The pursuit of individual self-interest is often not good for social efficiency leading to the long term depletion of resource. This short revision video looks an an example of the tragedy of the commons and also mentions the insights of the Nobel prize-winning economist Elinor Ostrom who understood how communities can create their own rules and institutions to manage their common pool resources in a sustainable manner.

When no one owns a resource, it may get over-used, for example fish stocks and deforestation - people use and benefit from a common pool resource such as grazing land without regard to the effects on others.

Over-use of a renewable resource can lead to a long-term decline in maximum sustainable yield. A good example of the tragedy of the commons is the problem of over-fishing in areas where fishing grounds are poorly protected.

Over-use of common pool resources can happen because people are acting in their own self-interest without regard to the impact this has on others in a community. It is a major cause of environmental market failure.