Governing the Commons - Notes
# Ostrom’s 8 Principles for Governing the Commons
Expanded with notes from Common Good by Robert Reich, examples from the Zcash public governance debates, and Swarmwise by Rick Falkvinge
## Clearly defined boundaries
#### No. 1: Individuals or households who have rights to withdraw resource units from the common pool resource (CPR) must be clearly defined, as must the boundaries of the CPR itself.
Defining the parameters is the first step to solving the problem, and organizing collective action. Although the tragedy of the commons issues can drain a CPR in a number of ways, one impediment to organizing around a CPR is the fear that those who invest in maintenance of the CPR will face free-riders who have no incentive to pay back, thus creating a one-round game where the incentive is to overuse the CPR.
This is the defining characteristic between common resources and open access institutions which do not have closed borders.
## Congruence between appropriation and provision rules and local conditions
#### No. 2: Appropriation rules restricting time, place, technology, and/or quantity of resource units are related to local conditions and to provision rules requiring labor, materials, and/or money.
Each system is distinct and requires distinct needs. In the example of provisioning water between spanish huertas, although all the huertas are close in proximity, some of them have water storage and others do not. For the huertas that do not have storage, farmers use a rotational system and consequently know how much water they will receive, but the timing of when they will receive the water is less clear. Different rules are applied to solve the problems of diversifying water to more terrains, and determining fees paid to water guards for maintenance activities although generally those who receive the highest proportions of water also pay the highest proportions of fees.
I think this is an interesting principle to analyze in terms of distributing grants from MEVA. Which teams should receive grants? What areas of research, development, community, or marketing require the most funding, and how should this be determined? How can funding be distributed in as diverse a way as possible while ensuring that the community gets the highest bang for their buck? Important things to consider include: how much has the team received in funding already? Is the funding for growth, or to sustain current operations, or as backpay? Et cetera.
## Collective-choice arrangements
#### No. 3: Most individuals affected by the operational rules can participate in modifying the operational rules.
It’s critical for those who are affected by the rules to be able to change the rules. Not only are people more likely to follow rules that they have created, but this allows the creation of better rules with a productive feedback loop to hone the rules… so long as the cost to changing the rules remains relatively low.
Analysts often assume these rules are created by external authorities who enforce compliance and agreement. In many of the studies conducted by Ostrom, there was no external authority despite a history of centuries of compliance.
Existence of rules does not imply adherence to rules. So why have so many communities succeeded in maintaining their CPRs for centuries?
Many game theoretical models posit that unanimous compliance is key to the continuance of the game. These models indicate that when a single individual deviates, then everybody will deviate immediately and in perpetuity. In practice, this is not the case, and shared social norms and reputation are insufficient in producing stable cooperative behavior in the long term. In long lasting CPRs, communities have invested in monitoring and sanctioning as well.
#### No. 4: Monitors, who actively audit CPR conditions and appropriator behavior, are accountable to the appropriators or are the appropriators.
Theorists presume that external authorities are required to monitor and sanction behavior, because CPR participants cannot overcome the second order dilemma on their own. (The first order dilemma being the provisioning of common goods themselves, the second order dilemma being the incentive to free-ride on mechanisms which keep the common good running, like maintenance fees).
This however is not true - in practice, those who participate frequently are the same people who monitor their peers. How can this be, when punishment is costly to the punisher, but the benefits are evenly distributed across all the members? Different CPRs employ different rules best suited to the needs of the community, and thus the costs of monitoring also vary, but the investment that individuals make in monitoring and sanctioning can be thought of as quasi-voluntary in the same sense that tax payment is quasi-voluntary.
In irrigation systems, each farmer takes turns opening their doors to water flow, and thus each farmer closely monitors the farmer preceding them and are also closely monitored by the farmers following them. This is an example of monitoring that arises naturally from usage of the commons although it is not the only mechanism in place. The monitoring systems in long lasting CPRs are typically highly redundant.
Another factor that theoretical models fail to consider is the abundance of information. Models typically assume perfect information on past behavior that leads to optimal decision making but this is rarely the case. Those who monitor activity will also obtain private information that aids themselves in making better decisions - yet another incentive towards monitoring others. As for the incentive to share this information with others in the community? Well, historically it seems that gifts of booze and cash have worked pretty well.
