"The Tragedy of the Commons" is a term used to describe what happens to common resources as a result of human greed. It was first coined in an article in Science in 1968 by Garrett Hardin. The commons dilemma was seen long before Hardin, but he brought widespread attention to it and described it in a common-sense fashion that made it easily accessible.
At its core, the Tragedy of the Commons demonstrates that, in an situation where the consequences of a course of action are shared among a collective, while the benefits are reaped by an individual or single group within the collective, people will tend to take actions that in the long term are detrimental to the group as a whole. This is a tragedy because, in seeking their own personal gain, the members of the group actually ultimately hurt themselves.
The example Hardin uses to illustrate the Tragedy of the Commons is of a group of ranchers and a shared land area. Each farmer is assumed to be keeping their own cattle on the land, from which they yield a personal profit, but the land is assumed to be collectively shared, or leased from a government. Each additional head of cattle has a cost and a gain associated with it: the cost is in land use and wear on the land, while the gain has to do with the profit that can be reaped from that cattle. The trick is, when a rancher adds a cow to his herd, he gains all the benefit of the extra cow, while sharing only a small portion of the cost in terms of land use.
It is therefore rational, in a strict short-sighted view, for a rancher to try to increase his herd as much as he can. And in fact, that view could work out quite well if only one rancher were to take it. But, since it is a rational course of action, we can assume all of the ranchers will pursue it, at which point the land will be degraded such that no cattle can use it, and all will lose. This is the Tragedy of the Commons, the loss of common space through individual pursuit of a rational course of action. Since actions are not taken in a vacuum, what seems like a smart strategy is in fact wrong-headed.
The Tragedy of the Commons can be applied to any sort of common resource, and has been used to describe a number of different situations. Fisheries are one of the most obvious victims, where a single fisherman might be able to fish as much as he or she wished without reaching the limit of a seemingly infinite resource. With tens of thousands of fishermen all pursuing the same strategy, however, the fisheries become depleted and there are no fish for anyone.
The term can also be used when describing national parks, river use, air quality, oil, forests, and even things such as radio frequencies. It is an important theory for designing resource usage plans, as its fundamental assumption about how rational humans can act in a way to bring about destruction of their resource gives a reason to set artificial limitations on usage through governmental policy.