of
the commons. Olson's argument concentrates rather on the size of the
selective benefits and costs, those that can discriminate between people
according to whether they contribute to the provision of the public good or



-18-
not.  It simply assumes the net collective benefit to be high, siace free
riders must by definition be a sub-set of those who value the public good
highly. So the argument inclines one to interpret evidence of
non-coop -ation faute de mieux as evidence for the free rider hypothesis,
rather than for the hypothesis of low collective benefit.
This is the first major qualification to Olson. The second
concerns the source of control and punishment. Olson's key proposition, it
will be recalled, is that existing cases of collective action groups are to
be explained in terms of the response to selective punishments or
inducements. This differs from the more conventional formulation (as in
Prisoners' Dilemma) where joint behavior is related to the presence of an
external enforcer of agreements. One of the merits of Olson's version is
that it leaves open the question of whether the source of selective
punishment or inducement is inside the group or outside; and it thus avoids
the prima facie silliness of the conventional picture of the people who
face congestion of the commons necessarily doing nothing to alleviate it
for themselves. Uowever, Olson himself is not clear on whether he thinks
his 'selective coercion' must come from outside the group. If one
interprets his frgument in the friendliest of ways, he is simply saying
that negative selective sanctions are an essential part of the
organizational design needed to sustain collective action. But he can also
be read as suggesting that the sanctions must be organized from outside the
group itself, specifically from the state. Whatever Olson's position, this
is the position adopted by many writers on the tragedy of the commons, and
the Prisoners' Dilemma model appears to provide an analytical
justification.



-19-
Here my findings and those of many others are contra. We have
many examples where villagers have established rules, monitored the
condition of the commons, monitored cheating, and assigned punishment.4 We
also have, of course, many more examples of where attempts to do this have
failed, and where in the absence of state regulation or private property
the commons has degenerated. But the successful cases of locally devised
rule systems indicate that it is not necessary for regulation of the
commons to be imposed from the outside (C4cKean 1984:56, Ostrom 1986). The
critical question is what are the conditions in which success is likely.
But this is not a question which the more popular collective action
theories encourage one to ask.
Where Olson and other collective action pessimists are surely
right is in the need for some coercion to back up agreements. Their
emphasis on the difficulties of strictly voluntary collective
action--that which proceeds from moral commitment, or habit, or a
calculation of the benefits to each if each complies--is a useful counter
to the simple optimism of those who believe that community development
projects, people's participation, water users' associations and the like
are mainly a matter of teaching people what their real common interests
are, or a matter of changing their values in a less individualistic
direction. On the contrary, the ability to make people do what they may
not immediately want to do, by means of sanctioned rules, is a necessary
ingredient of any arrangement for common-pool resource management. MN{y own
study of Indian villages provides much evidence consi'stent with this
argument, as do studies by Ostrom (1986) and many others. But perhaps the



-20-
most telling evidence comes from Japan. Japanese villagers have had a
strong community identity and have been very concerned about social
reputation and bonds within the group. They have also, according to
Mc.cean, internalized the preservation of the commons as a vital goal.    Yet
'even this most cooperative, compliant group of people were vulnerable to
temptations to bend, evade, and violaLe the rules governing the commons.
Thus there had to be a scheme of penalties and these had t- be enforced'
(iMcKean 1984:54). A great deal of care went into the design and operation
of the (village-, not state-based) penalty mechanism.
The issue of the voluntariness of collective action therefore has
to be considered at two levels. at the constitutional level people can
voluntarily negotiate a set of rules of restrained access or financial
contributions, their incentive to do so being the prospective net
collective benefit. At the action level, most of the compliance with the
rules must also be voluntary, not the result of a calculus of evasion and
punishment. But che rules must be backed by a system of punishment, the
existence of which heips to assure any one person that if he follows the
rules he will not be suckered, and which at times of crisis can directly
deter.5 This argument makes the size of the net collective benefit the
major factor in explaining the presence or absence of corporate
organization in groups like Indian villages. It suggests that Olson's
discounting of this factor results from an exaggerated pessimism about the
chances that individuals can devise ways to overcome the difficulties to
organization which his analysis so well shows. To be fair, however, we
must recall that Olson's pessimistic theorem is about large groups, whereas



