How to Repair our Resource Management Strategies

While we are working on this book, we see resources everywhere, from our phones and laptops to our families and colleagues (whom we saw quite infrequently in the last two years) to neighbors and global communities. Resources might exist in mutual relationships. Publishing houses are resources for aspiring authors, for example, but authors are also a resource. If authors would not sign contracts with them, publishing houses could not survive.

There are at least three types of resources. \emph{Private goods} are those whose ownership is restricted to an individual or a group who has already purchased the good. Your cell phone, a movie ticket you bought (well, before and after a pandemic), and a package of sausage (preferentially \emph{chorizo picante} you bought, maybe too often during the pandemic) are examples. Economists like to use the terms rivalrous'' and excludable,” for situations in which the availability of private goods is finite. The size of a cinema-hall is visibly finite, so access to the resource is excludable based on the purchase of a ticket. If you managed to buy all the tickets, you are the only user. Others, your rivals, can’t use it \citep{privategood}.

Public goods are non-rivalrous and non-excludable and available for each member of society. By society, we mean they are available to the population of a single country, since public goods are determined by national policies and a national budget. Law enforcement and national defense are certainly public goods in each country. Since there is no free lunch, the expenses of the public goods are covered by taxes. National policies decide whether healthcare and public education are public goods. The decisions are far from trivial, and there is a recurring question: Should we or shouldn’t we?

Arguments for government spending on public goods state that it is very beneficial for the whole society since a healthy and well-educated workforce will build a better country. Criticism is based on the argument that taxpayers pay for services they do not necessarily use, and the private sector is more efficient \citep{pubgood}.

Common-pool resources are a commodity that, in some sense, are located between a public and private good. A common-pool resource is rivalrous but non-excludable. In principle, it is available to everybody, but its supply is very finite. Fishes in the oceans are typical common-pool resources. Such goods can be overused and over-exploited. While a fisherman—who is not an owner of the resource—knows that more fishing may imply the extinction of fishes, he does not have any incentive to moderate his fishing. If he decides to leave more fish in the ocean today, he will not have more tomorrow, since other fishermen will catch more today. African elephants have also been common-pool resources and are overhunted \citep{jung17}.

The tragedy of elephants is a special case of the tragedy of the commons, a concept popularized by the biologist Garrett Hardin ($1915-2003$) \citep{hardin68}. His paper elaborated on the growing concerns about human overpopulation, but its illustrative example came from English sheep-grazing land. The problem is that each agent would act in his or her own (short-term!) self-interest and consume as much of the commonly accessible, scarce resource as possible. In the longer term, the resource would disappear, leading to tragedy.

Club goods are excludable but non-rivalrous (or at least not until they reach a point where saturation occurs). A private park is a textbook example.

For the continuation .. now you can pre-order the book.