Question

There are six farmers in Great Britain with access to government land to graze their cows for free. They all must share the land. Each farmer has an individual incentive to put as many of his cows on the land to increase his profits but each additional cow depletes the resources for all six farmers and if the farmers put too many cows on the pasture, the grass will be depleted and all the cows will starve. The grass is a limited resource. What strategy do you propose to the farmers?

Answer 1

This is a classic example of Tragedy of Commons . Since common land is rival in consumption but non-excludable , so it leads to over utilization and ultimately depletion or permanent destruction of the resource . Some other examples are environmental damage by pollution , over fishing and destruction of ocean ecosystem etc . The primary cause behind this tragedy is that common resource is limited and in free market structure people think about self interest only and not about the maintainance of the resource .

So in this case there can be certain strategies that can be adopted in order to curb this depletion . Firstly , there can be grazing permits which decides how long and how many maximum cows a farmer can take to the fields , disobeying this rule should lead to forfeit of permit . Secondly , government can sell this land to a private proprietor so that it becomes excludable and rival , this private owner then can allow farmers to use his land after paying proper rent . Thirdly , taxes can be introduced on number of cows that are taken for grazing in progressive rate . Forthly , for mutual benefit the farmers can come to a mutual understanding and pact which allows them to use the land for free and also take care of the land .