-21-
peasant villages are presumably intermediate groups in his classification,
about which his theorem makes no determinate predictions.
The conditions for collective action
The above critique of three popular collective action theories,
combined with empirical knowledge of the conditions in which the users of
common-pool resources have established arrangements to prevent over-use,
suggest a number of factors on which successful collective action depends.
In the extreme case, we would not expect to find effective rules of
restrained access organized by the users themselves when t'iere are many
users, when the boundaries of the common-pool resources are unclear, when
the users live in groups scattered over a large area, when undiscovered
rule-breaking is easy, and so on. Ia these circumstances degradation of
the commons can confidently be expected as demand increases, and
privatization or state regulation may be the only options. The further an
actual case deviates from this extreme the more likely will the people who
face the problem be able to organize a solution.
To spell it out in more detail, the likelihood of successful
organization depends on the following:6
(i) the resources: the smaller and more clearly defined the
boundaries of the common-pool resources the greater the chances
of success;
(ii)  the users:  "he smaller the number of users and the more clearly
defined the boundaries of the user group the greater the chances
of success;



-22-
(iii) the location of resources and users: the greater the overlap
between the location of the common-pool resources and the
residence of the users the greater the chances of success;
(iv)  the ease of detection of rule-breaking free riders:   the mcre
noticeable is cheating on agreements the better the chances of
success.  Noticeability is a function partly of (i) to (iii);
(v)  the users' demands:   the greater the demands (up to a limit) and
the more vital the resource for survival the greater the chances
of success;
(vi)  the userst knowledge:   the better their knowledge of sustainable
yields the greater the chances of success;
(vii) existing arrangements for discussion of common problems: the
better developed are such arrangements among the users the
greater the chances of success;
(viii) Ehe extent to which users are bound by mutual obligations: the
more likely that promises entered into will be kept the better
the chances of success;
(ix)  punishments against rule-breaking:   the more bite the better the
chances of success;
(x) the costs of exclusion: the higher the costs of exclusion
technology (such as fencing) and of enforcing private rights the
better the chances of success;
(xi)  the relative power of sub-groups:   the more powerful are those
who benefit from retaining the commons, and the weaker are those
who favor sub-group enclosure or private property, the better the
chances of success;



-23-
(xii) the reiat4ve power of state and users: the less the state can
undermine locally-based authorities the better the chances of
success.
Many of these facilitating conditions are found in the situations
in which Asian peasant villagers typically use common-pool resources. The
more they are present, the mure promising is the collective action route.
But as the list itself implies, there can be no presumption that the
collective action route will generally work, any more than there can be a
presumption that private property or state regulation will generally work.
My argument is only that (a) the propensity to descend into anarchy or
destruction is neither as strong nor as general as the Prisoner's Dilemma
model and its variants imply, and (b) that where a situation looks
promising for collective action according to the above criteria, government
officials should treat this option as seriously as the other two.
One good reason for taking it seriously is that collective action
is likely to be much cheaper in terms of state resources than the other two
(Runge 1986). both private property regimes and state control regimes are
expensive to make effective.   Already over-stretched states in developing
countries may not be able to provide the necessary resources to make them
work across myriad micro locations. A malfunctioning approximation to a
formalized system of state control or private property rights, based on a
distant authority only dimly aware of local conditions, may be worse in
terms of resource management than a strategy which aims to improve, or at
least not impair, local systems of rules.
The government can help ihese local systems by providing a legal
framework, and perhaps technical assistance. The legal framework should



-24-
make it possible for local collective action organizations to obtain
legally enforceable recognition of their identity and rights within the
society, and to call upon the state as an enforcer of last resort (Korten,
forthcoming). Obvious as it may sound, few countries in Asia have given
much attention to this task, with respect to rural as distinct from modern
urban organizations. If governments move in this direction, their efforts
should widen the range of situations in waich locally-based common property
regimes can be expected to work.



