Tragedy of Commons occurs when there is a common resource pool for all to use. People get full benefits of the resource by using it, but pay only a fraction of the cost.

This can be seen in the careless depletion of rain forests in Borneo. Logging and palm oil companies get the full benefits of cutting down the forests but yet, the cost of cutting it down is but a fraction of what they use. In an environmental context, the cost of cutting down forests is their contribution to pollution. Although they are the ones who cut down the forests, they do not bear the full brunt of pollution caused by themselves.

Due to this imbalance of cost and reward, many will tend to overuse the resource till it is no longer there.

The tragedy of commons can be solved in four different ways:

1. Government intervention: where behavior can be changed through the use of incentives and disincentives
2. Small communities: this is where the resource is divided equally and ownership is given to each person, causing them to be directly affected by what they do with their land
3. Education: where awareness and knowledge is given to the people
4. Morality and Ethics