The 2009 Nobel Prize for economics is a useful reminder of how easy it is for scientists to go wrong, especially when their mistake jibes with popular beliefs or political agendas.

Elinor Ostrom of Indiana University shared the prize for her research into the management of “commons,” which has been a buzzword among ecologists since Garrett Hardin’s 1968 article Science, “The Tragedy of the Commons.” His fable about a common pasture that is ruined by overgrazing became one of the most-quoted articles ever published by that journal, and it served as a fundamental rationale for the expansion of national and international regulation of the environment. His fable was a useful illustration of a genuine public-policy problem — how do you manage a resource that doesn’t belong to anyone? — but there were a couple of big problems with the essay and its application.

First, Dr. Hardin himself misapplied the fable. Declaring that “overpopulation” was a tragedy of the commons, he warned that “freedom to breed will bring ruin to all.” He and others advocated a “lifeboat ethic” of denying food aid, even during emergencies, to poor countries with rapidly growing populations. But “overpopulation” was not even a theoretical example of the tragedy of the commons. Parents are not like the cattle owners who profit individually by adding cows to the pasture (while collectively destroying it). Parents, unlike the cattle owners, have to pay to feed and house and educate their children, and the high economic costs of children are one reason that birth rates have declined around the world — without any of the coercion discussed by Dr. Hardin and some other ecologists (like Paul Ehrlich).

The second problem arising from Dr. Hardin’s fable was the presumption that a commons needed to be regulated by national and international agencies. Dr. Hardin didn’t explicitly make that generalization in the essay — he noted that the tragedy could be avoided either by regulating the commons or by converting it to private property — but others in the environmental movement essentially drew that conclusion. Although some greens talked about the virtue of “acting locally,” major environmental groups lobbied in Washington for expanded federal authority, and they urged the rest of the world to follow the American and European example by creating national rules governing commons like forests and fisheries.

But too often those commons ended up in worse shape once they were put under the control of distant bureaucrats who lacked the expertise or the incentives to do the job properly. Dr. Hardin and his disciples had failed to appreciate how often the tragedy of the commons had been averted thanks to ingenious local institutions and customs. Dr. Ostrom won the Nobel for her work analyzing those local institutions. In an interview at the Mercatus Center at George Mason University, Dr. Ostrom discussed the damage that had been done by those who had supplanted the local institutions:

International donors and nongovernmental organizations, as well as national governments and charities, have often acted, under the banner of environmental conservation, in a way that has unwittingly destroyed the very social capital — shared relationship, norms, knowledge and understanding — that has been used by resource users to sustain the productivity of natural capital over the ages. The effort to preserve biodiversity should not lead to the destruction of institutional diversity. . . . These institutions are most in jeopardy when central government officials assume that they do not exist (or are not effective) simply because the government has not put them in place.

Another Nobel laureate economist, Vernon Smith, described her work in an interview with Ivan Osorio for the Competitive Enterprise Institute:

She’s looked at a huge number of commons problems in fisheries, grazing, water, fishing water rights, and stuff like that. She finds that the commons problem is solved by many of these institutions, but not all of them. Some of them cannot make it work. She’s interested in why some of them work and some of them don’t. One example is the Swiss alpine cheese makers. They had a commons problem. They live very high, and they have a grazing commons for their cattle. They solved that problem in the year 1200 A.D. For about 800 years, these guys have had that problem solved. They have a simple rule: If you’ve got three cows, you can pasture those three cows in the commons if you carried them over from last winter. But you can’t bring new cows in just for the summer. It’s very costly to carry cows over to the winter—they need to be in barns and be heated, they have to be fed. [The cheese makers] tie the right to the commons to a private property right with the cows.

Letting cheese makers set their own rules is an example of what Dr. Ostrom calls polycentric governance. In the interview at the Mercatus Center, she explained the advantages of trusting locals:

The strength of polycentric governance systems is each of the subunits has considerable autonomy to experiment with diverse rules for a particular type of resource system and with different response capabilities to external shock. In experimenting with rule combinations within the smaller-scale units of a polycentric system, citizens and officials have access to local knowledge, obtain rapid feedback from their own policy changes, and can learn from the experience of other parallel units.

Here’s a paper by Dr. Ostrom on fisheries. Here’s a a report for PERC by Donald Leal that summarizes Dr. Ostrom’s research: “Her studies of well-managed, commonly-owned property show that well-defined boundaries, a strong community tradition, and absence of government interference can preserve resources.”

You read more about Dr. Ostrom’s work in these posts from David Bollier at Forbes.com, J.P. Freire at the Washington Examiner, Daniel and my colleague Catherine Rampell.

As Catherine notes, the comedian Larry David explains one way to avoid the tragedy of the commons in an episode of “Curb Your Enthusiasm.” Mr. David discusses the tradition requiring guests at a party to refrain from eating too many hors d’oeuvres at once. After your first helping, he says, you have to wait 20 minutes and make sure that the food isn’t disappearing too quickly before you go back for seconds. Does that qualify as polycentric governance?