-25-
NOTES
1.   For references, see citations later in text.
2.   The village council is constituted entirely by the villagers for
themselves and 'does not derive its authority from the state.
3.   It is not that Olson says or implies that the size of the collective
net benefit is irrelevant; he simply does not give it much attention.
Occasional passages like the following suggest that it is important:
'A group which has members with highly unequal degrees of interest in
a collective good, and which wants a collective good that is (at some
level of provision) extremely valuable in relation to its cost, will
be more apt to provide itself with a collective good than other groups
with the same number of members' (1971:45).
4.   For example, McKean on Japan (1984), Gilles and Jamtgaard on Peru
(1981), Campbell and Godoy (1985) on the Andes, Hitchcock (1981),
Peters (1983), Thomsen (1980) on Africa, Netting on Switzerland
(1978). See further Runge (1986) and Ostrom (1985b).
5.   This argument is in line with some of the early writings in public
choice theory, notably Buchanan and Tullock (1962) and Ostrom (1968).
Later work in the public choice tradition has tended to focus too much
on the issue of financial contributions. -
6.   See also Ostrom (1985b), the starting point of my own formulation.



-26-
R1FERENCES
Axelrod, R., 1981, 'The evolution of cooperation among egoists', American
Political Science Review, 75 (June):306-318.
Blomquist, W. and E. Ostrom, 1985, 'Institutional capacity and the
resolution of a commons dilemma', in Policy Studies Review
5(2) :383-393.
Buchanan, J. and G. Tullock, 1962, The Calculus of Consent, University of
Michigan Press.
Campbell, Bruce and R. Godoy, 1985, 'Common-field agriculture: the Andes
and medieval England compared', Geography Dept., Queens University of
Belfast, mimeo.
Carruthers, I., and R. Stoner, 1981, 'Economic aspects and policy issues in
groundwater development.' World Bank Staff Working Paper No. 496,
Washington, DC, The World Bank.
Dawes, KR, 1975, 'Formal models of dilemmas in social decision-making', in
Human Judgement and Decision Processes, (eds.) M. Kaplan and S.
Swartz, New York: Academic Press.



-27-
Demsetz, H., 1967, 'Toward a theory of property rights', American Economic
Review 57:347-359.
Ehrenfeld, D., 1972, Conserving Life on Earth. New York: oxford
University Press.
Gilles J.L. and K. Jamtgaard, 'Overgrazing in pastoral areas:     The commons
reconsidered', Sociologia Ruralis 21 (1981), pp. 129-141.
Hardin, G., 1968, 'The tragedy of the commons', Science 162 (Dec.):1343-48.
Hitchcock, R.K., 'Tradicional systems of land tenure and agrarian reform in
Botswana,' Journal of African Law 24 (1981).
Johnsotn, O., 1972, 'Economic analysis, the legal framework and land tenure
systems', Journal of Law and Economics 15:259-276.
Kimber, RL., 1981, 'Collective actions and the fallacy of the liberal
fallacy', World Politics, 33(2), pp.178-196.
Kimber, R., 1983, 'The tragedy of the commons reappraised', Department of
Politics, University of Keele, mimeo.
Korten, F., forthcoming, 'The policy framework for community management'.,
in Community Management: Asian Experiences and Perspectives, (ed.)
D. Korten, Kumarian Press.



-28-
McKean, M., 1984, 'Management of traditional common lands in Japan', Dept.
of Political Science, Duke University, mimeo.
Moore, B., 1967, Social Origins of Dictatorship and Democracy,
Harmondsworth, Penguin.
Netting, R., 1972, 'Of men and meadows: strategies of Alpine land use',
Anthropological quarterly 45(3):132-144.
North, D., and i{. Thomas, 1977, 'The first economic revolution', Economic
History Review, 30:229-241.
Nozick, R., 1974, Anarchy, State and Utopia, Oxford, Basil Blackwell.
Olson, M., 1971, The Logic of Collective Action, Cambridge:   Harvard
University Press.
Ophuls, W., 1973, 'Leviathan or oblivion', in Herman Daley (ed.), Toward a
Steady State Economy. San Francisco, W.H. Freeman.
Ostrom, E., 1985a, 'Are successful efforts to manage common-pool resources
a challenge to the theories of Garrett Hardin and Mancur Olson?',
Working paper W85-31, Workshop in Political Theory and Policy
Analysis, Indiana University.



