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PROPERTY RIGHTS: A PRIMER

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Technical Editor: Kathleen Painter Rights: A Primer Edited by Neil Meyer

Table of Contents ...... Page Introduction to Property Rights ...... 4 Neil Meyer, University of Idaho

Property and Property Rights ...... 6 Alan Schroeder, The University of Wyoming

Why Property Rights? ...... 7 Larry Libby, The Ohio State University

Why Property Rights Matter! ...... 9 George McDowell, Virginia Institute of Technology

Property Rights In Historical Perspective ...... 11 Jerry L. Anderson, Drake University Law School

Common Property and Natural Resource Management . . . .13 Robert Gorman, University of Alaska, Fairbanks

Economics of Property Rights ...... 17 Steve Medema, University of Colorado

State Property: Wildlife, Lands, And Open Spaces In Colorado ...... 20 Andrew Seidl, Colorado State University

Property Rights: A Philosophical Perspective ...... 22 Paul B. Thompson, Purdue University right to take property for public use under , with just com- Introduction to Property pensation. Police powers can be used in making and enforcing regulations that affect owners and their use of land Rights (Barlowe, R., 1990, Southern Rural Development Center). by Neil Meyer In addition to the formal rights of Department of Agricultural & Rural Sociology, University of Idaho government, communities can use other powers to influence owners. These other powers include We all have opinions about property mands certain responses from other public spending, public rights. Many of us are surprised when we people that are enforced by the gov- power, and public opinion. meet someone with a different point of ernment and culture. History shows that concepts of prop- view about property rights. Certainly Producers who own a hundred acres erty that were accepted in the past there is not one, universal view of prop- of cropland are entitled to the returns change with new conditions and the erty rights today. from their property, management passing of time. Early communities Property actually refers to the right skills, and good sense. They are pro- treated land and other natural resources to a stream of benefits from a given set tected from trespass by their neighbors as a communal resource held in joint of resources. In the U.S., access to those and by agents of the state. The pro- ownership. Under feudalism, every per- benefits is controlled in four basic ways: duction from their land, or stream of son’s status in society was directly relat- private ownership plus three forms of benefits, is theirs to sell or give away ed to the rights that person held in public ownership—, closed as they see fit. land. The distribution of those rights access, and state. • Property rights are a function of what differed greatly from the ones we have Where do property rights come from? others are willing to acknowledge. A today, but they are important because property owner’s actions are limited Property rights come from culture they provide the basis for our present by the expectations and rights of concept of property rights. and community. A person living totally other people, as formally sanctioned apart from others, on a remote island, and sustained in law. How are property rights defined? for instance, or in the American West The boundary between an obligation of the early nineteenth century, does Five legal terms come down to us and a right varies. Patterns of rights from the feudal era. These terms—prop- not need to worry about property rights. and obligations reflect prevailing When people come together, however, erty, fee, estate, interest, and right— judgments about fairness, based on have similar meanings and can generally the need for specific arrangements about people’s values. Government has the property ownership becomes apparent. be used as substitutes for each other. overall responsibility to protect public “Fee simple” ownership signifies that This group or community then defines health and safety, and to promote and enforces rules of access to the bene- the owner enjoys all the rights one can general welfare through selective hold in property. fits that come from owning land or exercise of discretion that sustains other property. Many citizens still cherish the indi- quality of life (Libby, 1994, p. 1000). vidualistic views that were popular on Who really owns my property? • Property rights can be likened to a the American Frontier. However, review “This land is mine, mine to use and bundle of sticks, with each stick repre- of the many programs adopted by local, enjoy, mine to treat as I wish,” is a com- senting a right, or a stream of benefits state, and federal governments in recent mon sentiment among many owners (Fig. 1). The bundle expands as sticks decades indicates that, as a society, we concerning their rights to land. This is are added and it contracts as they are have moved towards acceptance of a called the “human territorial impera- taken away. Important sticks, for larger role for government. The reasons tive.” Landowners obviously possess example, may be the right to sell, to for this change over the past 200 years many rights in the they hold, mortgage, to subdivide, to lease, and include increasing population, rising but do they really have all the rights to grant . incomes and standards of living, more they claim? Various actions by govern- The culture or community that competition for available resources, ris- ments and courts in recent years suggest grants the rights also reserves a number ing literacy rates, wider suffrage (women that private owners’ property rights are of sticks for its own use. The most com- and minorities have the right to vote), shared with the public, and that these mon rights reserved by the community and conservation and environmental rights are limited and can change over as a whole are the right to , the right concerns. time. We are all part of a society that to claim property for public use, the From a historical point of view, it defines our rights and has the power to right to control the type of private use, appears that the rights we hold in prop- redefine them over time. and the right to dispose of the property erty spring from society. Individuals may in case of death. More recently, issues believe that their rights are God-given What are property rights? such as water quality protection, species or endowed by natural law, but in prac- • Property rights establish relationships preservation, and even the preservation tice, the nature of one’s rights depends among participants in any social and of visual landscape have also been with- upon the interpretations accepted by economic system. “Property” is actual- drawn from the individual owner’s prop- the society in which we live. Rights are ly the stream of benefits from a partic- erty rights bundle. real only when the sovereign power or ular resource. The “right” to that Governments, acting for the public government, which acts as the agent of stream of benefits is an expression of and for society as a whole, have long society, recognizes them and is willing to the relative power of the bearer. exercised the power to tax private prop- defend and enforce them. Ownership of a property right com- erties. They also have the time-honored Subtractions from fee simple owner-

