Cooperative Institutions for Sustainable Management of Common Pool Resources

Beneficiaries of common pool resources (CPRs) may select available noncooperative and regulatory exogenous institutions for managing the resource, as well as cooperative management institutions. All these institutions may increase the longterm gains, prolong the life of the resource, and help to escape the tragedy of the commons’ trap. Cooperative game theory approaches can serve as the backbone of cooperative CPR management institutions. This paper formulates and applies several commonly used cooperative game theoretic solution concepts, namely the Core, Nash-Harsanyi, Shapley, and Nucleolus. Through a numerical groundwater example, we show how CPR users can share the gains obtained from cooperation in a fair and efficient manner, based on these cooperative solution concepts (management institutions). Although based on their fairness rationales, various cooperative management institutions may suggest different allocations that are potentially acceptable by the users, these allocation solutions may not be stable as some users may find them unfair. This paper discusses how different methods, such as application of the plurality rule and power index, stability index, and propensity to disrupt concepts, can help identify the most stable and likely solutions for enforcing cooperation among the CPR beneficiaries.