Economic Analysis, Sustainability and Environmental Commons

When confronted with market weaknesses and failures determining sustainability problems for environmental common-pool resources, economic analysis has proposed government intervention as the only alternative available. Elinor Ostrom showed that this dichotomy between market and government is not always helpful, and proposed a more complex approach to institutions focusing on an active role of communities, social norms and a polycentric system of governance. This paper summarizes the main factors at work in determining the role of institutions to deal with sustainability issues and explores the implications of this wider approach in dealing with environmental commons, particularly with global environmental commons, discussing two issues: climate change and biodiversity. Involvement of governments and a reference framework provided by intergovernmental agreements are necessary, but the difficulties of building a successful intergovernmental institutional framework require responsible and convinced actions at the level of consumers and firms, public opinion involvement in individual countries, and coordination between local and national levels of government: provided that some conditions are fulfilled, common resource management can be very helpful in achieving them.