-29-
Ostrom, E., 1985b, 'The rudiments of a revised theory of the origins,
survival, and performance of institutions for collective action',
Working paper W85-32, WorKshop in Political Theory and Policy
Analysis, Indlana University.
Ostrom, E., 1986, 'Institutional arrangements for resolving the commons
dilemma: some contending approaches', In Capturing the Commons, B.
McKay and J. Acheson (eds.), University of Arizona Press.
Peters, Pauline, Cattlemen, Borehole Syndicates and Privatization in the
Kgatleng District of Botswana, Ph.D. Thesis, Boston University, 1983.
Pi'cardi, A., and W. Siefert, 1976, 'A tragedy of the commons in the Sahel',
Technology Review 78:42-51.
Randall, A., 1983, 'The problem of market failure', Natural Resources
Journal 23(1):131-148.
iawls, J., 1971, A Theory of Justice, Harvard University Press.
Runge, C. Ford, 1984, 'Institutions and the free rider: the assurance
problem in collective acton', The Journal of Politics, 46:154-181.
Runge, C. Ford, 1986, 'Common property and collective action in economic
development'., World Development, forthcoming.



-30-
Smith, R., 1981, 'Resolving the tragedy of the commons by creating private
property rights in wildlife', CATO Journal 1(2):439-468.
Snidal, D., 1985, 'Coordination versus Prisoners' Dilemma: implications
for international cooperation and regimes', American Political Science
Review 79:923-947.
Sugden, R., 1984, 'Reciprocity: the supply of public goods through
voluntary contributions', Economic Journal 94:772-87.
Thomsen, James T., 'Peasant perceptions of problems and possibilities for
local-level management of trees in Niger and Upper Volta,' paper
presented at the African Studies Association MYleetings, October 15-18,
1980.
Wade, R., forthcoming-a, 'The Common Property resource management in South
Indian villages', book on common property resources under preparation
at National Academy of Sciences, Washington, D.C. Also Agricultural
Economics Research Unit Discussion Paper No. 36, World Bank.
Wade, R., forthcoming-b, Village Polities: The Management of Common
Property Resources in South India, Cambridge University Press.



-31-
DISCUSSION PAPERS
AGR/Research Unit
R   r N      ARU 1
Agricultural Mechanization: A Comparative Historical Perspective
by Hans P. Binswanger, October 30, 1982.
Report No.: ARU 2
The Acquisition of Information and the Adoption of New Technology
by Gershon Feder and Roger Slade, September 1982.
Report No.: ARU 3
Selecting Contact Farmers for Agricultural Extension: The Training and
Visit System in Haryana, India
By Gershon Feder and Roger Slade, August 1982.
Report No.: ARU 4
The Impact of Attitudes Toward Risk on Agricultural Decisions in Rural
India
by Hans P. Binswanger, Dayanatha Jha, T. Balaramaiah and Donald A.
Sillers, May 1982.
Report No.: ARU 5
Behavior and Material Determinants of Production Relations in Agriculture
by Hans P. Binswanger and Mark R. Rosenzweig, June 1982
(Revised July 22, 1985).  Revised December 1985,
Report No.: ARU 6
The Demand for Food and Foodgrain Quality in India
by Hans P. Binswanger, Jaime B. Quizon and Gurushri Swamy, November
1982.
ort No.: ARU 7
Policy Implications of Research on Energy Intake and Activity Levels with
Reference to the Debate of the Energy Adequacy of Existing Diets in
Developing Countries
by Shlomo Reutlinger, May 1983.
Report No.: ARU 8
More Effective Aid to the World's Poor and Hungry: A Fresh Look at
United States Public Law 480, Title II Food Aid
by Shlomo Reutlinger, June 1983.
Report No,: ARU 9
Factor Gains and Losses in the Indian Semi-Arid Tropics: A Didactic
Approach to Modeling the Agricultural Sector
by Jaime B. Quizon and Hans P. Binswanger, September 1983
(Revised May 1984).
Report No.: ARU 10
The Distribution of Income in India's Northern Wheat Region
By Jaime B. Quizon, Hans P. Binswanger and Devendra Gupta, August 1983
(Revised June 1984).



