What do lobsters 🦞, whales 🐳, and elephants 🐘 have in common?

Oct 25, 2021

Two different stories came across my newsfeed this week about how various animals are adapting to recent environmental changes. The animals in each story also share an important economic characteristic, but I want you to consider a hypothetical scenario before we get too far into the economics. Imagine there’s a special ATM in your neighborhood. This particular ATM is stocked with cash but requires no passcode to access the money. Anyone who knows where the ATM is located can stop by and withdrawal as much cash as they want. If there’s any money left over at the end of the day, it will earn interest and can be taken out the next day. How soon would you stop by this ATM once you learned about it and how much would you take out in your first transaction?

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How quickly would you take money from an ATM that didn’t have a pin code? [**Flikr**]

If you’re the only one who knows about this special ATM then you may be a lot more careful with its contents. You’d probably take some cash, but you’d likely let it grow too. Perhaps you would just withdrawal the interest each day and leave the rest untouched? You might even be willing to put more money into the ATM so that the accumulated interest is even larger! The key takeaway is that you would likely take care of the money in the ATM and protect it from others. When people own something, they tend to take much better care of the resource than when it’s more commonly available to everyone.

But what if everyone in your neighborhood knew about this special ATM? Any of your neighbors could stop by for some quick cash before heading off to work in the morning. In all likelihood, this ATM would be all out of cash very quickly. While you may have been conservative in your withdrawals when you were the only one using it, you no longer have the same incentive to keep the ATM balance high enough to earn interest. You can’t stop your neighbors or even other strangers from taking what they think is the appropriate amount. If they take too much, there may not be any left for you when you stop by. Your incentive has changed from protecting the resource to getting there early as you can and taking as much as you can. Tragically, it won’t matter how large the interest rate, there won’t be any cash left to grow.

This particular scenario is actually a modern-day version of the tragedy of the commons and is a potential problem for resources that have two key characteristics. The first characteristic to consider is that one person's consumption impacts someone else’s ability to consume the exact same resource. This natural rivalry between consumers means that someone can consume all of the resources and leave nothing for everyone else. If your neighbor shows up early to the ATM and takes all the cash out of the machine, there’s none left for you when you show up. While this seems like the obvious reason for the tragedy of the commons, it actually requires a second characteristic to get to the potential tragedy.

The problem with our open-access ATM is actually the open-access part. There aren’t clear property rights over who owns the right to access the cash in the machine, which creates an incentive for people to claim “their share” of the resources as quickly as possible. When you were the only one who knew about the machine, you were willing to take care of the cash reserves and make sure it continued to provide for you in the future. Property rights are also the basis to ensure people can legally buy and sell different products with each other. If you had enough money, you could stop by Old Navy on your way home and buy all of the pants they have in the store, leaving nothing for the next person who stops by. Your consumption impacts someone else’s consumption. The difference, though, is that Old Navy has the right to sell you those pants and you can’t just walk in and take all of the pants without paying. That small difference, owning the resource and being able to charge for it, is what differentiates regular goods from common resources. It’s also one of the key ways to avoid the tragedy of the commons. Elinor Ostrom spent her life researching other ways societies avoid the tragedy of the commons and was awarded a Nobel prize for that work in 2009.

Forget our hypothetical money machine and consider instead the issues facing a few natural money makers: lobsters, whales, and elephants. Each is found in the wild, and without government intervention, is at risk of becoming extinct as a result of the tragedy of the commons. Even with government intervention, poachers and illegal fishing risk destroying entire species. The American lobster has an above-target population in the Gulf of Maine but is significantly below target in Southern New England. In Africa, the greatest threat to their survival is poaching for the illegal ivory trade. While whaling is no longer a threat to the Atlantic right whale, at one point in time commercial whalers had hunted them to the brink of extinction. Each group has experienced (or is still experiencing) the tragedy of the commons to some extent, but new environmental changes may impact future government policies around their protection.

Let’s start in Maine, one of the world’s richest fishing grounds, and see how nature has impacted lobster harvests. One of the major changes over the past few decades has been warming waters, which has pushed lobster populations from Southern New England up to the Gulf of Maine. Lobster War is an incredible documentary about the fight around international borders for this precious resource. Because of the high value of American lobster, the US government heavily regulates fishing activity. Without regulation, lobster fishing would likely result in overfishing and extinction. While Maine lobster populations are currently well-stocked, the New England lobster population is at critically low levels from warmer waters. If things continue on the trend they have been over the past few decades, Maine lobster populations may look like the New England populations. Despite being considered appropriately stocked, the size of lobster and soft shell crab catches have fallen from a few years ago:

Warmer waters have also impacted another important creature in the Gulf of Maine: the North Atlantic right whale. The animal’s primary food source has died off in warmer waters, forcing the animal to move further north. While whales aren’t hunted in the Gulf of Maine, they do provide tourism benefits to whale watchers eager to catch a peek at one of these endangered animals. Centuries of whaling have left the animal population at critically low levels today. Currently, their main cause of death is related to fishing vessels in the area. While Maine lobster fishing may be sustainable right now, there are external costs too. As fishing vessels go out in search of lobster and crabs, they may inadvertently strike whales in the ocean or whales may be entangled in fishing nets. Two-thirds of the known deaths over the past few years have been caused by fishing vessels. If lobster populations eventually decrease in the Gulf of Maine, like they have in New England, fishing vessels will need to venture further out to sea or fish longer in the season to capture the same amount. The more time those vessels are at sea, the higher the risk for the right whales.

Finally, let’s head over to Africa where the scientists have uncovered a possible genetic change in Mozambique elephants. For decades, and still today, elephants were killed so that their tusks could be sold to create ivory trinkets. Some elephants, however, are born with a genetic condition that results in them having no tusks. Poachers avoided killing these animals since they provided no value to the poachers without their ivory tusks. Those elephants would eventually mate with other elephants, and this tusk-less gene was passed to offspring. Decades of poachers killing tusked elephants have apparently resulted in a previously rare trait becoming much more common. While this sounds like good news against poaching, the new trait is dangerous to male elephants and will likely result in lower birth rates in the future.

Each of these resources is at risk for extinction without government intervention. Lobster fishing is heavily regulated in the United States, but some populations remain critically below target levels. Elephants and whales have historically been poached to a level that, even with heavy government regulation, the current populations remain endangered. Government regulation may need to be more adaptable for changing environmental factors that place the animals at further risk for extinction given their current populations. If you’re looking for ways to help, the World Wildlife Fund has a number of ways listed on their website.