Commons as Insurance: Safety Nets or Poverty Traps?
Environment and Development Economics, Vol. 14, No. 3
Posted: 26 Sep 2007 Last revised: 31 Aug 2014
Date Written: 2009
Common property resources are often used by households of developing countries as insurance in case of economic stress. The aim of this paper is to consider the potential poverty-trap implications of this use. If the capacity of the resource is small, or if the population in need of insurance is too large, the households are trapped in CPR extraction activity and cannot get more than their subsistence requirement. In this context, cooperation between households and the introduction of a cooperative insurance mechanism may sustain an equilibrium outside the poverty trap and relax pressure on the resource. Moreover, private insurance schemes could also be potential solution to this poverty trap.
Keywords: Commons, Insurance, Poverty trap
JEL Classification: D23, Q15, Q23
Suggested Citation: Suggested Citation