We should enable local communities to solve problems: Elinor Ostrom

Elinor Ostrom, who won the Nobel Prize for Economics in 2009, is in India to attend a seminar on how commons — forests, water systems and pasture lands — are managed by local communities. But she is no alternative economist. She thinks that traditional systems like market and state work well in some situations, but not in all. In an exclusive interview with DNA, she explains her ideas of managing resources.

One of the major theses of your work is that beyond market and state, it is the communities that can manage things.
At different scales. We have ignored enabling local communities to manage water, forests and pasture lands.

You are not an economist in the traditional sense as it is understood in the last 50 years.
My official degree is in political science with a minor in economics. I am very much influenced by Douglass C North, Vernon Smith, James Buchanan, and Amartya Sen.

Do the solutions you look at  work at a macro-level?
Some. And I am working on a polycentric approach to global climate. And that is looking at work that can be done at very small and medium and larger levels. I have studied public goods in metropolitan areas for 15 years. I am talking about St Louis, a big metropolitan area. What we saw was complex systems, both small and large, that have found ways of working together.

Centralisation is not something you would recommend at any time?
You are wrong. At times you want centralised solutions. I don’t say everything is wrong or everything is right.

For agriculture, do you think that resources are better managed at community level?
Yes. If you look at rice, there are ways farmers can work together effectively if they help each other plant and they find ways of harvesting it together. Sometimes co-ops can be powerful ways of organising agriculture. It is not the only way, but frequently it is very, very powerful.

So your solutions can be applied to large areas as well as small?
Sure. I was born and raised in Los Angeles, and I studied the ground water system in Los Angeles.

Would you say that the debates on privatising public utilities like water is good? Or is it bad?
I can’t say. In Los Angeles county, some water companies are private and some are public. In  Bolivia and other places, we worked out this huge private system. But it did not work.

It did not turn out right in Latin America but it has in Los Angeles at the local level?
We have to see whether private can be responsible, can be held accountable. I have this one thing: When people do not get the bill for the water in the tap, that cannot be a good foundation for keeping the water in the system. In the apartments, where there is absolutely no charge for the amount of water you use, I am opposed to that.

You think user charges are essential?
Yes.

One of the issues in Indian agriculture is whether farmers should be given free power.
I don’t think anyone should be given free power. Overuse of power is a very great threat, a major threat to us all.

Even if it is meant as an incentive in a sector like agriculture, which is supposed to require some help?
No. I think they should be paying for water and power because you want them to use it efficiently.

The water supply problem shows that it has to be studied and tackled at different levels?
Yes. If there is a river, you better have a basin authority. In the groundwater basin I studied early in Los Angeles, 11 cities were part of the county. It had to eventually create a district that was the same size of the groundwater basin. Problems of one basin are different from that of another basin. A study we have done has shown that after 15 to 16 years, this unit has actually increased the water level. They taxed the water farmers very heavily but because that tax does not go anywhere but stays local, the taxes were used to replenish ground water. They have actually improved the basin.

Would you say that the local government is the key to many of the solutions?
The boundary of the government and the boundary of the problem should be the same. The big challenge is (to figure out) what is the boundary of the problem we are dealing with.

The kind of approach you have adopted in the 1950s, has it gone against the general tide of the economists?
I was trying to solve problems. I had a lot of training in economics, in social sciences.

Do you perceive a change in the economics discipline, that more economists are looking at social problems?
There are more economists — I consider myself a behavioural economist — who are looking at settings which are not of immediate monetary profit. It is not that money is not important but if that is your only goal then it is entirely different from being one of the set of goals.

What is the way to get the communities to have a say?
Slowly and surely to authorise people to create institutions the same size as the problem.