6 Design Principles to Sustain the Commons

6.1  Introduction

What is the best set of rules to govern a particular type of shared infrastructure? This is the ultimate question asked by policymakers involved with managing common-pool resources and providing public infrastructure. Unfortunately, there is no such optimal set of rules. What we have learned over the years is that there are some “design principles” that help explain why some communities are successful while others are not.

These design principles are based on a systematic study of many case studies of fisheries, irrigation, groundwater, and forestry systems. Information was collected from each case study regarding the size and composition of the community, the formal rules and norms in use, how the system was monitored and by whom, the conflicts that arose, and how the resource system evolved over time.

Elinor Ostrom and her team studied hundreds of these case studies in the 1980s and proposed the design principles in her classic 1990 book Governing the Commons. She initially focused on determining which rules were best but was unsuccessful in identifying a particular set of rules that were “best” in all circumstances. Instead, she turned her efforts toward identifying eight underlying design principles that characterized case studies of long-lasting common-pool resource systems. The design principles she identified were mostly met in these long-lasting systems, but were absent in those that collapsed.

The concept of eight design principles was an initial proposal in 1990. Twenty years later, analyses of about 100 case-studies provide evidence that the design principles hold up when challenged with data (Cox et al., 2010; Baggio et al., 2016).

6.2  Institutional design principles

The design principles derived from case studies of long-lasting systems of common-pool resource governance:

1. Clearly defined boundaries. The boundaries of the resource system (e.g., irrigation system or fishery) and the individuals or households with rights to harvest resource units are clearly defined.
2. Proportional equivalence between benefits and costs. Rules specifying the amount of resource products that a user is allocated are related to local conditions and to rules requiring labor, materials, and/or money inputs.
3. Collective-choice arrangements. Many of the individuals affected by harvesting and protection rules are included in the group that can modify these rules.
4. Monitoring. Monitors, who actively audit biophysical conditions and user behavior, are at least partially accountable to the users and/or are the users themselves.
5. Graduated sanctions. Users who violate rules-in-use are likely to receive graduated sanctions (depending on the seriousness and context of the offense) from other users, from officials accountable to these users, or from both.
6. Conflict-resolution mechanisms. Users and their officials have rapid access to low-cost, local action situations to resolve conflict among users or between users and officials.
7. Minimal recognition of rights to organize. The rights of users to devise their own institutions are not challenged by external governmental authorities, and users have long-term tenure rights to the resource.

For resources that are parts of larger systems:

8.Nested enterprises. Appropriation, provision, monitoring, enforcement, conflict resolution, and governance activities are organized in multiple layers of nested enterprises.

We will now look at each design principle in more detail. Although the design principles are intended for natural resources, we will illustrate their use with other kinds of systems too.

6.3  Examples of design principles

6.3.1  Well-defined boundaries

The first principle relates to two types of boundaries: the biophysical boundaries of the resource system and the boundaries that determine which individuals or households have rights to harvest the resource. Having clear boundaries is critical to addressing the problem of free-riding. If there are clear boundaries indicating who can appropriate which resources, it will be clear who is following the rules or not when harvesting activities are observed.

These two types of boundaries are demonstrated in our roadway systems. Not having a valid drivers’ license is a clear violation of a boundary rule of driving a car on the road. Roads themselves benefit from clear demarcations on the road to define the lanes.

Such clear demarcations also help in sports to define the boundaries of the common space for competition. What would John McEnroe do if there were no clear lines on the tennis court? In many sports, players wear a uniform and a number that indicates that they are allowed to participate. You cannot just run in the New York marathon. You have to sign up and wear your start number and start in your assigned position. Also, many internet services require that you register in order to be able to use those services. Watching a streaming Netflix movie in the U.S. is possible if you have paid your monthly fee, but it is not possible to do this on the same account on your laptop in China. The reason for this is that the rights for consuming  Netflix content are clearly defined for certain countries for which Netflix owns copyrights. When your laptop uses an IP address outside the U.S., Netflix  will not provide access to the content.

When resource users create boundaries, they can make use of the ecological context. For example, defining specific areas with easily observable landmarks  where one can harvest from the resource makes it easier to monitor and enforce.

Clearly defined boundaries are not enough for a successful institutional arrangement. One also needs to be able to defend boundaries against potential intruders. But the research shows that clearly defined boundaries are a prerequisite for success.

