The Moon is a common in the economic sense and therefore primed for polycentric governance. In addition, the diversity of resource systems within the larger lunar system will require diverse and distinct governance systems to tackle the individual challenges of each of the subsystems.
For coherent governance, the management of resources should be informed by their key characteristics. Two fundamental properties of resources, originating in microeconomics, are excludability and subtractability/rivalrousness. Both properties are sliding scales but among the combinations that emerge, governance challenges vary greatly.
The possible combinations are typically presented as a matrix with 4 options: private goods, toll goods, public goods and common pool resources (Fulton and Grey, 2007):
There have been some recent comments on how certain space actors do not consider space and the Moon as a commons. However, according to the above described characteristics, the Moon is technically a common pool resource according to the economic definition (Executive Order on Encouraging International Support for the Recovery and Use of Space Resources). The Moon itself, without yet considering the diversity of resource systems on it (see the next chapter), is not a resource system that invites excludability. Physically restricting access to the lunar orbit or surface is very difficult since, like for the high seas, physical space and entrance points are abundant. The barrier that restricts access to the lunar system is the availability of lunar transport technologies. Accordingly, restricting access through the use of technologies could theoretically be achievable. However, Article I of the Outer Space Treaty protects the freedom of access, exploration, and use of space and all celestial bodies including the Moon, and therefore any attempt to restrict access would be in direct conflict with international law (Outer Space Treaty, 1967). Additionally, national appropriation of any celestial body is strictly prohibited (Article II Outer Space Treaty, 1967). Under the current terrestrial governance system, national sovereignty, and therefore appropriation, are a necessary precondition for property rights since private property requires an entity to recognize and enforce such rights. Hence, physically, technically, and legally, all resources and goods in the lunar system can, at this time and from an economics perspective, only be described as either Common-Pool Resources or Public Goods. As a celestial body in the night sky, the Moon is a Public Good which can be used for orientation, time management, or as a culturally significant object. As a planetary body, the Moon is a Common-Pool Resource as it is substractable in a resource-exploitation and spatial sense.
Commons are widely associated with overuse, exploitation, and mismanagement. Since the late 1960s, Garrett Hardin made popular the conception of commons as naturally leading to tragedy. In his influential paper “tragedy of the commons”, Hardin explains how in any common, rationally (self-maximising) and economically acting individuals will inadvertently overexploit a resource system until it collapses (Hardin, 1968) (1). This seemingly unavoidable dilemma has become the focus of many scholars. Privatization of commons has been proposed by libertarians through the assertion of property rights. For example, in the United States during the 1860s, colonial governments established new resource management regimes such as The Homestead Act. This allowed settlers to claim up to 160 acres of land to be designated as their private property. Alternatively, more state-centric literature focuses on the public ownership of commons in which the state holds and manages a resource system. This way, the state can assign limits, quotas, and licenses to users to hold a common in the interest of the public/collective. These management regimes differ due to the differing characteristics of the resources, the philosophies of the governing bodies, and the expressed desires and intentions of the stakeholders involved at the time of regime creation. There is no one perfect method of managing any given commons, and yet there are certainly failure modes.
Nobel Laureate Elinor Ostrom offers an alternative view on the inevitability of the “Tragedy of the Commons”. While never disagreeing with the existence of the dilemma, Ostrom introduces restrictions its occurrence. Hardin’s tragedy of the commons does occurwhen surrounding conditions are very hostile. Usually, commons have long standing, local traditions accommodating them that manage use and maintenance. Further, resource-users are often acquainted which allows for some level of communication and trust. Only in the absence of all these social system characteristics and the most theoretical scenarios is the tragedy of the commons truly inevitable (Ostrom, 2008). The misconception of the inevitability of this dilemma has, however, led to dominance of the approaches that enclose the commons via private or state-centric legal forms which have in turn led to mismanagement and commons deterioration across the globe (2). Public ownership of commons is conceived as a solution for social dilemmas as it eliminates the competitive, short-term maximization of benefits. In reality, however, public ownership often lacks critical local knowledge and the necessary association with the resource system to meaningfully and effectively govern (Ostrom, 2008). In the same way, privatization of resource systems has led to commercialization and short-term profit-seeking rather than sustainable use and community benefits. Furthermore, market-based schemes for environmental protection frequently lead to deterioration of ecosystem services and loss of biodiversity (Huber et al., 1998). Ostrom introduces polycentricity as a mode of governance in which multiple layers and nodes of clustered stakeholders utilize system-specific knowledge and institutions to sustainability and cooperatively use a common.
