This blog post uses the dolphin protection debate in the drama as a starting point to calmly examine, from an economic perspective, how good intentions can lead to the tragedy of the commons.
The Economics of Protecting Dolphins
In August 2022, the hugely popular ENA Korean drama “The Uncanny Lawyer Woo Young-woo” concluded. The drama had several focal points, one of which was ‘whales’. The protagonist, Woo Young-woo, is a character who particularly loves whales, remembers almost all information about them, and has whales symbolically appear at crucial moments throughout the series.
Woo Young-woo doesn’t just stop at liking whales; he also takes direct action for them. He declares that aquariums are no different from prisons for whales and participates in protests holding placards demanding the release of dolphins. However, as the drama gained immense popularity, a paradoxical problem emerged: the number of people taking boat tours to see dolphins in person surged dramatically.
In the drama, Woo Young-woo observes dolphins from afar using binoculars. While he could take a boat out to sea to see the dolphins up close, he chooses not to. His reason is clear: taking a boat to observe dolphins at close range is essentially human intrusion into their habitat, posing a threat to the dolphins. In fact, there have been reported cases of dolphin fins being damaged or severed by dolphin-watching boats.
The economic concept most analogous to this problem is the ‘tragedy of the commons’ covered in introductory economics. The tragedy of the commons refers to the phenomenon where natural resources or resources that are not private property are overused, ultimately leading to their degradation or depletion.
For example, imagine a large grassy field behind a village. This field is freely accessible to all villagers and is primarily used for grazing sheep. That is, this pasture is a ‘commons’ rather than ‘private property’. If the number of sheep is maintained at an appropriate level, the pasture can be sustained indefinitely. However, if the number of sheep grows excessively, the pasture gradually deteriorates. The problem arises when villagers begin bringing too many sheep to the pasture. What matters most to them is not the long-term preservation of the pasture, but increasing the number of sheep they personally raise right now. Over time, the number of sheep using the pasture continues to increase, but because it is a commons, no one takes responsibility for its preservation. As a result, the pasture gradually becomes degraded and eventually turns into wasteland. This vital resource, the pasture, disappears. Thus, the tragedy of the commons is a classic example of how, without government intervention, when the market operates and people seek only to maximize their own interests, harm occurs to society as a whole.
The ocean, habitat for dolphins, and the pasture mentioned earlier share similar characteristics in many ways. Both cases lack a specific owner and share the common issue that problems arise when too many people use them. So, how can this problem be solved?
How can the tragedy of the commons be solved?
The first solution that comes to mind might be surprising, but it is to clearly establish private property rights. As we saw earlier, the commons is a space without a responsible owner. However, if this commons is divided among the villagers and converted into private land, the problem can be partially solved.
When it is a commons, all villagers are interested in using as much pasture as possible. But when it becomes private land, the situation changes. Each person becomes interested in continuously producing pasture on their own land and maintaining the land’s value. This is because only then can they secure grassland long-term, sell it to others if necessary, or pass it on to their descendants. Within this structure, problems can be significantly mitigated without the government needing to intervene with constant enforcement.
Gregory N. Mankiw, author of 「Principles of Economics」, illustrates this point using the example of elephants and cows. Both elephants and cows are useful animals to humans, yet elephants face extinction while cows do not. The reason is that elephants remain wild animals within the commons, whereas cows are raised as livestock and fall under the category of private property.
The problem is that privatization is not always a viable solution. Depending on a resource’s characteristics, it may sometimes be more profitable for individuals to develop or extract it entirely in the short term than to conserve it long-term. The previously mentioned grassland is an example where continuously producing pasture provides sufficient profit for individuals, but not all resources are like this. Furthermore, while land can be divided among multiple owners, the ocean where dolphins live cannot be divided in such a way. Furthermore, when a specific resource is monopolized by a single individual or company, the potential for causing harm to others also increases.
For example, if one company monopolizes dolphin tourism routes, it could excessively raise tour prices. If dolphin popularity increases, there is also the potential for operating an excessive number of tour boats to maximize profits. This represents a different form of adverse effect compared to the problems arising from multiple companies operating indiscriminately.
These points demonstrate that the tragedy of the commons can be resolved through the establishment of private property rights or institutional reforms, while also clearly revealing that the same approach cannot be applied universally in all cases.
Why Government Intervention is Necessary
Therefore, government intervention is essential to resolve the tragedy of the commons. To protect dolphins, the marine area must be systematically managed, and the number of boats operating for dolphin tourism must also be strictly controlled. If the population is rapidly declining or facing extinction, measures such as a complete ban on boat tourism for a certain period are also necessary.
In fact, this structure is similar to many environmental pollution problems. For highly harmful pollutants, the government must impose a complete ban on their use. However, for less dangerous substances, regulation at an appropriate level may be more effective. This includes setting caps on pollution emissions or imposing high taxes. Not every problem requires a ban; various policy tools can be employed depending on the situation.
Suppose dolphin boat tours are permitted within certain limits. If a cap is set on the number of tours, the crucial question becomes how to allocate these limited opportunities. Two main approaches can be considered. The first is to allow private operators to set prices autonomously. As demand increases, tour prices would rise, allowing private operators to earn substantial profits. The second is government price control. In this case, if prices are kept low, demand would surge dramatically, likely leading to first-come-first-served systems or intense competition for tickets. People would face long lines or exert excessive effort to secure tickets.
What about an auction system? Some seats could be allocated on a first-come, first-served basis, while the remainder are sold through auction. Furthermore, if the additional revenue generated by the auction is reinvested into wildlife conservation and research, more positive effects can be expected. Thus, rather than relying solely on simple bans or complete market autonomy, combining market principles with government regulation appropriately can yield better results.
