The Common Property Problem

The common property problem arises when livestock are kept under individual ownership on communally owned land. With communal land ownership each individual tries to maximize his share by increasing his own livestock holding as much as he can; this leads to overstocking and degrading of the pasture. The mainstream opinion on this matter is that the solution is to privatize the land which will hopefully prevent tragedy of the commons. The common property problem assumes utility maximization by individuals rather than long term community maximization. This leaves them in need for a formal institution to regulate the land and prevent degradation by finding the optimal level of stocking.

There are two main motives for the pastoralists to continue to grow their herds exponentially. The first is related to insurance against risk. Of course there is a certain percentage of your herd that may die during a dry season or due to any kind of disease that may occur, and the more livestock that you own the less likely you are to lose them all.  The second motivation is investment related. These animals are a capital investment that can create lasting returns and will continue to grow as long you keep breeding them. Therefore, more livestock is more profitable. This constant growth model creates several issues. If there are uneven stock holdings among individual herds there are conflicts of interest that create a hostile environment and an increased stratification of wealth in the area. Also as they continue to grow, resources run out creating the "boom and bust syndrome" among this industry.

Taking a closer look at the degradation of land it is clear that collective rationality would tell the pastoralists to stop growing their individual herds to be larger than the carrying capacity of the land. Unfortunately without regulation the situation does not play out that way. During good years the available forage increases, so the herds multiply. On the contrary, when there is a drought and the available forage decreases, the herds stay at the same level because this is the time that pastoralists need the most milk produced and also are also diversifying risk through large numbers. AS technology increases and water resources become more transportable, land degradation increases even more. Now they don't even have to migrate around but can just stay in one place to save labor costs. This articles suggests that individual and collective rationality are at odds in this scenario and are at the center of the common property problem. It proves that without institutions, there cannot be common property without serious land degradation taking place.