Cassandra has moved. Ugo Bardi publishes now on a new site called "The Seneca Effect."

Monday, July 27, 2015

Hardin's "tragedy of the commons" explained with a practical example: a tourist trap in Florence

Image by James Good

Garrett Hardin's idea of "The Tragedy of the Commons" has become well known, but not always really understood. In my case, I can say that I have big troubles in having my students grasping its mechanism; that is the interplay of individual advantage versus public goods; the basic factor that leads to what we call "overexploitation."

Perhaps the problem lies in the fact that Hardin used the example of sheep and pastures to explain the reasons of the tragedy, but that's rather unfamiliar to my students (as well as to most of us). For instance, many of my students don't seem to be able to grasp the concept of "overgrazing", that is the fact that grass doesn't regrow if it is grazed too much. Besides, the pastures that Hardin was considering never experienced the "tragedy"; they were well managed and well regulated, specifically in order to avoid it.

So, let me propose a different example for the mechanism of overexploitation, based on a real event that happened to me. Maybe it can explain the concept better.

Just a few days ago I was literally kidnapped inside an underground parking in Florence because I had lost my entrance ticket, with the employees of the place insisting that they won't let me out unless I was willing to shell out 237 euros for about two hours of parking (!!).

I described the experience in detail in a post in Italian, that you may machine translate if you are really interested. The gist of the story, anyway, is that I found myself caught in a trap mainly designed to siphon out some money out of the pockets of the hapless foreign tourist passing by. In my case, I was able to negotiate my release and avoid paying the exorbitant surcharge. But, put yourself in the shoes of someone who doesn't speak the local language, doesn't know what are his/her rights, is in a hurry; then the best strategy is to pay and be over with it. Although, after such an experience, most tourists will probably swear that they won't ever again set foot in this hateful city.

Now, despite the rather nasty circumstances, what I have described is nothing more than an economic transaction. But, here, there doesn't seem to hold the conventional view that demand and offer are always the same and, at the same time, "right". What happens, instead, is the perverse mechanism of Hardin's tragedy taking hold of the situation.

Let's quantify: by forcing a tourist to pay 237 Eur, the management of the parking lot gains the difference between the normal parking rate (say, 4 euros) and the surcharge; a net gain of 233 Euros. At the same time, the fact that the tourist mugged in this way will never come back to Florence means a loss in terms of hotel rooms, meals, various purchases and more. Considering that the enraged tourist will also discourage friends and relatives from coming to Florence, the overall loss is surely of the order of several thousand euros. The transaction, therefore, turns out to be a net loss for everyone involved.

But here comes Hardin's tragedy. The loss of thousands of euros is spread over several thousands of operators in the tourism industry and for each one it is so small to be nearly invisible. Instead, the monetary gain of 233 euros is well visible for those who pocketed it. There follows that almost everyone, as an individual or a single firm, gains in overcharging tourists. That's what generates what we call a "tourist trap," a common occurrence everywhere tourists go.

It is the same mechanism of Hardin's original example, with the tourists in the role of grass and the tourism operators in the role of shepherds. In Hardin's example, overgrazing leads to the destruction of the resource (grass). In the case I was describing, tourists in Florence have not been destroyed, yet, but they are constantly overcharged, overcrowded, and overexploited in various ways. It is not so obvious that they will continue to flock to a place where they are so badly mistreated and so often.

I know what you are thinking, that Florence will always be Florence. True, but visiting Florence is, in the end, the result of the fact that it is fashionable to do it. And fashions change over time. Years ago, it was fashionable to buy overpriced and oversized cars, and manufacturers thought they could overexploit their customers at will. For a while, yes; then look at what has happened to Detroit.

The final point of this discussion is to note how difficult it is for human beings to manage well the resources they exploit. The overexploitation phenomenon lurks almost everywhere and it is extremely difficult to stop it, because it generates a cascade of economic gains that overcome the (usually feeble) attempts of the authorities to regulate the use of the resource. It is true for tourism, but also for minerals, for fish, for agriculture, whatever you have that generates an economic return sufficiently large to make it possible to reinvest a fraction of it to increase the exploitation rate. We haven't found a way to avoid the tragedy in modern times and chances are that we never will, at least as long as we reason in terms of maximizing individual profits and we keep believing that doing that optimizes the exploitation of the system. Maybe it does, but at the cost of destroying it.


Ugo Bardi is a member of the Club of Rome, faculty member of the University of Florence, and the author of "Extracted" (Chelsea Green 2014), "The Seneca Effect" (Springer 2017), and Before the Collapse (Springer 2019)