-32-
Discussion Paoers
(continued)
Re2ort No.: ARU 11
Population Density, Farming Intensity, Patterns of Labar-Use and
Mechanization
by Prabhu L. Pingali and Hans P. Binswanger, September 1983.
Report No.: ARU 12
The Nutritional Impact of Food Aid: Critria for the Selection of Cost-
Ef f ective Foods
by Shlomo Reutlinger and Judith Katona-Apte, September 1983.
Report No.: ARU 13
Project Food Aid and Equitable Growth:    Income-Transfer Efficiency First!
by Shlomo Reutlinger, August 1983.
Re2ort No.: ARU 14
Nutritional Impact of Agricultural Projects: A Conceptual Framework for
Modifying the Design and Implementation of Projects
by Shlomo Reutlinger, August 2, 1983.
Report No.: ARU 15
Patterns of Agricultural Projection
by Hans P. Binswanger and Pasquale L. Scandizzo, November 15, 1983.
Report No.: ARU 16
Factor Costs, Income and Supply Shares in Indian Agriculture
by Ranjan Pal and Jaime Quizon, December 1983.
Report No.: ARU 17
Behavioral and Material Determinants of Production Relations in Land
Abundant Tropical Agriculture
by Hans P. Binswanger and John Mclntire, January 1984.
Report No.: ARU 18
The Relation Between Farm Size and Farm Productivity: The Role of Family
by Gershon Feder, December 1983.
Report No.: ARU 19
A Comparative Analysis of Some Aspects of the Training and Visit Svstem
of Agricultural Extension in India
by Gershon Feder and Roger Slade, February 1984.
Report No.: ARU 20
Distributional CoTnsequences of Alternative Food Policies in India
by Hans P. Binswanger and Jaime B. Quizon, August 31, 1984.
Report No.: ARU 21
Income Distribution in India: The Impact of Policies and Growth in the
Agricultural Sector
by Jaime B. Quizon and Hans P. Binswanger, November 1984
(Revised October 1985).



Discussion Papers
(continued)
Report No.: ARU 22
Population Density and Agricultural Intensification: A Study of the
Evolution of Technologies in Tropical Agriculture
by Prabhu L. Pingali and Hans P. Binswanger, October 17, 1984.
Report No.: ARU 23
The Evolution of Farming Systems in Agricultural Technology in
Sub-Saharan Africa
by Hans P. Binswanger and Prabhu L. Pingali, October 1984.
Report No.: ARU 24
Population Density and Farming Systems - The Changing Locus of
Innovations and Technical Change
by Prahbu L. Pingali and Hans P. Binswanger, October 1984.
Report No.: ARU 25
The Training and Visit Extension System: An Analysis of Operations and
Effects
by G. Feder, R. H. Slade and A. K. Sundaram, November 1984.
Report No.: ARU 26
The Role of Public Policy in the Diffusion of New Agricultural Technology
by Gershon Feder and Roger Slade, October 1984.
Report No.: ARU 27
Fertilizer Subsidies: A Review of Policy Issues with Special Emphasis
on Western Africa
by Haim Shalit and Hans P. Binswanger, November 1984
(Revised November 1985).
Report No.: ARU 28
From Land-Abundance to Land Scarcity: The Effects of Population Growth
on Production Relations in Agrarian Economies
by Mark R. Rosenzweig, Hans P. Binswanger and John McIntire,
November 1984.
Report No .: ARU 29
The Impact of Rural Electrification and Infrastructure on Agricultural
Changes in India, 1966-1980
by Douglas F. Barnes and Hans P. Binswanger, December 1984.
Report No.: ARU 30
Public Tractor Hire and Equipment Hire Schemes in Developing Countries
(with special emphasis on Africa). A study prepared by the Overseas
Division, National Institute of Agricultural Engineering (OD/NIAE)
by P. J. Seager and R. S. Fieldson, November 1984.
Report No.: ARU 31
Evaluating Research System Performance and Targeting Research in Land
Abundant Areas of Sub-Saharan Africa
by Hans P. Binswanger, January 1985.



