Abstract
The debate on the environmental implications of property rights has a long tradition. Gordon (1954) and Hardin (1968) are famous for making a case for the positive impact of the definition and enforcement of property rights on environmental stewardship in the early days of the debate. They argue that rational decision-makers will only manage a resource sustainably and make investment and consumption decisions accordingly, if they are reasonably certain that they will be the principal beneficiaries of the pursuit of sustainability. In the logic of this argument, overexploitation and depletion of natural resources are likely in the absence of long-term control, i.e. in the absence of well-defined and well-enforced property rights.
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This fact is important to remember in the context of debates on the environmentally desirable property regime. In this debate, private property rights are often treated as absolutes, which in reality they rarely are. Rather than having to choose between private property regimes, common property regimes, and state ownership, the imposition of some constraints on private property often is a reasonable alternative.
Such limits on unbundling can also exist in terms of the feasibility of the separation of property rights to different attributes to the resource.
Property rights, thus, are continuously determined at the margins in an ongoing endogenous process. (Obviously, property rights are determined exogenously as well, for instance, through political changes such as revolutions or transitions from communist to capitalist regimes or even through `simple’ policy changes.)
In addition, the bounded rationality arguments, of course, apply, as some scholars call it, a boundary of imprecision in human decision making (Windrum and Birchenhall, 1998).
Contrary to many advocates of private property rights claiming that the latter are associated lower costs of governance, however, these lower costs do not imply that a single appropriator from a resource is economically more efficient than a group of appropriators in all instances. Resource ownership by a single appropriator is associated with higher costs of exclusion than ownership by a group (see Eggertsson, 1996).
Note, that individuals often do not just calculate their own costs and benefits in such situations though, which is where the economic argument is insufficient. Frequently, individuals will abstain from appropriate investments - even if they would receive a net-benefit - if other individuals have the potential to free-ride, because they conceive such free-riding as unfair. Thus, norms do play a significant role in influencing individual decisions, besides economic incentives.
Economists have identified insecure property rights as causes of “inefficient” behavior, if considered in terms of long-term social objectives, in numerous contexts, including investment rates and types and economic growth (Alesina, Ozler, Roubini, and Swagel, 1991; Barro, 1991; Borner, Brunetti, and Weder, 1995; de Soto, 1989; Ozler and Rodrik, 1992; Persson and Tabellini, 1994).
While this argument relies on the Pareto-criterion, we need to acknowledge that this criterion is not without problems of its own, of course. Two Pareto optimal positions cannot be compared, for instance. Furthermore, it provides no guidance for comparisons of income distributions, and favors the status quo. Still, it remains one of the most prevalent normative standards in economics.
The Prisoner’s Dilemma offers an alternative way to show how the failure of individuals to cooperate can lead to a Pareto sub-optimal outcome. As defection is the dominant strategy for players in a Prisoner’s Dilemma situation, the Nash outcome is mutual defection, which has the lowest social payoff.
For collective action problems to be completely avoided rather than reduced, contrary to Coase (1960), we do not only need property rights, but also a perfectly functioning market providing for a `correct’ value of those property rights. The question of how to achieve that for many environmental resources is one of the fundamental concerns in the environmental field today, of course, as intergenerational dynamics, scientific uncertainty, and those characteristics of natural resources that make the assignment of property rights difficult to begin with complicate the assignment of monetary values.
Hardin and the `father’ of Collective Action, Mancur Olson, were not the first scholars to reveal the dynamics around collective action problems, however, and we should give credit where credit is due. Aristotle already argued that “what is common to the greatest number has the least care bestowed upon it. Everyone thinks chiefly of his own, and hardly of the common interest” (Aristotle, Politics, Book II, chapter 3).
The technology of publicness captures how individual contributions add to the total public supply achieved. The most common technology identified by Sandler (1992) is that of summation. Q = sum q’, where q’ is the collective good’s provision level of individual I, and n is the group size (or Q = w’q’ + w2q2, in which 0_w’_1 for i = 1,2, if the substitutability of individuals is imperfect. Alternative technologies are those of the weakest link. Q = min (q’,, q°), and the best-shot technology: Q = max (q’ q” )
For collections of case studies see Bromley, Daniel W. (ed.). (1992). Making the Commons Work. Theory, Practice, and Policy. San Francisco: ICS Press; Ostrom, Elinor. (1990). Governing the Commons. The Evolution of Institutions for Collective Action. Cambridge: Cambridge University Press; National Research Council (1986). Proceedings of the Conference on Common Property Resource Management. Washington, DC: National Academy Press. Furthermore, a thorough bibliography of Common Property Resource (CPR) studies has been published by Martin, Fenton. (1992). Common Pool Resources and Collective Action: A Bibliography. Vol. 2. Bloomington: Indiana University, Workshop in Political Theory and Policy Analysis.
The updated version of Olson’s proposition then could be: “With identical individuals and symmetric equilibria, an increase in group size worsens sub-optimality when a summation technology applies” (Sandler, op.cit.: 194).
In addition, one can talk about the final beneficiaries from the resource, i.e. the consumer of the final product. In the context of our project, however, such a focus appears less important.
Source: Schlager and Ostrom, 1992.
Recall that a sustainable harvest rate is a kind of investment, as it means sacrificing today’s consumption for tomorrow’s consumption.
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© 2003 Springer Science+Business Media Dordrecht
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Fuchs, D.A. (2003). Property rights and environmental stewardship. In: An Institutional Basis for Environmental Stewardship. Environment & Policy, vol 35. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-0709-1_3
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DOI: https://doi.org/10.1007/978-94-017-0709-1_3
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