In economic terms, common pool resources can be viewed as natural or artificial systems. The characteristics and size of these systems make it hard to exclude potential beneficiaries from their exploitation (Auer 217). As a result of their nature, they are often referred to as common property resources. Classic examples of such resources include seawaters, rivers, irrigation schemes, and fishing grounds. Such forms of wealth are not limited to private owners of capital.
On the contrary, they are accessible to all members of the community. As a result of this public access, the resources are susceptible to overuse and degradation. It is worth noting that these common pool forms of capital are core to human existence. They act as sources of essential products, such as food and water, which are necessary for the survival of mankind. As such, human beings cannot live without these resources. In light of this, it is important to put in place laws and regulations to govern their utilization to ensure sustainability.
The use of common pool wealth is mostly determined by the owners. They may be owned by private individuals, corporations, or community groups. They may also be under the control of local, national, or regional governments. When common resources are owned by no particular person or entity, open access is practiced. The use of this capital is regulated by the application of locally formulated strategies, rules, and regulations (Xepapadeas 591). Common property regimes are mostly used for the preservation and maintenance of these resources. It is noted that when properly managed, communal wealth can regenerate. It can also be saved from exhaustion. Effective and sustainable management can be achieved by setting limits on the amount of ‘harvest and entry’. The laws formulated to address this should be strictly enforced to promote sustainable exploitation.
In this paper, the author is going to analyze an economic issue from a legal perspective. The economic problem selected for this review is the aforementioned common pool resources. The legal frameworks informing the exploitation and management of these assets will be reviewed. The impacts of these legal instruments on the public sources of wealth will also be analyzed.
As stated earlier, most common pool resources are open to members of the society who are at liberty to exploit them. In most cases, there are no set laws and regulations to govern the use of such sources of capital. The practice has led to the congestion and overuse of these resources. Some of them have been destroyed to the point that they are no longer useful to the communities living around them (Xepapadeas 591). Strict regulations help to curb the degradation of the resources. Resource allocations systems that are commonly used are discussed in detail below. They include open access and common property regimes.
Open Access Regimes
The regimes are commonly used to regulate the exploitation of resources in cases where it is not possible to put in place restrictions. There is little oversight over the usage of such resources (Brentwood 64). Utilization in such cases is on a “first come first served” basis (Furuzawa and Kiminami 181). As a result, competition is high. The probability of the resources being degraded is also high. However, open access regimes ensure that the resources are exploited optimally. It is noted that optimal exploitation stimulates economic growth. In addition, the maximum benefits and potential of these assets are realized. The practice also encourages industrialization since raw materials are readily available. Industrialization leads to economic growth and is a source of employment for the members of the community living around the resources.
Open access regimes are often used where the resources are vast. Under such circumstances, restrictions would be uneconomical since the ‘goods’ contained in the assets are excessive and would effectively serve a large population (Furuzawa and Kiminami 181). Examples of common pool resources where open access regimes are used include seas, lakes, and rivers. All members of the communities living around these areas are allowed to exploit them for their own benefit. The economy of such communities is improved. For instance, water bodies support fishermen in the region. The fishermen invest in this trade to support their families and the larger community. Gains made from the sale of such goods stimulate economic growth.
Open access regimes also help members of the society to remain independent. All individuals have the right to exploit the goods contained in the resources. As such, they move to areas where they will be in a position to earn a livelihood. In light of this, open access regime helps create employment opportunities. They are also important in promoting equitable distribution of resources (Carter 158). People from areas that are considered disadvantaged in terms of resource availability can move to the regions where the assets are concentrated. The individuals can then use the gains that they have made as a result of exploiting these resources to develop their own backgrounds.
Disputes are common in such a system since no one can claim ownership over the resources. There are no rules and regulations informing exploitation. As a result, the disputes may be widespread. Furthermore, there are no dispute resolution mechanisms in place. Open access regimes make every good contained in the common pool asset accessible to all individuals. Consequently, the resources become scarce, while their demand remains high (Carter 158).
