by more than one user, and anyone’s use potentially degrades the resource for all. When ownership and the assignment of rights and responsibilities are unclear and access is unrestricted, these resources often generate so-called social dilemmas or social traps in which the outcome of decision making is less than optimal, if not wasteful or destructive. Part of the difficulty is a fundamental issue in social interaction, the free-rider problem, which arises when the results of coordinated social action are public goods, available to everyone, so that the incentive is reduced for any user to contribute to their management (Olson, 1965). Without effective rules restricting access, even evidence of resource decline may fail to induce restraint, resulting in a “tragedy of the commons” (Hardin, 1968). Tragic outcomes are especially difficult to avoid when resources are highly unpredictable and poorly understood (Wilson, 2002).
A major finding of recent decades of research is that such results can be avoided through institutions for governing the commons that meet basic requirements of environmental governance, such as providing needed information and infrastructure, resolving conflict, inducing compliance with rules, and adapting to change (e.g., Ostrom, 1990; National Research Council, 2002a; Dietz, Ostrom, and Stern, 2003). By institutions we refer to rules and the social and cultural systems that maintain them. Common institutional forms include direct control by centralized government agencies; indirect control through quasi-privatized and tradable allowances or quotas; nongovernmental control through market mechanisms; nongovernmental control by associations of businesses, communities, and resource users or by representation of diverse interests on decision-making bodies (e.g., of environmental interests on corporate boards); partnerships and collaborations that cross jurisdictional or sectoral lines; and participatory forms of governance that combine expert and lay knowledge and authority. Although each of these institutional forms can meet governance requirements under the right conditions, none is uniformly successful. The research need is to develop sufficient knowledge to enable improved choices of institutional forms that are well suited to meeting environmental and other objectives in particular situations and at particular spatial and temporal scales, as well as being capable of adapting to the dynamics of complex socioecological systems.
Analyzing environmental governance as a problem of institutional design is useful because it reframes the central governance question from one of selecting a single best governance strategy (e.g., choosing between top-down regulation and market-oriented policies) to one that considers a full range of governance options and seeks to match institutional forms to specific governance needs. It expands discussion from a debate over which actors are best able to govern resource use (e.g., national governments versus local governments, governments versus businesses) to a discussion of