4 Property Rights: A Primer ship do not necessarily mean that prop- with the concept of private property. become controversial, for example, graz- erty has less value, or that it provides Other types of property regimes include ing and logging on public lands in the fewer satisfactions to its owners. open access, communal, and state or western U.S. The same is true for pub- Residential easements that deliver power governmental. lic parks in all areas of the U.S. and water while putting utility under- Open access property has no gover- ground usually enhance property values. nance, and everyone can use and take Final points The same can be said for covenants and part of the benefit stream. This situation • Property is a benefit that a society and zoning rules that protect landscape of uncontrolled use often results in dete- a culture agree to protect. views, control noise levels, or affect rioration of the resource. Fishing on the •A property right is a claim to the ben- architecture. More recently, the right to open seas is an example of this manage- efits or stream of benefits derived pollute air and water has been taken ment regime. from the property. away from individual owners. Communal management of property References: means it is jointly owned but there are Why are property rights important? limits to access and use of the benefit Barlow, Raleigh. 1990. Who Owns Your Because property rights are culturally stream. Those who jointly own the Land? Southern Rural Development defined and enforced and because differ- resource exercise control over use of the Center, Mississippi State University, ent groups gain and lose power, no one benefit stream. Many New England lob- Starkville. can be certain how far the current ster fisheries are managed in this man- Libby, Lawrence W. 1994. Conflict on movement will go to broaden public ner. the : Natural resource powers over private property. The inter- Governmental managers make deci- entitlements, the public interest, and ests of different groups vary greatly. sions and rules for access and use of ben- agricultural economics. American Those seeing private ownership as an efit streams to state-owned property. Journal of Agricultural Economics, opportunity for making money and Rules for use and allocation of the bene- 76(5):997-1009. acquiring wealth have obvious reasons fits from publicly owned property often for trying to stop or reverse the trend toward more public power. Others, who view land as a scarce and fragile resource, the use of which is closely Table 1. Characteristics of different property rights intertwined with community concerns, Type of property Ownership Management Access Enforcement argue for even more public supervision. Most Americans’ attitudes lie between Private Individual Individual Closed Society/Law these two points. Public With the prospect of stronger Open access All members No one All members No one demands and pressures for public pro- Closed access Group members Group members Group members Group members grams to direct land use, individual Government Government Government All Government owners may very well fear that attitude changes will strip them of certain rights. A growing sentiment for wider acceptance of a public trust view of rights calls for recognition that the Figure 1. Bundle of property rights rights enjoyed by owners of private property are balanced by their responsi- bilities. It is to society’s advantage that TheThe Bundle Bundle of ofRights Rights in inLand Land owners use land for productive purposes. Owners have the responsibility to use Landowner Rights Public Rights land, or other streams of benefits, in ways that do not cause injury or loss of benefits to others or work against the Tax basic interests of others in the commu- Sell Lease nity. Take For Public Use What is common property? Mortgage Subdivide Common property is joint ownership Control Use Of of a stream of benefits. Management of common property cases is more compli- cated and often becomes controversial Devise Escheat because groups and individuals have dif- Grant Easements ferent values and opinions about how to manage a given resource. Many property rights conflicts today concern manage- ment of commonly owned resources. What are the different types of common property? Ownership and management are often confused when the term common property is used. Everyone is familiar