Scarcity fuels more conflicts. In some cases, it may lead to outbreak of civil wars. For instance, Sierra Leone, one of Africa’s most resource-rich nations, experienced a civil war as different parties attempted to control diamond and iron mines. In such a case, the use of open access regimes in the exploitation of common pool resources may lead to a decline in the economy of a region. It may fail to stimulate economic growth as envisaged by the governments.
Common Property Regimes
Proprietors and custodians of common pool resources may decide to come up with measures to control the amount of wealth ‘harvested’. The measure is often referred to as common property regime (Weeden and Chow 169). It is aimed at coordinating the activities undertaken in light of these resources so as to ensure sustainability. The regimes are community based initiatives and are implemented at local levels. In most cases, they are established through consensus among community leaders. All the members of the community have a moral obligation to abide to the rules and regulations that are agreed upon.
The effectiveness of the common property regime is dependent on the cohesion between members of the community using the resource. In most instances, the terms of the regime are deliberated upon by the members before a consensus is arrived at. The laws are binding to all members of the community. For this reason, the common pool resource should be maintained as a single entity without being split among individuals. Splitting of the communal asset among the members of the community would make it hard to manage.
Every individual would have the right to make decisions concerning the portion assigned to them. In such cases, competition would occur as each party attempts to reap maximum benefits from the resource. Individual and isolated exploitation may lead to optimal utilization in some cases. However, the resources may be exhausted and depleted (Wolsink 833).
Common property regimes also ensure that access to the resources is not free. Access is monitored by the appropriators. There are regulations governing entry. For these reasons, common pool assets that are managed under these regimes cannot be considered as public goods (Wolsink 833). Outsiders are denied the right to exploit or access them. On the other hand, insiders are allowed to benefit from the goods associated with the resources. Once the goods are drawn, the resources are considered to be the private properties of the insiders. They are at liberty to use the goods in whichever way that they choose.
The exclusion of outsiders is important to the members of the community since it reduces competition for the goods obtained. The community that has control over the resource is likely to enjoy economic growth owing to the sale of the items created. If the goods obtained from the resource are scarce in other areas, the community will accrue additional benefits. The market value of such items is likely to go up due to their scarcity. Preventing outsiders from accessing the resources also makes it easy to manage them. External agents are not concerned with the sustainability of the resources. On the contrary, they only seek to exploit them (Philip 72). For this reason, they are more likely to degrade the resources compared to the members of the community.
However, in some cases, exclusion of external parties may be detrimental to the local economy (Philip 72). The community members may lack the capability to optimally utilize the goods obtained from the resources. In such cases, the sources of wealth are underutilized. Maximum benefits are not reaped from the resources. The economic growth of the outsiders is also hampered since they are denied the right to utilize the wealth. One may argue that restricted access to outsiders is important for the preservation of common pool resources. However, it is important to ensure that the reasons for the move are justified and are economically significant. When the restrictions are applied, boundaries should be clearly defined to avoid the occurrence of conflicts.
Common property regimes set limits in relation to utilization of resources. They specify the amount of goods that can be harvested within a given duration of time (Galinato 954). It is important to note that the harvesting of these products is the main economic activity of the people living near these resources. For instance, people living near water bodies practice fishing as their main economic activity. As a result, the assets are the main source of livelihood for these communities. Care should be taken when striking a balance between conservation of the resources and the impact of the regimes on the economy.
Setting a low limit may lead to underutilization of the goods produced. The resources will be of little economic use to the society (Philip 72). Underutilization may also be viewed as wastage of valuable resources, leading to their accumulation. The assets will not be in a position to satisfy the needs of the local industries. They may also fail to satisfy subsistence consumption. As such, the benefits associated with the resource will be unnecessarily reduced. As a result, potential gains will be lost to the members of the society. However, low limits will be of great importance to the community if the resource is under threat of depletion (Galinato 954). The practice may lead to the restoration of previously degraded resources.
Just like lower limits, setting higher limits in terms of the goods harvested has its share of advantages and disadvantages. To begin with, the practice may lead to overexploitation of the resources. The practice is favorable to local industries in the short-term, but it is not sustainable (Philip 72). Such a regime may lead to the collapse of local industries when the resource is totally degraded. It is important to determine the economic implications of limits set by various regimes in a bid to control the exploitation of community wealth. The resources should be used to stimulate economic growth. However, sustainability is equally important.
