Tuesday, October 13, 2009

Nobel for Natural Resources

This may have been lost in the attention given to a more prominent prize and its recipient. Half of this year's Nobel Prize in Economics was awarded to Elinor Ostrom for her work on the distribution of natural resources.

Ostrom has studied the "tragedy of the commons," the notion that if a town has a common pasture on which everyone can graze sheep, the land will be overgrazed, making it less useful for everyone. Ostrom found that in a wide range of such settings -- such as shared fisheries, forests and water supplies -- people form voluntary arrangements to govern use and prevent overharvesting. That applies, she has found, even in the absence of a powerful centralized authority.

That has deep implications for how to help poor countries develop. If an aid agency were to build an irrigation system in a distant location that must be shared by different communities, it may need to establish whether those communities have a history of cooperating to share scarce resources, rather than expecting such restrictions to be enacted by fiat.
Sharing of natural resources is of course not just a problem for developing countries and not just a problem for human economies. Even in the United States there are ongoing conflicts involving water usage in western states, the interests of coal companies versus residents' drinking water from Arizona to Appalachia, and declining fisheries. There are also difficulties with distributing resources to meet both human and animal needs. Ongoing fights over habitat for owls and salmon in the Pacific Northwest are but two examples. As the climate changes and the world's population grows, the proper division of natural resources will come into even greater prominence. It is important that we have economists and other scholars studying how best to meet these challenges.

The Nobel committee awarded President Obama this year's Peace Prize with the hope that the United States would take "a more constructive role in meeting the great climatic challenges." Two years ago, it awarded the Peace Prize to the IPCC and Al Gore for their work in studying and promoting the threat of climate change. Those two awards, combined with this year's Economics Prize, seems like a signal that the Nobel committee is taking environmental issues very seriously. I wish American leaders would do the same.

Update: Here is Grist's take on the award.