Editing Environmental economics (section)

=== Common goods and public goods ===
When it is too costly to exclude some people from access to an environmental resource, the resource is either called a [[common-pool resource|common property resource]] (when there is rivalry for the resource, such that one person's use of the resource reduces others' opportunity to use the resource) or a [[Public good (economics)|public good]] (when use of the resource is [[rivalry (economics)|non-rivalrous]]). In either case of non-exclusion, market allocation is likely to be inefficient.

These challenges have long been recognized. [[Garrett Hardin|Hardin]]'s (1968) concept of the [[tragedy of the commons]] popularized the challenges involved in non-exclusion and common property. "Commons" refers to the environmental asset itself, "common property resource" or "common pool resource" refers to a property right regime that allows for some collective body to devise schemes to exclude others, thereby allowing the capture of future benefit streams; and "open-access" implies no ownership in the sense that property everyone owns nobody owns.<ref name="Ostrom, E 1990">Ostrom, E. 1990. Governing the Commons. Cambridge: Cambridge University Press.</ref>

The basic problem is that if people ignore the scarcity value of the commons, they can end up expending too much effort, [[over harvesting]] a resource (e.g., a fishery). Hardin theorizes that in the absence of restrictions, users of an open-access resource will use it more than if they had to pay for it and had exclusive rights, leading to [[environmental degradation]]. See, however, [[Elinor Ostrom|Ostrom]]'s (1990) work on how people using real common property resources have worked to establish self-governing rules to reduce the risk of the tragedy of the commons.<ref name="Ostrom, E 1990" />

The [[mitigation of climate change]] effects is an example of a public good, where the social benefits are not reflected completely in the market price. Because the personal marginal benefits are less than the social benefits the market under-provides climate change mitigation. This is a public good since the [[Climate risk|risks of climate change]] are both non-rival and non-excludable. Such efforts are non-rival since climate mitigation provided to one does not reduce the level of mitigation that anyone else enjoys. They are non-excludable actions as they will have global consequences from which no one can be excluded. A country's incentive to invest in carbon abatement is reduced because it can "[[Free rider problem|free ride]]" off the efforts of other countries. Over a century ago, Swedish economist [[Knut Wicksell]] (1896) first discussed how public goods can be under-provided by the market because people might conceal their preferences for the good, but still enjoy the benefits without paying for them.
<gallery caption="Global biochemical cycles" widths="140px" heights="80px" perrow="4">
File:Nitrogen Cycle.jpg|[[Nitrogen cycle]]
File:Water cycle.png|[[Water cycle]]
File:Carbon cycle-cute diagram.svg|[[Carbon cycle]]
File:Oxygen Cycle.jpg|[[Oxygen cycle]]
</gallery>