The role of common property regimes is to ensure that the resources are utilized in a beneficial and sustainable manner. The common property should also bring about economic growth in the community where they are located. To achieve this, a number of steps must be followed in formulating the regimes. For starters, boundaries that are clearly defined should be set. The boundaries are used to mark the areas where the regimes are applied (Galinato 954).
The rules to be applied should then be formulated and discussed by the appropriators to ensure that a consensus is arrived at. Following the consensus, a monitoring system should then be put in place. Appropriators are to be held accountable for the utilization of the resources. Sanctions should be put in place to penalize appropriators who do not adhere to the set rules. Mechanisms for conflict resolution should be identified to ensure that disputes are settled amicably (Wolsink 833). The primary aim of the regimes should be to ensure that the resources available are fairly allocated to all members of the society. The allocation is done in a manner that will promote economic growth and enhance sustainability at the same time.
Privatization is another mechanism that can be used in the allocation of common pool resources. It refers to the transfer of previously publicly owned property to private entities and individuals (Wolsink 833). In this system, private property rights are awarded. The previously publicly held common pool resources are divided into parcels and allocated to members of the community surrounding it. Individuals that get allocations are considered by the law as the rightful owners of the respective parcels. They are required to utilize the goods contained in the parcel responsibly. Their responsibilities include preventing pollution, depletion, and other forms of degradation. The system is of great economic importance when sustainability is achieved. The goods produced are availed to the consumers throughout the year.
The privatization system assumes that the individuals will use common pool resources more efficiently when they are solely responsible for them. Irrational behavior by members of the public is curtailed. Individuals are likely to carefully consider the consequences of their actions before making decisions regarding the use of the resources (Altrichter and Basurto 154). They are also likely to consider ways through which sustainability can be achieved so that they can continue to reap goods obtained from the resource. For example, an individual who is allocated a parcel of land in a forest will consider planting more trees after harvesting so that they can accrue more profits in the next season. Sustainability is vital in promoting economic growth since there is a continuous generation of resources, such as raw materials, which are important in maintaining the productivity of local industries.
Privatization also plays an important role in making sure that disputes between individuals are avoided. The rights to the common pool resources are given to specific individuals. As such, disputes are averted. The law of the land protects and recognizes the individuals who are awarded the parcels. Peace is important to sustainable and fast economic growth (Altrichter and Basurto 154). With privatization, peaceful coexistence is fostered since instances of conflicts of interest are reduced. Members of the community live in harmony with each other. In most cases where privatization mechanism has been used, clear boundaries are demarcated. There are also strict laws that deter people from trespassing into private property. Fencing can also be done to protect the goods contained in the parcels from theft and utilization by intruders and other unauthorized parties.
However, in some cases, privatization may be impractical. Such a situation may occur in instances where common pool resources are indivisible and in instances where it is difficult to demarcate the land. Ocean land, for example, cannot be divided amongst individuals. Even if privatization was to occur, it would be difficult to safeguard the resources from intruders. The nature of the resource also allows for the free flow of goods, such as fish, from one location to the other. Under such circumstances, degradation may occur since no individual is responsible for the resources. The vast nature of such resources makes it difficult to monitor them (Weeden and Chow 169).
Common pool resources can be natural or man-made. It is difficult to exclude the resources from the individuals who utilize them due to the fact that their lives greatly depend on the assets. The communities around the resources are in turn required to protect them from degradation, pollution, and depletion (Altrichter and Basurto 154). Protection of the assets from overuse and congestion will ensure sustainability. The resources are allowed time to regenerate and produce more goods for harvesting by the communities (Weeden and Chow 169).
As a result of their vast nature, common pool sources of wealth are often difficult to allocate to the members of the community. Three mechanisms are often used when it comes to the allocation of these assets. The mechanisms include open access, common property, and privatization regimes. The three approaches have various advantages and disadvantages in terms of their contribution to the economy. Their use in the allocation of these resources also depends on their nature.
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This research paper on Common Pool Resource Allocation: Legal Perspective