6.3.2  Proportional equivalence between benefits and costs

Do the rules allocate the benefits from the resource in proportion to the costs of  effort people put into harvesting and maintaining the resource? If some users get all the benefits and pay a small proportion of the costs, other users might not be willing to follow the rules over the long term. This design principle relates to fairness. Yet some inequality in the benefits people derive from the resource are acceptable provided the cost they bear in relation to the benefit is proportional. For instance, users may accept that the individuals who put a lot of effort into building an irrigation system get a better plot of land to grow his/her crops.

Salary levels are a typical topic of debate, especially in periods of economically challenging times. For the sustainability of an organization, it is not wise to lay off employers while the boss keeps her seven-figure salary. Similar levels of sacrifices are expected over the whole organization.

There are important differences between countries in how costs and benefits are defined. For example, because the labor market in the U.S. is more flexible it is easier to lose a job and there is only a limited safety net. Within Europe, social security provides a minimum level of income for people who have no job. How a society allocates its costs and benefits—as exemplified in their rules—is largely defined by prevailing social norms. Fairness within the U.S. relates to receiving benefits based on effort, while in Europe fairness relates to equality among people independent of effort. This is a gross simplification, but as the authors can attest—since both of us have lived on both continents—there are important differences in social norms that affect the rules on allocation of costs and benefits.

6.3.3  Collective-choice arrangements

People who are affected by institutional arrangements should have a way to participate in making and modifying the rules. Action situations where local resource users are able to devise rules are able to better tune those rules to local circumstances. Further, when participants make the rules together, they often receive more careful consideration by participants. When rules are viewed as imposed by an elite, participants are less likely to comply with them.

Universities typically include students in their governance systems, and sport federations have athletes on their boards. These are all ways to include relevant knowledge in the decision making process—the perspective of students and athletes—and increase the likelihood that the rules are accepted by the broader community.

In larger organizations, or even states, countries and the global community, the ability of people to participate in rule crafting seems difficult. Sometimes we may think the only thing we can do is to vote for who represents us in the decision-making process. One of the big challenges we face in modern times is the large scale of the communities we participate in.

6.3.4  Monitoring

How is monitoring of the rules organized? Effective monitoring is not only a matter of counting the number of guards, referees, and policemen and making sure this number is high enough. The subtleties of what these monitors actually do to monitor and enforce the rules and the incentives they face are critical. If guards in a national park are not paid well, it is not surprising that they might accept bribes to look the other way when poaching is happening. It is often more effective to have local people as monitors. This may assure conditionally-cooperative resource users that somebody is genuinely checking on the conformance of others to local rules. In urban areas neighbors sometimes organize themselves in a neighborhood watch instead of hiring security personnel.

To understand whether monitoring will be effective, we need to understand what the incentives are for a monitor. Will a monitor be paid independent of whether rules are broken or not? Will a monitor be affected by rule breaking (are they a local resource user themselves). Will somebody notice whether the monitor is doing his or her job or not? If there is a lot of variation in harvest levels, people may not notice in the short run whether rules are broken or not.

Sometimes monitoring is so important for the functioning of the system that high investments are made in monitoring. In some highly productive fisheries in the Artic, each boat has an official of the federal agency NOAA (National Oceanic and Atmospheric Administration) on board. Does this sound outrageous? This is like having a police officer riding in every car to make sure drivers don’t break the rules. What about all the official and unofficial referees (general public) during a football match?

6.3.5  Graduated sanctions

People make errors. When you make a mistake you get a warning. If you keep bullying a player on the other team you may receive a yellow card. And if you continue ignoring the rules you may get sent off the field with a red card or even be expelled from the league.

For many action situations there is a graduated sanctioning system. One reason is that rules are not always commonly understood or known, and getting a warning when a rule is broken may remind people of the actual rules in use. Another reason is the potentially high costs of strict enforcement. What would happen to a sport if there was strict enforcement of the rules? There are norms of fair play, and a tolerance of players exploring the boundaries of the formal rules. This is especially important if the assessment of whether a rule is broken necessarily involves some subjectivity.

6.3.6  Conflict-resolution mechanisms

The goal of conflict resolution mechanisms is to provide access to rapid, low-cost, local opportunities to resolve conflict among users or between users and officials. Rules, unlike laws of nature, have to be understood in order to be effective (the laws of nature function whether or not we understand them—right?). There are always situations in which participants can interpret a rule that they have jointly made in different ways. By devising simple, local mechanisms to get conflicts aired immediately and resolutions that are generally known and accepted in the community, the number of conflicts that reduce trust and cost time and money can be minimized. If individuals are going to follow rules over a long period of time, some mechanism for discussing and resolving what is or is not a rule infraction is quite necessary to the continuance of rule conformance itself. For example, within Wikipedia there can be eruptions of editing wars and designated editors can mediate between the different parties to resolve the conflict.

