Common good (economics)

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Wild fish are an example of common goods. They are non-excludable, as it is impossible to prevent people from catching fish. They are, however, rivalrous, as the same fish cannot be caught more than once. Man fishing from the banks of a lake in Burkina Faso, 2009.jpg
Wild fish are an example of common goods. They are non-excludable, as it is impossible to prevent people from catching fish. They are, however, rivalrous, as the same fish cannot be caught more than once.

Common goods are defined in economics as goods that are rivalrous and non-excludable. Thus, they constitute one of the four main types based on the criteria:

One modern example is climate stability. [1] Classic examples of common goods are water and air. Water and air can be polluted: water flows can be tapped beyond sustainability, and air is often used in combustion, whether by motor vehicles, smokers, factories, wood fires. In the production process these resources and others are changed into finished products such as food, shoes, toys, furniture, cars, houses and televisions.

Another example of a private exploitation treated as a renewable resource and commonly cited have been trees or timber at critical stages, oil, mined metals, and crops. Fish stocks in international waters are also cited. In this latter example, when fish are withdrawn from the water without any limits being imposed, living stocks of fish are likely to be depleted for any later fishermen. To describe situations in which economic users withdraw resources to secure short-term gains without regard for the long-term consequences, the term tragedy of the commons was coined. For example, forest exploitation leads to barren lands, and overfishing leads to a reduction of overall fish stocks, both of which eventually result in diminishing yields to be withdrawn periodically.

Debates about sustainability can be both philosophical and scientific. [2] [3] [4] However, wise-use advocates consider common goods that are an exploitable form of a renewable resource, such as fish stocks, grazing land, etc., to be sustainable in the following two cases:

See also

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Natural resource Resources that exist without actions of humankind

Natural resources are resources that exist without actions of humankind. This includes all valued characteristics such as magnetic, gravitational, electrical properties and forces, etc. On Earth it includes sunlight, atmosphere, water, land along with all vegetation, crops and animal life that naturally subsists upon or within the previously identified characteristics and substances.

Tragedy of the commons A theoretical concept concerning the allocation of shared, open access resources

The tragedy of the commons is a situation in a shared-resource system where individual users, acting independently according to their own self-interest, behave contrary to the common good of all users by depleting or spoiling the shared resource through their collective action. The theory originated in an essay written in 1833 by the British economist William Forster Lloyd, who used a hypothetical example of the effects of unregulated grazing on common land in Great Britain and Ireland. The concept became widely known as the "tragedy of the commons" over a century later due to an article written by American biologist and philosopher Garrett Hardin in 1968. In this modern economic context, "commons" is taken to mean any shared and unregulated resource such as atmosphere, oceans, rivers, fish stocks, roads and highways, or even an office refrigerator.

Environmental economics is a sub-field of economics concerned with environmental issues. It has become a widely studied subject due to growing environmental concerns in the twenty-first century. Environmental Economics "...undertakes theoretical or empirical studies of the economic effects of national or local environmental policies around the world .... Particular issues include the costs and benefits of alternative environmental policies to deal with air pollution, water quality, toxic substances, solid waste, and global warming."

Market failure in economics, inefficient resource allocation resulting in a net loss of value

In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value. Market failures can be viewed as scenarios where individuals' pursuit of pure self-interest leads to results that are not efficient– that can be improved upon from the societal point of view. The first known use of the term by economists was in 1958, but the concept has been traced back to the Victorian philosopher Henry Sidgwick. Market failures are often associated with public goods, time-inconsistent preferences, information asymmetries, non-competitive markets, principal–agent problems, or externalities.

Public good (economics) Good that is non-excludable and non-rival

In economics, a public good is a good that is both non-excludable and non-rivalrous, in that individuals cannot be excluded from use or could benefit from without paying for it, and where use by one individual does not reduce availability to others or the good can be used simultaneously by more than one person. This is in contrast to a common good such as wild fish stocks in the ocean, which is non-excludable but is rivalrous to a certain degree, as if too many fish are harvested, the stocks will be depleted.

Community management or common-pool resource management is the management of a common resource or issue by a community through the collective action of volunteers and stakeholders. The resource managed can be either material or informational. Examples include the management of common grazing and water rights; fisheries and open-source software. In the case of physical resources, community management strategies are frequently employed to avoid the tragedy of the commons and to encourage sustainability.

Overfishing the act whereby fish stocks are depleted to unacceptable levels, regardless of water body size

Overfishing is the removal of a species of fish from a body of water at a rate that the species cannot replenish in time, resulting in those species either becoming depleted or very underpopulated in that given area. According to a highly contested 2006 article in the journal Science, if fishing rates continue unchanged, all the world's fisheries will have collapsed by the year 2048. In a Food and Agriculture Organization of the United Nations 2018 report, the FAO estimates that one-third of world fish stocks were overfished by 2015.

Rivalry (economics) the property of goods whose consumption by one consumer prevents, makes it harder to, or lessens the benefits of simultaneous consumption by other consumers

In economics, a good is said to be rivalrous or a rival if its consumption by one consumer prevents simultaneous consumption by other consumers, or if consumption by one party reduces the ability of another party to consume it. A good is considered non-rivalrous or non-rival if, for any level of production, the cost of providing it to a marginal (additional) individual is zero. A good can be placed along a continuum ranging from rivalrous to non-rivalrous. The same characteristic is sometimes referred to as jointness of supply or subtractable or non-subtractable.

