Are All Commons Tragedies? Bison in the 19th Century

Published: 
Wednesday, November 5, 2014
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We storified National Bison Day 2014 for you, but this piece by P.J. Hill is fundamental for understanding the story of the North American bison, the continent's largest land mammal.

Abstract
The near extermination of the North American bison is widely viewed as a case of the overuse of an open-access resource—a classic example of the tragedy of the commons. This “tragic” view, however, ignores the rising opportunity cost of grasslands that could support a more commercially viable commodity: cattle.

This article appeared in the Spring 2014 issue of The Independent Review.

Are All Commons Tragedies? The Case of Bison in the Nineteenth Century
Economists tend to rely upon tried and true examples to make their theoretical points. Since H. Scott Gordon’s 1954 article “The Economic Theory of a Common-Property Resource: The Fishery,” economists have recognized that the overexploitation of an open-access resource—the “tragedy of the commons”—arises when individuals’ incentives aren’t aligned with maximizing the overall gains to society. Gordon’s model has been widely applied, and the near extinction of the bison on the American frontier has been frequently held up as a confirmation of the model.

However, just as Ronald H. Coase (1974) showed that a lighthouse is not the best example of a public good, and Steven Cheung (1973) explained that bees, in most cases, do not provide an unpriced externality, we also need to rethink how we present the overexploitation of open-access resources and its applicability to bison. In particular, economists should be careful not to ignore an important element in our tool kit, opportunity costs, when we discuss overexploitation. This means that the rapid depletion of a particular resource may or may not represent a tragedy of the commons, depending on alternative uses of all the scarce resources in question.
 
In this article, I argue that the iconic depletion of the bison in nineteenth-century America was not a tragedy of the commons. First, because bison were a means of converting grass to meat, one has to include the opportunity cost of the grass in any calculations of the wastefulness of killing bison. If an alternative way of using grass existed, and it did in the form of domesticated cattle, then depletion of the bison was not necessarily wasteful. In addition, open access can also lead to dissipation of rents through the excessive use of resources in harvesting. But it does not appear that there was a substantial waste of resources in the bison-harvesting activity itself. Finally, if there is a lag between the presence of a less-efficient method of harvesting grass (bison) and a more efficient converter of grass to meat (cattle), that lag can also represent resource waste. However, data on the lag between the elimination of the large bison herds and the introduction of cattle suggest this wasn’t the case. Of course, there is still the question of the amenity (nonconsumptive) value of bison. That issue is dealt with in the last part of the article.
 
P. J. Hill is Professor of Economics Emeritus at Wheaton College, Wheaton, Illinois and a Senior Fellow at the Property and Environment Research Center in Bozeman, Montana, where he currently resides. He is the co-author, with Terry L. Anderson and Douglass North of Growth and Welfare in the American Past, with Terry Anderson of The Birth of a...
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