Property Rights: A Primer 5 public and private management of natu- ral resources. A better understanding of Property and Property the effectiveness of particular property and management regimes might go a long way in resolving some of these dis- Rights putes. The objective of this series of papers Alan Schroeder, Associate Professor is to facilitate public dialogue by identi- Department of Agricultural Economics, The University of Wyoming fying and clarifying the underlying terms, principles, and positions readers may encounter in the current natural Introduction make sense if we accept the premise resource and property debate. Stories of property rights conflicts are that they are motivated by principles Whenever possible, readers will be pre- regularly on the front page of local other than or in addition to self-inter- sented with research exploring the effec- newspapers—landowners criticizing the est, narrowly defined. The same can be tiveness of particular property and man- government for excessive regulations; said about many agency, environmental, agement regimes in dealing with specific neighbors complaining about environ- and industry representatives. We will resources. Though some claims may be mental or health problems created by explore this point in even greater detail shown to be unsupported by current adjoining land uses; environmentalist in subsequent papers. data or legal reasoning, our primary pur- and others berating both government It is probably more accurate to say pose is not to act as judges. and industry for losses of prime agricul- that many of these disputes turn on fun- This series is organized in the follow- tural land, wilderness areas, wildlife damental confusion regarding three ing fashion. In this, the first paper, we habitat, and scenic rivers. In the past, things: 1) what principles should moti- will briefly describe some the principles parties have gone to court, seeking a vate government policy regarding natu- and terms found in the current property legal ruling that some private property ral resources; 2) what property rights debate. In the remaining papers the right or important public interest was exist in disputed resources; and 3) how writers will illustrate how these princi- being threatened. The resulting rulings effective are different private and public ples and terms can be used to under- frequently satisfied neither the dis- property management systems in stand and critically examine public poli- putants nor the public in general. achieving these ends. cy debates in such areas as: First, even professionals disagree on In the western United States, these • Property rights and land use planning conflicts often focus on publicly held the content and meaning of specific types of property rights. For example, • Property rights and environmental lands. Federal lands represent more than law forty percent of land ownership in some economists refer to resources, not subject to any ownership or control, as • Property rights and public lands Alaska, Arizona, California, Oregon, • Property rights and aboriginal lands Idaho, Nevada, Utah, and Wyoming. “common property;” others call the Mining, forestry, grazing, recreation, and same things “open access” resources and There are some limitations to our environmental interests often clash use the term “common property approach. We believe establishing a regarding how well publicly-held resource” to refer to property that is common vocabulary is crucial to facili- resources (e.g., waters, lands, wildlife) jointly owned and/or managed by more tate dialogue. Nevertheless, as we indi- are faring, who should participate in the than one person or organization. cated above, there is no common agree- management decisions, and what (if Second, interest group members do ment among professionals. Readers any) private or collective property rights not necessarily agree among themselves should be aware of this fact when exist in these resources. Some politi- on the principles or solutions that reviewing the bibliography. We must cians and social commentators suggest should be applied in particular disputes. also reiterate that we will draw no con- that these resources might be better Books and articles discussing public clusions regarding which property managed if legal was transferred lands and the sagebrush rebellion point regime or management system is best. into private hands (). out that some permittees and policy Our primary purpose is to facilitate Others have challenged these con- makers favored privatizing publicly-held understanding, not act as judges. tentions. lands, claiming such a move would Moreover, many of our statements will It is easy to dismiss these very public maximize public welfare. Others favored be generalizations. In a series of short and sometimes rancorous disputes. privatization, not because of its social papers it is impossible to fully summarize These disputes are often clothed in welfare impact but rather because it the rich and varied backgrounds and words and phrases such as “private prop- would formally recognize what they saw principles underlying each interest erty rights,” “takings,” “public health as “rights” already held by the user (a group’s position. We hope the bibliogra- and safety,” “sustainability,” “public rights-based justification). In the end, phy attached to each paper will allow trust” and “protection of future genera- Secretary Watts rejected privatization readers to delve more deeply into the tions.” These terms are often simply dis- and adopted a “good neighbor policy” conflicting views. missed as interest groups manipulating under which title was retained by the Recognizing these problems, we ask language in an attempt to capture pub- federal government but greater manage- readers to suspend judgment until each lic opinion for their own purposes. To ment control was transferred to permit- argument is presented. In this way read- do so is a mistake, however, because it tees. Commentators suggest this policy ers can better understand what moti- seems clear that principles beyond self- was justified using both efficiency and vates those with whom they might agree interest motivate many of the dis- rights-based principles. or disagree. Sometimes a conclusion putants. Indeed the expenditures and Third, as we indicated above, dis- that an opponent’s argument “does not personal risks made by Mr. Hedge and putants often make broad generaliza- make sense” may simply mean we are others participating in the sagebrush tions—both favorable and unfavor- using a different measure of “sense” than rebellion in the West seem to only able—regarding the effectiveness of they. We also ask readers to think

