In the Introduction, we discussed the foundation of a cowboy economy, a concept brought to life by economist Kenneth Boulding. In Part 1, we dove into how water is distributed to support cranberry bogs – Massachusetts’ largest agricultural crop. In this third installment, we’ll apply Game Theory to observe how Best Management Practices affect the conservation of resources like water.
In Garett Hardin’s original piece The Tragedy of the Commons, he describes how “freedom in the commons brings ruin to all” and that “the individual benefits as an individual from his ability to deny the truth even though society as a whole, of which he is part, suffers.” As Hardin defines his argument using the classic cattle and pasture scenario, he presents a few options for mitigating the tragedy of the commons, stating that they could be sold as private property, kept as public property, allotted by lottery, or delegated to individuals based on either wealth or merit. However, when Hardin discusses the tragedy of the commons as it relates to “air and waters surrounding us” he openly admits that these resources can not be “fenced,” as in they can not be allocated to individuals as private property. Hardin continues, admitting that we will be “locked into a system of ‘fouling our own nest’ so long as we behave only as independent, rational, free-enterprisers.” Even in 1968, there was a mutual understanding that to share the Earth’s resources there needed to be some method of collaboration or else everyone’s self-interest would cause collective losses.
To provide a deeper understanding of this concept, let’s apply game theory using payoff matrices. This method of game theory allows you to compare two players’ strategies and determine which decisions would yield the highest payoff. For many individuals, the critical example of a payoff matrix is the Prisoner’s Dilemma: Two prisoners are given the option to stay silent or to rat one another out. The prisoners would receive the highest collective gains if they both stayed silent, but their “dominant strategy,” or decision that has the highest individual yield for themselves, encourages them to rat the other out. This lack of collaboration initiates an “inefficiency,” meaning that the two prisoners’ inability to stay quiet causes them to be stuck at a payoff that could be higher if they simply worked together.
If we apply game theory to water management in Massachusetts cranberry farming, the question addressed would be the following: how do the interactions of cranberry growers and their respective usage of water affect collective cranberry yield?
There is a strategic interdependence between cranberry growers that dictates the success of cranberry yield. The implementation of Best Management Practices (BMPs) for water conservation has been so effective that for bogs utilizing BMPs, growers can plant up to 9.3 acres above their registered acres before requiring a permit from MassDEP. These BMPs range from irrigation techniques to the construction of water control structures, to creating water recovery systems for re-usage during flooding. By following BMPs, cranberry growers can work together to encourage collective, collaborative action in agriculture. By ignoring BMPs, Massachusetts cranberry growers risk deepening the drought and decreasing water quality. The Water Control Structures (WCS) BMP tells cranberry growers how the proper construction of flumes and dikes with National Conservation and Resource Service supervision can control flooding, erosion, and water quality in cranberry bogs to ensure that multiple bogs sharing the same water source can successfully grow and harvest their cranberry crop.
To help keep track of our analysis, here are the elements of the game:
Players
- Cranberry Grower 1 (Row Player) with 4.6 acres of bog.
- Cranberry Grower 2 (Column Player) with 4.6 acres of bog.
Strategies
- Both players have the option to follow the Water Control Structures (WCS) BMP for cranberry growing. Both players have the option of ignoring WCS BMPs, as BMPs are not regulations but rather guidance for farmers with 4.6 acres of bog to implement on their own.
Information
- This is a perfect information game. Both players are aware of one another’s strategies and know what the others’ past moves have been.
Using the research we have so far, as well as our understanding of game theory, we can picture the payoff matrix to be something like this:
Both Cranberry Growers Choose to Implement WCS BMP (Upper Left-Hand Quadrant):
If both Cranberry Growers 1 & 2 spend the money to construct the flumes and dikes as directed by the NCRS and the WCS BMP, then both parties can plant up to 9.3 acres above their registered acres before requiring a permit from MassDEP. This is equivalent to a total of 4.6 + 9.3 = 13.9 acres for each Cranberry Grower.
Only Cranberry Grower Chooses to Implement WCS BMP (Bottom Left-Hand Quadrant & Upper Right-Hand Quadrant):
Although the Cranberry Growers who implement WCS BMP are now eligible to grow a total of 9.3 acres above their registered acres, their payoffs are cut in half. This is because the other Cranberry Grower will farm as usual to obtain their 4.6 acre cranberry yield, causing there to be a lack of water and potential wastewater transfer into the other Cranberry Grower’s crop.
No Cranberry Grower Implement WCS BMP (Bottom Left-Hand Quadrant):
If both Cranberry Growers continue to flood and harvest as normal, both of their cranberry crop yields will be limited to 4.6 acres due to a shortage of water and the transfer of wastewater runoff between the two bogs.
Stay tuned for the final installment of this series to see how we can analyze this game using economic principles like institutions and power to mitigate the tragedy of the commons.
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