Ostrom studied or surveyed thousands of systems from around that world that had sustainably managed community resources over long periods of time, decades, even centuries.
It was the wise use and management of the regulations that led to the wise use and management of the resources. How regulations were created, enforced, and modified made a huge difference in the sustainability of a resource.
Ostrom also makes some surprising observations and assertions:
- Sustainable regulations often don’t come from governments. Indeed, the longer a sustainable resource continues, the greater the likelihood of wholesale governmental change. The village forests in Japan that Ostrom discusses have been sustainably through shogunate, imperial, and democratic styles of governance stretching back centuries.
- Sustainable regulations often come from those most familiar with the resource. Those who best know the community resource, the local users and their community, are in the best position to craft regulations for the sustained use of the resource. The inland fishermen in Alanya, Turkey were in the best position to devise a simple system of rotating fishing spots that helped them fish sustainably.
- Sustainable regulation has layers. Some of the systems Ostrom documents had multiple layers of regulation and the monitoring of regulation. With irrigation, for example, neighbors keep an eye on each other’s water withdrawals from their shared canal. Overseers watch over a neighborhood of canals. Directors represent the various neighborhoods on the irrigation committee. The local and state elected government provide the legal structure that recognizes and legitimizes the community’s irrigation committee. Layered regulation allows for scalability of monitoring, dispute resolution, and solution implementation.
- Sustainable regulations have flexible and scalable enforcement. Small, local infractions of the rules can be handled at the local level with graduated penalties. This helps participants feel the the system is fair to all parties, which in turn encourages them to maintain the system. Repeat offenses, large infractions, and systemic issues can be escalated to larger or more powerful bodies than have the power to investigate cases, render judgements, and enforce penalties. The scalability of enforcement goes hand-in-hand with the layered, scalable design of the regulations.
Ostrom’s observations about regulation aren’t universal, as she well points out. They are drawn from and apply to systems of community pooled resources, where renewable but deplete-able items of economic value (water, trees, fish) must be managed for the continued use of the social group. This is not the same as regulating public goods like banking, items or services that are not diminished by individual use.
Still, I think the spirit and impetus behind Ostrom’s observed regulatory systems could enliven our regulation of public goods and services. With more local input, effective small-scale monitoring, and proportionate enforcement, our financial system might not be in its current awful state.