Referenced Article: http://www.guardian.co.uk/environment/2008/feb/18/conservation.aaas

There are many situations that involve a finite amount of a very valuable resource. Everybody involved has an interest in procuring portions of that resource (often as much of it as possible), but it is in nobody’s interest alone to conserve or maintain that resource. There is a conflict between adhering to self-interest and improving the common good (social welfare) for everyone. This type of situation is known as the “tragedy of the commons”, wherein the valuable resource in question is spent faster than it can be replenished, which ultimately results in scarcity, and in some cases, total extinction of that resource.

Worldwide overfishing provides a perfect example of the tragedy of the commons. This article discusses in particular the overfishing of sharks, which is made possible by the lack of restrictions on shark fishing in international waters. Indeed, nations with coastlines are especially eager to sweep the seas in order to gather as many resources as possible to try to gain a competitive edge over each other in the global fish market. In doing so, these nations ignore the pleas, recommendations, and warnings sent out by the hundreds of environmental and wildlife organizations each year that point out the wider spectrum of dire consequences (both economic and environmental) resulting from an eventual extinction of fish species. This harkens back to the outcome of the prisoner’s dilemma. Even though both prisoners could shorten their overall prison time by cooperating with each other and agreeing not to confess, each prisoner’s individual dominant strategy is still to confess. Of course, this does not lead to social welfare maximization, because both prisoners end up spending longer times in prison. Similarly, in the case of overfishing, all nations could agree to fish at a predetermined amount so the fish will replenish themselves faster than they are plucked from the sea. This will produce the maximum social welfare because there will not come a time in which an economic slump arrives due to the depletion of fish. However, it is every nation’s dominant strategy to fish as much as possible to gain a market advantage over one another. This then leads to a result that is not social-welfare-maximizing. Therefore, the solution to the problem of worldwide overfishing is not just the drafting of treaties and trade agreements between nations to keep their fishing levels below predetermined limits. Almost always, there needs to be a central regulating authority such as the UN (as suggested in the article) to make sure that these nations cooperate with each other and do not surpass the fishing limit. And only with cooperation can we hope to arrive at the social-welfare-maximizing result.