Not all disputes within the U.S. appear in front of the Supreme Court. Most conflicts can be resolved informally by having a good discussion in a neutral environment. By having a drink with your colleague or neighbor, you may discover that the conflict is mainly caused by a misunderstanding. When conflicts are not resolved in informal ways, more formal procedures are possible, such as through your homeowners’ association, your company, the court system, etc. The importance of cost effective conflict resolution cannot be understated. Consider the resources expended on litigation in the U.S. Litigating minor conflicts in hope of financial gain is enormously costly to society.

6.3.7  Minimal recognition of rights

When local users can organize themselves to craft their own rules, do national and local government entities recognize and respect these arrangements? The lobster fishers in Maine organized themselves in the 1920s and 1930s after the lobster population almost collapsed. The rules devised by these organizations were informal arrangements among fishers. In the 1990s the federal government wanted to reorganize fishery regulations along the east coast of the U.S. and have all fishers in all states comply with the same regulations. The well-functioning lobster fishery system would have been negatively affected by this, and significant efforts by fishers and scientists resulted in their informal arrangements receiving legal recognition, permitting them continue as they had within the framework of modern regulations.

6.3.8  Nested enterprises

When systems are larger, it may be necessary to have systems of governance at different levels. What might be needed is a “polycentric” (many centers of governance and authority) system. Every neighborhood may need to have policemen to patrol the streets, but not each neighborhood needs to have a crime lab. One crime lab for the whole city might be a better solution in terms of having the specific expertise available at a reasonable cost.

Polycentric systems emphasize approaching problems at the right level and ensuring that all parties with some control over outcomes (centers of power) are involved. This may mean that some collective action problems are addressed locally, while others are addressed at a regional or national level. For example, in resolving disputes on the use of water from the Colorado River, it is not productive to have Los Angeles and Phoenix debate this topic alone. Several states and the Bureau of Reclamation need to be involved in order to develop a meaningful plan for allocating the available water.

There are various challenges with polycentric systems. What is the right level of governance for each problem? Some lower-level communities might not be able to self-organize, or they may be dominated by local elites. How do higher-level authorities facilitate the local level governance systems to succeed?

In a polycentric system, some units are general-purpose governments while others may be highly specialized. Self-organized resource governance systems in such a system may be special districts, private associations, or parts of a local government. These highly specialized governance units are nested in several levels of general-purpose governments that provide civil, equity, as well as criminal courts.

A university is often organized as a polycentric system. Each department has a certain level of autonomy in offering courses. New courses can be offered, but to get them permanently on the books and count for college-wide credits, they have to be approved at the college level. Some basic requirements hold for all the majors, while the rest of the course work can be tailored to the specifics of the major.

Besides departments, there are specialized organizations and services such as fraternities and sororities, research institutes, financial aid offices, and libraries. Although there is a university president who oversees the whole university, most units have a lot of flexibility within the general constraints set by the higher levels of authority. If there is a lack of autonomy such that each decision at the local level requires approval from “above,” a large organization will grind nearly to a halt because of the transaction costs associated with decision making and many decisions will be made by higher-level officials without proper knowledge of the detailed practical problems associated with the decision.

6.4  Using design principles in practice

The design principles were originally proposed as hypotheses based on analysis of several case studies. In the more than 30 years since they were developed, they have held up to scrutiny. Although some people may interpret the design principles as blueprints for designing robust institutional arrangements, they are not. They are observed regularities derived by looking at cases after the fact. So how can we use the design principles in practice?

One way to use design principles is to translate them into questions concerning how to improve institutional arrangements for governing the commons. For example, for local resource users we can ask:

• How can we better define the boundaries of this resource and of the individuals who are using it so as to make clear who is authorized to harvest and where harvesting is authorized?
• How can we clarify the relationship between the benefits received and the contributions to the costs of sustaining this system?
• How can we enhance the participation of those involved in making key decisions about this system?
• Who is monitoring this system and do they face appropriate incentives given the challenge of monitoring?
• What are the sanctions we are authorizing and can they be adjusted so that someone who makes an error or a small rule infraction is sufficiently warned so as to ensure longer-term compliance without our trying to impose unrealistic sanctions?
• What local and regional mechanisms exist to resolve conflicts arising over the use of this resource?

For design principles seven and eight, questions need to be addressed at a higher level of governance.

• Are there functional and creative efforts by local appropriators to craft effective stewardship mechanisms for local resources that should be recognized?
• How do we create a multiple-layer, polycentric system that can be dynamic, adaptive, and effective over time?