Private good

A private good is defined in economics as "an item that yields positive benefits to people" that is excludable, i.e. its owners can exercise private property rights, preventing those who have not paid for it from using the good or consuming its benefits; and rivalrous, i.e. consumption by one necessarily prevents that of another. A private good, as an economic resource is scarce, which can cause competition for it. The market demand curve for a private good is a horizontal summation of individual demand curves.

Club good

Club goods are a type of good in economics, sometimes classified as a subtype of public goods that are excludable but non-rivalrous, at least until reaching a point where congestion occurs. Often these goods exhibit high excludability, but at the same time low rivalry in consumption. Because of that low rivalry in consumption characteristic, club goods have essentially zero marginal costs and are generally provided by what is commonly known as natural monopolies. Furthermore Club goods have artificial scarcity. Club theory is the area of economics that studies these goods. One of the most famous provisions was published by Buchanan in 1965 "An Economic Theory of Clubs", in which he addresses the question of how the size of the group influences the voluntary provision of a public good and more fundamentally provides a theoretical structure of communal or collective ownership-consumption arrangements.

Sustainable yield

The sustainable yield of natural capital is the ecological yield that can be extracted without reducing the base of capital itself, i.e. the surplus required to maintain ecosystem services at the same or increasing level over time. The term only refers to resources that are renewable in nature as extracting non-renewable resources will always diminish the natural capital. The sustainable yield of a given resource will generally vary over time with the needs of the ecosystem to maintain itself, e.g. a forest that has recently suffered a blight or flooding or fire will require more of its own ecological yield to sustain and re-establish a mature forest. While doing so, the sustainable yield may be much less. The term sustainable yield is most commonly used in forestry, fisheries, and groundwater applications.

In traditional usage, a global public good is a public good available on a more-or-less worldwide basis. There are many challenges to the traditional definition, which have far-reaching implications in the age of globalization.

The commons is the cultural and natural resources accessible to all members of a society, including natural materials such as air, water, and a habitable earth. These resources are held in common, not owned privately. Commons can also be understood as natural resources that groups of people manage for individual and collective benefit. Characteristically, this involves a variety of informal norms and values employed for a governance mechanism. Commons can be also defined as a social practice of governing a resource not by state or market but by a community of users that self-governs the resource through institutions that it creates.

In economics, a common-pool resource (CPR) is a type of good consisting of a natural or human-made resource system, whose size or characteristics makes it costly, but not impossible, to exclude potential beneficiaries from obtaining benefits from its use. Unlike pure public goods, common pool resources face problems of congestion or overuse, because they are subtractable. A common-pool resource typically consists of a core resource, which defines the stock variable, while providing a limited quantity of extractable fringe units, which defines the flow variable. While the core resource is to be protected or nurtured in order to allow for its continuous exploitation, the fringe units can be harvested or consumed.

In economics, a good or service is called excludable if it is possible to prevent people (consumers) who have not paid for it from having access to it. By comparison, a good or service is non-excludable if non-paying consumers cannot be prevented from accessing it.

Global commons is a term typically used to describe international, supranational, and global resource domains in which common-pool resources are found. Global commons include the earth's shared natural resources, such as the high oceans, the atmosphere and outer space and the Antarctic in particular. Cyberspace may also meet the definition of a global commons.

The Commonize Costs–Privatize Profits Game is a concept developed by the ecologist Garrett Hardin to describe a "game" widely played in matters of resource allocation. The concept is Hardin's interpretation of the closely related phenomenon known as the tragedy of the commons, and is referred to in political discourse as "privatizing profits and socializing losses."

A resource is a source or supply from which a benefit is produced and that has some utility. Resources can broadly be classified upon their availability — they are classified into renewable and non-renewable resources. Examples of non renewable resources are coal, crude oil etc. Examples of renewable resources are air, water, natural gas, wind, solar energy, etc. They can also be classified as actual and potential on the basis of level of development and use, on the basis of origin they can be classified as biotic and abiotic, and on the basis of their distribution, as ubiquitous and localized. An item becomes a resource with time and developing technology. Typically, resources are materials, energy, services, staff, knowledge, or other assets that are transformed to produce benefit and in the process may be consumed or made unavailable. Benefits of resource utilization may include increased wealth, proper functioning of a system, or enhanced well-being. From a human perspective, a natural resource is anything obtained from the environment to satisfy human needs and wants. From a broader biological or ecological perspective, a resource satisfies the needs of a living organism.

Overexploitation

Overexploitation, also called overharvesting, refers to harvesting a renewable resource to the point of diminishing returns. Continued overexploitation can lead to the destruction of the resource. The term applies to natural resources such as: wild medicinal plants, grazing pastures, game animals, fish stocks, forests, and water aquifers.

Environmentally Sustainable design is the philosophy of designing physical objects, the built environment, and services to comply with the principles of ecological sustainability.

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