Markets, Property Rights, and Biodiversity

Abstract

One of the most well-known and widely accepted ideas in resource economics is the “tragedy of the commons” (Hardin 1968). When property rights are not assigned in open access situations there is an incentive to over-exploit renewable resources. According to standard theory, if property rights are assigned in these cases the market will act to properly balance competing uses and force the socially optimal outcome. It is not so well-known that over-exploitation can also occur when common property resources are privatized. This has been referred to as the “tragedy of the enclosure” (Martinez-Alier, 1991a, 1991b).

[The naturalist] looks upon every species of animal and plant now living as the individual letters which go to make up one of the volumes of our earth’s history; and, as a few lost letters may make a sentence unintelligible, so the extinction of the numerous forms of life which the progress of cultivation invariably entails will necessarily render obscure this invaluable record of the past. It is, therefore, an important object [to preserve them]... If this is not done, future ages will certainly look back upon us as a people so immersed in the pursuit of wealth as to be blind to higher considerations.

Alfred Russel Wallace