Pacific Coast Environmental Metrics
"Specializing in measuring intangibles."

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Oct. 12, 2009 - Dr. Elinor Ostrom wins Nobel Prize in Economics for her work on collective action management of common pool resources.

What is "collective action?"

Collective action is the management of common-pool resources by local community groups. This is neither privatization nor public sector management. There are elements of both, but in general the focus is on local people solving problems locally. Common-pool resources are a type of good that is neither a public good nor a private good, and the outcomes of resource utilization have impacts on all users. Collective action has successfully managed common-pool resources such as water and forests for hundreds of years, and conversely, when the ability of locals to manage the resource has been removed and centralized at a remote location, the resource has often seen immediate degradation.

While many people have documented collective action, Pacific Coast Environmental Metrics believes Dr. Elinor Ostrom, and her Workshop in Political Theory and Policy Analysis offers some of the most rigorous analysis of collective action (the use of Dr. Ostrom's name and Workshop should not in any way be interpreted as an endorsement of PCEM). Through her extensive experience and with the help of dozens of scholars, Dr. Ostrom has identified eight design principles that are present in all successful collective action systems:

    1) Clearly Defined Boundaries
    2) Proportional Equivalence Between Benefits and Costs
    3) Collective-Choice Arrangements
    4) Monitoring
    5) Graduated Sanctions
    6) Conflict Resolution Mechanisms
    7) Minimal Recognition of Rights to Organize
    8) Nested Enterprises

Source: Ostrom, Elinor (2005) Understanding Institutional Diversity Princeton University Press

Pacific Coast Environmental Metrics can present these concepts to your community, private sector or government group and help your group identify the "rules-in-use" that either facilitate or interfere with effective management of a common-pool resource. As an outsider with no vested interest in the outcome, PCEM can operate as design principle number 6 - a conflict resolution mechanism - when internal discord threaten the functionality of the group managing the resource. PCEM can also function as a representative on the group's behalf when externalities make local decision-making and enforcement difficult to maintain.

Fundamental to PCEM's mission is the education of the groups managing the resources. Education is the key to developing effective tools, and in many cases it is simply a matter of identifying actions and getting everyone to understand how they impact other members. PCEM has seen groups ranging from almost completely functioning and not even realizing they were very close to having all of the design principles, to groups almost completely dysfunctional to the point that they were looking for an external authority come in and impose remote administration of the resource.

Additionally, PCEM can also present some of the newest mathematical approaches to game theory that offer local groups a mathematically sound refutation of classic game theory that predicts individuals will maximize their own interests, at the expense of the collective benefit. This is important to local groups who know their approaches succeed, even though many high-dollar economists and policy analysts claim common-pool resources must be managed globally, by people in far locations, and claim to have math to prove it. PCEM can provide information that shows the solution is to specify the criteria for allowable actions instead of specifying the actions themselves.

The equation to the right is the Pareto-optimal Nash Equilibrium Quantum Game Theory solution to Prisoner's Dilemma, when only operators using real numbers are allowed and players are fully entangled. Both players have a final state equal to their original agreement. When operators using complex numbers are allowed in Prisoner's Dilemma the dilemma is transformed to a "Paper, Rock, Scissors" situation where for every action by one player the other player can take one action that maximizes the other player's payoff.