The Moon is a common in the economic sense and therefore primed for polycentric governance. In addition, the diversity of resource systems within the larger lunar system will require diverse and distinct governance systems to tackle the individual challenges of each of the subsystems. As an example, on Earth even alike subsystems such as watersheds or agricultural lands are governed very differently across the globe. Each resource system is accompanied by a handful of other systems that interact. Resource systems are associated with the physical properties of its resource units, and its users and the institutions ascribed to the resources. The systems are further connected with other ecosystems and embedded in social, economic, and political settings (Ostrom, 2009). All these factors need to be considered for each individual lunar subsystem to achieve effective governance. This cannot be achieved by one single governance system applicable to the highly diverse lunar resource systems and goods.
In order to explore the development of practical management regimes that support lunar settlement, concepts such as polycentricity should be interrogated for their applicability to the lunar environment. No single ideology will hold all the answers for how to manage the unchartered territories of a new planetary body, just like there is no one system that unifies terrestrial governance. Therefore, it is all the more pressing to consider polycentricity so as to embrace systems within systems, and enable stakeholder and geographic diversity of implementation approaches.
If we employ the characteristics of polycentricity within the lunar setting, we could create a vision of a truly transdisciplinary use of our nearest extraterrestrial neighbor. In turn, this could showcase methodologies which could inspire resource management solutions on Earth simultaneously.
To fully employ polycentricity, we would aim for a multi-level system that, through constitutional rules, allows for operators to autonomously create governance regimes (collective choice level) with like-minded actors (operational level) (Ostrom, 1990). Thus, we need an overarching, international (formal) agreement that empowers the self-organization and self-governance of lunar operators within a set of procedural rules and principles. Apart from the constitutional rules, subsidiarity should be the mode of governance. Governance should be constituted/collectively agreed upon by those actors that intend to participate in a common-pool resource. These governance regimes would be to the highest possible degree congruent with the resource system it intends to govern. The operators can then, in accordance with their agreed upon rules and goals (Collective-Choice Rules), conduct their missions without having to coordinate with a monocentric coordination organ. To guarantee spontaneity and adaptive learning, the constitutional rules should, at least for the initial regime formation phase, protect the ease of joining and leaving regimes. Only if stakeholders can freely partake in their desired local regime, can coherent governance for the high diversity of goods occur.
As a necessary condition of polycentricity, freedom of entry can, in the lunar context, lead to significant challenges. Namely, CPR management regimes are usually characterized by at least some shared interests in the same goods between competing actors. Conflict in CPRs typically arises when competing actors seek to exploit the same resource excessively in trying to maximize their short-term benefits. In community forests, locals compete for produce of the forest and timber. In watershed areas, competition over the amount of water available for each actor creates tensions. In grazelands, herders conflict over the area in which their cattle can feed. In all these cases, the actors are interested in the same good or resource which leads to competition. Since types of goods in the lunar resource systems are highly diverse and the use of one good can be inherently and absolutely obstructive for the use of other goods types in the same resource system, competing and mutually exclusive interests can emerge. An example (3) is the competing interests in the Cold Traps where the science community is interested in the conditions of extreme temperatures some 250 degrees below 0 Celsius, while simultaneously private actors are interested in resource extraction due to these conditions being favorable for volatiles like water. A similar conflict of extracting industry versus science occurs in the Mare Moscoviensis on the far side of the Moon that offers permanent shielding from terrestrial radio wave emissions making it unique for radio astronomy. The Mare is not only radio quiet but also rich in Helium-3 which is an intriguing resource for potential energy production methods once extracted. For polycentric governance to succeed, all corresponding actors must collaborate to establish a shared vision and agreed upon collective-choice rules for their use of the site or region.