These are not, of course, the only questions local resource users and officials should ask in an effective process of crafting institutional arrangements, but they can be thought of as a good beginning.

6.5  Threats to sustainable use of the commons

Even as we look carefully to the design principles for guidance, there are various threats to the sustainable use of common-pool resources. We list a number of them below based on what we have learned from many case studies.

6.5.1  Rapid exogenous changes

Rapid changes in technology or population numbers can become a challenge to effective governance of the commons. A new technology that enables fishers to catch more fish with the same amount of effort, may render rules on where and when to fish useless unless restrictions on gear are implemented. The provision of music, movies and books has experienced many challenges during the last few decades with the emergence of new physical devices to digital files. These challenges have caused the need for change in the original business structure of creative activities in order to remain viable. A musician cannot depend on the sales of music records anymore, but must find other ways to earn revenues from his or her creations.

6.5.2  Translation failures

Informal arrangements can be translated into official rules. For example, when writing the bylaws of a homeowners association the rules are often based on informal practices. Over time the reasons why some formal rules are written in the books may be lost, which may lead to problems.

For example, when a simple majority rule is used to make decisions, one can push forward with important decisions when the minimum number required is reached, but this might not be best for the viability of the community. A slight majority means that almost as many members of the community oppose the decision. Leaders who rely on minimal majorities for too many decisions may find themselves having to use coercion and/or corruption, rather than general agreement, to keep themselves in power.

6.5.3  Blueprint thinking

The fact that some rules work out well in one action situation does not mean that those same rules will work well for other situations. The rules and regulations for urban planning in Boston might not work well in Phoenix given the many differences in the biophysical and social context. Obviously, rules for tennis would not work for basketball. However, rules of the game of ice hockey may not work well for field hockey even though these sports share many similarities. Nonetheless, we see blueprint thinking frequently, especially when large organizations implement many projects, as is the case in development agencies. The World Bank may implement projects on community development in many places in the world, but requires each project to use the same blueprint policies to receive funding.

6.5.4  Corruption and rent-seeking

When individuals in power have the opportunity to allocate resources, there is always the possibility of corruption. In these situations, various actors may collaborate to harvest subsidies or large infrastructure investments. When a bridge needs to be built, will the money be spent to build it according to the specifications, or can the inspector be bought off to save on expensive, high-quality construction materials?

6.5.5  Lack of large-scale supportive institutions

Small-scale communities can be very effective in self-organizing and sustaining their shared resources but will eventually experience challenges in the long term if they do not have the support of larger-scale institutions. For example, when efforts are coordinated at a large scale, scientific information can be collected and analyzed with expertise and resources that are not possible at the small-scale (it is difficult to build a particle accelerator by yourself). Farmers, for example, may receive help from highly trained professionals on new technologies and methods. Agricultural extension agencies provide a supportive role in disseminating knowledge, information and experience that farmers would not have the time to gather as individuals working alone.

6.6  Critical reflections

Based on the analysis of many case studies of fisheries, forestry, irrigation systems, and other long-lasting social-ecological systems, design principles can be identified. Those design principles are not blueprints for design but are guiding principles to analyze institutional arrangements and help researchers and practitioners to ask appropriate questions to improve the governance of the commons as needed.

6.7  Make yourself think

1. What are examples of boundaries that are not clearly defined?

2. Neighborhood watch programs are an example of self-monitoring. What are the pros and cons of such programs? How about neighborhood Home Owners Associations (HOA’s)? Have you ever heard someone say about the new house they bought “Well, the good thing is that there is NO HOA”.

3. When economic times are tough, politicians often recommend centralization of government function to save money. Why is centralization of governance structures in cities not necessarily an effective way to save monetary resources?

6.8  References

Baggio, J. A., Barnett, A. J., Perez-Ibarra, I., Brady, U., Ratajczyk, E., Rollins, N.,Rubiños, C., Shin, H.C., Yu, D.J., Aggarwal, R., Anderies, J.M., and Janssen, M. A. (2016). Explaining success and failure in the commons: the configural nature of Ostrom’s institutional design principles. International Journal of the Commons, 10(2), 417–439. DOI: http://doi.org/10.18352/ijc.634

Cox, M., Arnold, G., & Villamayor Tomás, S. (2010). A review of design principles for community-based natural resource management. Ecology and Society, 15(4), 38.

Ostrom, E. (1990). Governing the commons: the evolution of institutions for collective action. Cambridge University Press.

Ostrom, E. (2005). Understanding institutional diversity. Princeton, NJ: Princeton University Press.