-34-                      Discussion Paoers
(continued)
Report No.: ARU 32
On the Provision of Extension Services in Third World.Agriculture
by Al.astair J. Fischer (Consultant), January 1985.
Report No..: ARU 33
An Economic Appraisal of Withdrawing Fertilizer Stubsidies in India
by Jaime B. Quizon, April 1985 (Revised August 1985).
Report No.: ARU 34
The Impact of Agricultural Extension: A Case Study of the Training and
Visit Method (T&V) in Haryana
by Gershon Feder, Lawrence J. Lau and Roger H. Slade, March 1985.
Repor,t No.: ARU 35
Managing Water Managers: Deterring Expropriation, or Equity as a Control
Mechanism
by Robert Wade, April 1985
Renort No.: ARU 36
Common Property Resource Management in South Indian Villages
by Robert Wade, April 1985.
Report No.: ARU 37
On the Sociology of Irrigation: How do we Know the Truth about Canal
Performance?
by Robert Wade, May 1985.
Report No.: ARU 38
Some Organizations Concerned with Animal Traction Research and
Development in Sub-Saharan Africa
by Paul Starkey, April 1985.
Report No.: ARU 39
The Economic Consequences of an Open Trade Policy for Rice in India
by Jaime B. Quizon and James Barbieri, June 1985.
Report No.: ARU 40
Agricultural Mechanization and the Evolution of Farming Systems in    --
Sub-Saharan Africa
by Prabhu L. Pingali, Yves Bigot and Hans P. Binswanger, May 1985.
Rport No.: ARU 41
Eastiasian Financial Systems as a Challange to Economics: The Adventures
of 'Rigidity," with particular referetuce to Taiwan
by Rober Wade, June 1985.
Report No.: ARU 42
Education, Experience and Imperfect Processing of Information in the
Adoption of Innovations
by Alastair J. Fischer, June 1985.
Report No.: ARU 43
A Review of the Literature on Land Tenure Systems in Sub-Saharan Africa
by Raymond Noronha, July 1985.



-35-
Discussion Papers
(continued)
Report No.: ARU 44
Policy Options for Food Security.
by Shlomo Reutlinger, July 1985.
Report No.: ARU 45
Credit Markets in Rural South India: Theoretical Issues and Empirical
Analysis.
by H. Binswanger, T. Balaramaiah, V. Bashkar Rao, M.J. Bhende and
K.V. Kashirsagar, July 1985.
Report No.: ARU 46
The Impact of Agricultural Extension: The Training and Visit System in
India.
by Gershon Feder and Roger Slade, June 1985.
Report No.: ARU 47
Methodological Issues in the Evaluation of Extension Impact.
by Gershon Feder and Roger Slade, July 1985.
Report No.: ARU 48
Estimation of Aggregate Agricultural Supply Response.
by Hans Binswanger, Yair Mundlak, Maw-Cheng Yang and Alan Bowers
August 1985 (Revised October 1985).
Report No.: ARU 49
Land Values and Land Title Security in Rural Thailand.
by Yongyuth Chalamwong and Gershon Feder, June 1985 (Revised October
1985).
Report No.: ARU 50
Land Ownership Security and Capital Formation in Rural Thailand.
by Gershon Feder and Tongroj Onchan, December 1985 (Revised February
1986).
Report No.: ARU 51
Land Ownership Security and Farm Productivity in Rural Thailand.
by Gershon Feder, April 1986.
Report No.: ARU 52



-36-
Discussion Paper-s
(continued)
Report No.: ARU 53
Land Ownership Security and Access to Credit in Rural Thailand.
by Gershon Feder, Tongroj Onchan and Tejaswi Raparla, April 1986.
Report No.: ARU 54
The Management of Common Property Resources: Collective Action as an
Alternative to Privatizationi or State Regulation.
by Robert Wade, May 1986.