Common Pool Resource (CPR)

A common pool resource is a resource that benefits a group of people, but which provides diminished benefits to everyone if each individual pursues his or her own self-interest. The value of a common pool resource can be reduced through overuse because the supply of the resource is not unlimited, and using more than can be replenished can result in scarcity. Overuse of a common pool resource can lead to the tragedy of the commons problem.

Common pool resources (CPR) such as forests, underground water basins, grasslands, and fisheries are often managed by a combination of government action and market mechanisms. Sometimes a resource is small enough to be collectively managed by interested parties in an honor system; in other cases, valuable resources must be placed under a local government agency altogether. A key goal of CPR management is allowing a certain amount of the resource to be used during a given period while leaving the principal, so to speak, intact. CPR usage is governed by agreements that specify physical boundaries of the resource, parties involved, allocations, time limitations, authority for dispute resolution, enforcement means, etc.

Suppose a fishery can sustainably yield 100,000 pounds of fish annually — that is, the core population of the fishery each year produces 100,000 pounds. Ten companies agree to harvest 10,000 each. In the absence of regulation, each company would harvest more than its allotted quota in order to sell more fish and gain more profits at the expense of others. If each company over-harvests by 1,000 pounds, the fishery will be over-harvested by 10,000 pounds, reducing the core fish population and its ability to produce the same level next year, leading to gradual depletion. Recognizing that it is in their long-term interest to sustain the fish population, though, the companies make an agreement to stick with their 10,000 quota and hire an independent third party to oversee that the agreement is carried out by each.