The Built Environment’s Social Costs, Part 3: Managing Common Pool Resources and the City Energy Project

Part 1 of this series focused on how a more deliberate quantification of productivity and health impacts, as well as the larger social costs associated with the built environment, could impact the decision making process relative to short and long range planning, value engineering exercises, related policy formulation, etc. Part 2 discussed some of the evolutionary reasons for our species’ shortsightedness and how involving more people in the decision making process can increase our collective ability to take the long view.

Another concept that is useful here is the tragedy of the commons. The basic idea is that individuals or small groups acting in their own self interest will often behave in a manner contrary to the long term best interests of the larger group that they are a part of. Specifically they will tend to behave in a manner that depletes resources common to the whole group (including environmental quality and global climate stability). However, there are features of group organization that have evolved over the history of our species that help curb these “selfish” behaviors and promote pro-social behavior beneficial to the larger group. Involving more people in the decision making process is one of these features.

In 1990, Elinor Ostrom formulated eight design principles that enable groups to successfully manage their common-pool resources for the longer term benefit of the group. More recently David Sloan Wilson et al. generalized Ostrom’s eight design principles to a wider range of groups and situations. Very briefly, these eight principles are as follows (taken from the Wilson et al. reference):

1. Clearly defined boundaries.
2. Proportional equivalence between benefits and costs (and a more comprehensive accounting of benefits/costs must be performed as discussed in Part 1).
3. Collective-choice arrangements (ensure that those affected by the rules can participate in modifying the rules, i.e., involve as many people impacted by the rules/behaviors as possible).
4. Monitoring (managing free-riding and exploitation – transparency can be a component of this).
5. Graduated sanctions for rule violators (resource distribution, public shaming, gossiping and ostracizing can be components of this, along with more formalized legal means).
6. Conflict resolution mechanisms (to resolve conflict quickly and fairly).
7. Minimal recognition of rights to organize (groups must have authority to conduct their own affairs).
8. For groups that are part of larger social systems, there must be appropriate coordination among relevant groups (build responsibility for governing/decision making in nested tiers from the lowest level up to the entire interconnected system).

Simplified forms of the first seven principles evolved over the long history that our ancestors spent as hunter/gatherers, living in comparatively small groups. The last one has come into play more recently as our societies have grown in size and complexity. The larger the group, with more potentially competing subgroups composed of varying related individuals (social/culturally and genetically), the harder it is to set up and maintain these design principles. One question then becomes how we effectively upscale the elements of these design principles that are fine tuned for small groups. This LinkedIn post and subsequent comments discuss this in more detail.

Let’s briefly look at managing common pool resources with respect to Kansas City’s selection to participate in the City Energy Project. This is a 3-year initiative by the Natural Resources Defense Council (NRDC) and the Institute for Market Transformation (IMT) to promote energy efficiency improvements in commercial and institutional buildings. Two critical issues being addressed as part of this effort are 1) encouraging the business community to rapidly adopt the Mayor’s Energy Challenge and 2) sharing their benchmarking and building data with the City. As discussed in Part 1, the potential productivity and health benefits often associated with projects making energy focused improvements may be enough to move the needle for some building owners. This falls under Ostrom’s second design principle.

Per Part 2, the more key stakeholders directly or indirectly involved in this decision for any individual building, the more likely a building owner will adopt the Mayor’s Energy Challenge, all else being equal. This falls under Ostrom’s third design principle. And sharing benchmarking and building data is critical for measuring and monitoring progress as a community, a component of Ostrom’s fourth design principle. Sharing this data isn’t required to participate, but it is required to receive the benefit of public recognition (back to the second design principle). And the lack of data sharing itself will be transparent (Ostrom’s fourth design principle), potentially leading to various degrees of peer pressure and shaming intended to promote data sharing (Ostrom’s fifth design principle). Even if the peer pressure and shaming are only perceived to have occurred (or just feared to potentially occur), they can be effective motivators for behavior change in order to avoid negative impacts on social and economic status.

It will be interesting to see how successful the City Energy Project is, in Kansas City as well as the other nine selected cities, and how the degree of success can be tied to Wilson et al.’s generalization of Ostrom’s eight design principles. It’s likely that many elements of the design principles are being incorporated inadvertently simply because they’re already recognized as best practices. But a contextual, systematic incorporation of Wilson et al.’s and Ostrom’s work in this area would likely increase the City Energy Project’s overall success.