Question

Identify whether each of the following resource categories is a public good, a common-pool resource, or neither and defend your answer: a. $A$ pod of whales in the ocean to whale hunters. b. $\mathrm{A}$ pod of whales in the ocean to whale watchers. c. The benefits from reductions of grecnhouse gas cmissions. d. Water from a town well that excludes nonresidents. e. Bottled water.

Short answer

Question: Identify the category of each given resource and defend your answer: a. A pod of whales in the ocean to whale hunters, b. A pod of whales in the ocean to whale watchers, c. The benefits from reductions of greenhouse gas emissions, d. Water from a town well that excludes nonresidents, e. Bottled water.

Step-by-step solution

a. A pod of whales in the ocean to whale hunters

This resource can be considered a common-pool resource. The reason is that whales are non-excludable (difficult to prevent hunters from accessing them in the open ocean) and their numbers are rivalrous in the sense that if one hunter catches a whale, that whale is no longer available for others to catch.

b. A pod of whales in the ocean to whale watchers

This resource can be considered a public good. The reason is that whales are non-excludable for whale watchers, as you cannot prevent them from watching the whales in open waters, and non-rivalrous since one person's whale watching experience does not take away from another person's experience or reduce the availability of whales for other people to watch.

c. The benefits from reductions of greenhouse gas emissions

This resource can be considered a public good. The reason is that the benefits from reduced greenhouse gas emissions (such as cleaner air, better health, and reduced climate change impacts) are non-excludable (everyone benefits regardless of their personal contribution to the reduction) and non-rivalrous (one person benefiting from cleaner air does not reduce the benefits for others).

d. Water from a town well that excludes nonresidents

This resource is neither a public good nor a common-pool resource. The reason is that the water from the town well is a rivalrous resource (one person's use reduces the availability for others) and excludable (only accessible to town residents). This makes it more of a club good, which is a category of goods that are excludable but rivalrous.

e. Bottled water

This resource is neither a public good nor a common-pool resource. The reason is that bottled water is both rivalrous (one person's consumption of a bottle of water reduces the availability for others) and excludable (bottled water is typically sold and inaccessible to those who do not purchase it). This makes it a private good, which is a category of goods that are both excludable and rivalrous.

Key concepts

Non-Excludable and Non-Rivalrous Goods

Non-excludable and non-rivalrous goods have two defining characteristics: no individual can be effectively prevented from accessing them (non-excludable), and one person's use of the good does not diminish another's enjoyment or use of that good (non-rivalrous).

For instance, when considering the exercise, a pod of whales viewed by whale watchers can be seen as a public good. This is because the whales cannot be exclusively 'owned' or withheld from people who want to watch them (non-excludable). Furthermore, the experience of one whale watcher does not take away from the ability of others to watch and enjoy the same whales (non-rivalrous).

Similarly, the benefits derived from the reduction of greenhouse gas emissions are shared by all and cannot be confined to paying users only. Cleaner air or a stabilized climate are enjoyed by all regardless of individual efforts to combat emissions, thus these benefits exhibit the qualities of a public good due to their non-excludable and non-rivalrous nature.

Rivalry and Excludability in Natural Resources

The concepts of rivalry and excludability are pivotal in the management and classification of natural resources. A resource is rivalrous if one person’s consumption subtracts from another's ability to consume it.

From the exercise, we see that a pod of whales to whale hunters is a different scenario compared to whale watchers. In the hunters' case, the capture of a whale by one hunter eliminates the opportunity for another, indicating a rivalrous relationship. However, since whales in the open ocean are difficult to restrict access to, they fall under common-pool resources, being non-excludable yet rivalrous.

In contrast, bottled water is a clear example of a rivalrous and excludable good, making it a private good. Once a bottle is consumed by an individual, others cannot consume that same bottle. It's also excludable since access to the bottled water is determined by one's willingness or ability to pay for it.

Classification of Environmental Resources

The classification of environmental resources is based on the two dimensions of rivalry and excludability. These dimensions give us four broad categories: public goods, private goods, common-pool resources, and club goods.

Public goods are non-rivalrous and non-excludable, like the air we breathe. Club goods are non-rivalrous but excludable, such as a private park. Private goods are both rivalrous and excludable, exemplified by personal possessions like clothing. Lastly, as detailed in the exercise, common-pool resources are rivalrous but non-excludable, like fish stocks or a pod of whales for hunters.

Understanding this classification helps in determining the appropriate governance and management strategies for each type of resource to ensure sustainability and fair access.

Common-Pool Resources Management

Managing common-pool resources, which are rivalrous but non-excludable, poses unique challenges as individuals have the incentive to overuse these resources without bearing the full cost of their depletion.

The exercise indicates that whales for hunters and water from a town well for residents exhibit characteristics of common-pool resources. Although water from the town well excludes nonresidents, for those who have access, it is still rivalrous. Effective management of these resources typically requires collective agreements or regulation to prevent overexploitation. This could include setting quotas for whale hunting or enforcing usage limits for the town well water to all residents.

Without proper management, such resources are susceptible to the 'tragedy of the commons,' where individual users acting independently according to their own self-interest can ultimately deplete the resource, even against the common good of all users.