Freedom of access also brings about challenges to the practicality and acceptance of the governance system for non-state actors. Continuous entry of new actors and interests could create systematic uncertainty regarding competition dynamics, socio-political circumstances, and more. This changabilty could make investments, commitments and agreeing regime designs difficult if left unaddressed. A future polycentric governance system for lunar activity will have to either restrict freedom of entry to a degree or address the stability of the institutions and regime through constitutional rules.
Overall, the conceptual challenges of polycentricity are surmountable through careful crafting of overarching, international (constitutional level) rules. If efforts towards the establishing of such a governance system were to begin in the near future, collaboration between all parties could develop a coherent and truly transdisciplinary regime, supporting sustained lunar activities to become technologically and economically feasible. Polycentricity on the Moon promises a much more effective, resilient, and just governance regime than traditional privatization and public ownership regimes, even despite the current legal constraints these approaches face.
1) The rational choice of any actor in a rivalrous, non-excludable system is to maximise its utility. Hardin explains the decision-making process with the example of a herdsman. A herdsman weighs the positive utility of adding an additional animal to his herd, one extra unit of produce, against the negative utility, overgrazing the resource system which is a cost carried equally between all resource system users. He arrives at the conclusion that he personally can gain one extra unit of utility while only having to carry a fraction of the negative impact. Thus, the herdsman chooses to add another animal to his herd, and another one, and another one. And so does every other herdsman in the resource system leading to rapidly increasing overgrazing and the depletion of the resource system (Hardin, 1968). The rational choice for each individual actor leads to the worst possible collective choice and the least effective governance strategy. The severity of this ineffectiveness is only exacerbated further by each actor's knowledge about the rational dominant strategies of the other actors. It becomes a race to generate the most possible short-term benefits before the inevitable deterioration of the resource system. (For more information read Wikipedia: Tragedy of the Commons)
2) Examples for public mismanagement: Newfoundland Cod crisis in which the Canadian fisheries policy was a major factor in the depletion of Cod stocks (Sinclair, 1992); Mismanagement through privatization: Mongolian Rangelands (Partelow, 2019).
3) For more examples see “Lunar Resource Management: Applying Public Choice Theory”
Fulton, M., & Gray, R. (2007). Toll Goods and Agricultural Policy (No. 2105-2018-3804).
Hardin, G. (1968). The Tragedy of the Commons.
Huber, R. M., Ruitenbeek, J., & Seroa da Motta, R. (Eds.). (1998). Market-based instruments for environmental policymaking in Latin America and the Caribbean: lessons from eleven countries. The World Bank.
Nechyba, T. (2011). Microeconomics: an intuitive approach with calculus. Nelson Education.
Ostrom, E. (1990). Governing the commons: The evolution of institutions for collective action. Cambridge university press.
Ostrom, E. (2008). Tragedy of the commons. The new palgrave dictionary of economics, 2.
Ostrom, E. (2009). A general framework for analyzing sustainability of social-ecological systems. Science, 325(5939), 419-422.
Partelow, S., Abson, D., Schlüter, A., Fernández-Giménez, M., von Wehrden, H., & Collier, N. (2019). Privatizing the commons: New approaches need broader evaluative criteria for sustainability. International Journal of the Commons, 13(1).
Sinclair, P. R. (1992). Atlantic Canada's fishing communities: The impact of change. In D. A. Hay, & G. S. Basran (Eds.), Rural sociology in Canada. Don Mills, Ontario, Canada: Oxford University Press
The Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and other Celestial Bodies, of 27 January 1967
Executive Order on Encouraging International Support for the Recovery and Use of Space Resources, on 6 April 2020