Interesting mechanism from the “analyzing institutional change” chapter:
**West Basin Negotiations**
* There exists an entity that only monitors and reports the facts - they do not take any action. If any wrongdoing is found, they simply report it to the affected parties and those parties may decide whether or not to take action.
Sort of like a political watchdog group. Also seems similar to the relationship between the Electric Coin Company and the Zcash Foundation. However, as Zooko has noted in his interview with Leigh Cuen, there is a difference between adversarial thinking for designing robust computer systems, and adversarial thinking with regards to monitoring humans.
Where do we draw the line in monitoring behavior and actions of humans who participate actively in decentralized governance? Constant accusations of wrongdoing and default assumptions of malintent from the community members towards community leaders will not only wear down existing leaders, it will also dissuade new members from active productive participation. (Anybody can shit on things and amass followers on twitter, but it doesn’t really resolve critical issues).
## Graduated Sanctions
#### No. 5: Appropriators who violate operational rules are likely to be assessed graduated sanctions (depending on the seriousness and context of the offense) by other appropriators, by officials accountable to these appropriators, or by both.
For those who typically follow the rules but in one instance, are faced with a severe problem, they simply confirm to the monitors
1) the importance of monitoring when everyone seems to be following the rules and
2) that these temptations to break rules exist even for those who tend to follow the rules. In these cases, a small sanction may be imposed as a reminder for compliance. If the fine is too large, it may deter the individual from continuing to follow rules in the future. The same does not apply to frequent rule breakers, who are faced with harder sanctions.
I can't remember the chapter, but there was this Japanese forest community that had restrictions on the size of tree and quantity of trees that each member could cut. During hard times, some members snuck into the forest and broke the rules to cut more trees. The monitors largely ignored this rule-breaking out of sympathy to those who were trying to make ends meet. Additionally, the woodsmen only cut what they absolutely needed to and no more - out of respect to the long term health of the CPR.
## Conflict-resolution mechanisms
#### No. 6: Appropriators and their officials have rapid access to low cost local arenas to resolve conflicts among appropriators are between appropriators and officials.
Determining what constitutes as an infraction enables compliance to the rules. It also separates between those who broke the rules by mistake, and those who have done so purposefully.
In some communities, mechanisms for resolving conflict are relatively informal - in others, there are highly developed court systems in place. It all depends on the nature of the CPR and the interactions between the appropriators. The higher the likelihood of conflict or the more scarce the resource, the more these mechanisms are needed to maintain the rules.
In Valencia, the advanced court system has been in place for 10 centuries!!!
## Minimal recognition of rights to organize
#### No. 7: The rights of appropriators to devise their own institutions are not challenged by external governmental authorities.
CPR participants frequently create their own rules for CPR usage. One way to grief the stability of this system is to go to an external government. Further, external governments often presume that only they can make the necessary rules, despite having less information than the participants themselves. Ostrom refers to an example regarding farmers who use a rotational irrigation system. Upstream farmers have first access to the water and can technically take as much as they want. However, downstream farmers are critical to providing the labor required to maintain the canal and can therefore use this to negotiate more favorable water rights. When the government stepped in and provided canal maintenance (thinking they were doing something amazing for all participants) they inadvertently stripped the downstream farmers of their negotiation leverage, as the labor downstream farmers provided was now far less critical.
## Nested enterprises
#### No. 8: Appropriation, provision, monitoring, enforcement, conflict resolution and governance activities are organized in multiple layers of nested enterprises.
All of the long lasting and complex CPRs meet this principle. Spanish huertas organize on the local, regional, and national level. Problems faced in a tertiary canal are different than those faced in a secondary canal and similarly, this differs in the management of water diversion itself.
I feel like you see this a lot with organizational management and the special numbers people like to talk about - 7 people as the max small group size (total of 21 relationships), then 30, then 150 (the Dunbar number).
Falkvinge’s Swarmwise notes the nested enterprise as critical to building an agile decentralized swarm. He also cautions against filling power vacuums with those who are merely there for their own personal gain and brand building. Is a process necessary for managing the appointment of leadership and management of turnover? Who determines and upholds it?