“The Tragedy of the Bunnies” is a simple game that illustrates an important concept commonly referred to as “The Tragedy of the Commons.”

Having a commons (publicly-owned property) sounds like a great idea, so why do stories about the commons – the ocean, rivers, and air – so often turn tragic? Why are so many species facing extinction? Why are so many resources being depleted?

How do we avoid these tragedies? The following discussion explores some solutions.

The Tragedy of the Commons is a well-known phenomenon to environmentalists and economists. The phrase itself was penned by Garrett Hardin in his seminal 1968 article, "The Tragedy of the Commons."

As any economist will tell you, people respond to incentives. If there's a valuable resource lying about in a commons—picture a pizza at a frat party—people will try and grab as much of that resource as they can before the resource is depleted. This response is natural—it's an example of people responding to incentives. In other words, in a zero-sum game, you need to "get while the getting is good". The more other people get, the less there is for you.

Even if the resource is renewable—like a forest or an elephant population—the situation can turn into a zero-sum game. This is because while it may be in the community's interest to refrain from depleting the resource, it's still in each individual's interest to "get while the getting is good." Tragically, the very people who do act in the long-term public interest and refrain from depleting the resource end up getting nothing. Even more tragically, when a renewable resource is utterly depleted, no one benefits over the long-term. This is the tragedy of the commons.

How Can We Avoid the Tragedy of the Commons?

To most people, the obvious way to avoid the inevitable depletion of resources in a commons is to employ top-down regulations. However, regulatory approaches are fraught with their own problems, often resulting in unintended consequences that may actually exacerbate the problem.

Consider the example of elephants. During the late 1980s, the ivory trade received a great deal of attention, in part due to efforts of the International Wildlife Commission to raise awareness about the problem of poaching. In April of 1989, The IWC sponsored an advertisement featuring the image of a dozen African elephants lying dead and rotting at the edge of a forest, their faces mutilated by chainsaws used to hack off their tusks. The message: Stop the international trade in ivory and thereby stop the massacre.

The message got through, and ivory trade was banned, despite the fact that elephant populations were stable in countries like South Africa and actually on the rise in countries like Zimbabwe.

The ban on ivory trade necessarily resulted in high enforcement costs and ultimately failed to in its objective to stop poaching. Why?

While the ban successfully shut down most legal markets for ivory, the black market ivory trade flourished. A kilogram of unworked ivory, which sold for around $200 before the ban, was reported to be selling for as much as $2,000 in 1993. This artificial increase in the value of ivory created huge incentives for poachers. In the five years following the ban, customs officials in Africa seized more than 2500 shipments of black market ivory.

CAMPFIRE-A Property Rights Based Approach

About the same time the ban on the ivory trade went into effect, Zimbabwe instituted a unique program called CAMPFIRE (Communal Areas Management Program for Indigenous Resources). Through the CAMPFIRE program, rural villagers are granted title to wildlife living on their land. By selling photo and hunting safari rights to tourists, the villagers are able to generate much needed revenue. At the same time, the villagers are given a strong incentive to protect the wildlife from poachers.

The CAMPFIRE approach has worked so well in Zimbabwe, in fact, that officials are pushing for an end to the ivory trade ban. As one official of the National Park Department put it, "Wildlife is a renewable resource. If utilized properly and in a sustainable manner, it will go a long way towards improving our people's life as a country and a continent. We want to make use of this resource which we have in abundance."

Many people balk at the very idea of giving people property rights to elephants. However, by denying financial benefit to the villagers who cohabitate with elephants, we create a perverse incentive structure—poachers have a big incentive to poach, and locals, with no stake in the elephants, have little incentive to stop poachers from poaching. In fact, African villagers who see elephants as a threat to their safety and their crops often view poachers in a relatively positive light.

Giving local communities property rights to the elephants on their land has proven to be an effective way to enable humans and elephants to live together to mutual advantage.

Of course, it's not always easy to define property rights; such is the case with fish and water supplies, for example. However, as empirical researchers like Elinor Ostrom have discovered, people have developed a staggering array of institutional arrangements that effectively manage commons to the benefit of local communities.