6 Property Rights: A Primer about other possible principles, argu- Unfortunately, the same commentators The ownership interest ments, and solutions we may have often mean different things when they Recently some commentators have missed in our brief summaries. In doing refer to this . sought to separate the ownership inter- so, readers may find mutually acceptable est into its component parts. For exam- solutions to similar problems in their The property estate: the “bundle of rights” as a special concept ple, McCay divides ownership interest community. into two parts: The term “bundle of rights” is some- • Title: Who has legal title to the prop- Illustrating the language of “property” times used in a special or physical sense, and “property rights” conflicts erty. particularly when referring to real prop- • Management: Who determines how In a famous early American case, erty. For example, different persons may the property may be used. Pierson v. Post, 3 Gaine 175 (N.Y. have legal title to the mineral, air, McCay is not entirely clear as to 1805), the plaintiff, Post, claimed: water, and/or surface rights associated what particular rights are contained in “[B]eing in possession of certain dogs with land at a particular location. That each of these two categories. For exam- and hounds under his command, did, is, a property “owner” may have a right ple, we might further subdivide the ‘upon a certain wild, and uninhabited, to build on or cultivate the land (the “title interest” (our label) into the rights unpossessed and wasteland, called the surface estate) but not to remove its to exclude others, use or receive benefits beach, find and start one of those nox- rock, oil and gas, or coal without first from its use, and/or transfer legal title to ious beings called a fox,’ and whilst obtaining permission from the mineral another. there , chasing and pursuing the estate “owner.” same with his dogs and hounds, and This same special concept can be References when in view thereof, Pierson, well employed in other contexts. For exam- McCay, Bonnie. 1996. Forms of proper- knowing the fox was so hunted and pur- ple, the court in Post held that Post ty rights and the impact of changing sued, did in the sight of Post, to prevent would have a “property right” in the fox ownership. Increasing Understanding of his catching the same, kill and carry it if he had physical custody of it. Public Problems and Policies, off.” Post sued Pierson, claiming a prop- Similarly, some states have held that a Proceedings, Farm Foundation erty right in the fox. How should the property right attaches to oil and gas, National Public Policy Education court have ruled? water, and other movable (sometimes Conference, Providence, RI, p. 127. called “fugitive”) resources when they Definitions of “property” and are in possession of a particular party. “property rights” Black’s Law Dictionary defines prop- erty as: “That which is peculiar or prop- er to one person; that which belongs exclusively to one. In a strict legal Why Property Rights? sense, an aggregate of rights which are Larry Libby, C. William Swank Professor of Rural-Urban Policy guaranteed and protected by govern- The Ohio State University ment.” Similarly, Webster’s Ninth New Property rights are essential to the the state, accept, acknowledge, and Collegiate Dictionary provides us with a exchange process because they define agree to its existence. University of few definitions: “property...2a: some- the opportunities available to people Wisconsin agricultural economist Dan thing owned or possessed, specif.: a within an economic system. People must Bromley has said, “Rights are not rela- piece of ; b: the exclusive clearly understand what they are buying tionships between me and an object, but right to possess, enjoy, and dispose of a or selling, what the product or service is, between me and others with respect to thing: OWNERSHIP; c: something to and the flow of rights and opportunities that object.” which a person has a legal title; d: one that go with a tangible exchange. Rights to property, then, exist only in (as a performer) under contract whose Property is not the tangible thing a publicly sanctioned context within work is esp. valuable...” and being bought or sold. What is exchanged the social system in which there is gen- “property right…a legal right or is the right to use a stream of benefits eral acceptance of the right being exer- interest in or against specific property.” from that property or object in some cised. Once social acceptance is accom- The terms “property” and “property way, and there are always limits to those plished, the state reinforces and ensures rights” under these definitions refer not rights. You have the right, for example, the relationship between ownership and to a “thing”—the fox in the above to slice up a tomato and put it in a sand- exercise of the associated rights. example—but rather to the real rela- wich but not to throw the tomato at Without enforcement, rights have very tionship among people regarding the somebody with whom you happen to little substance and essentially cannot thing. Thus the issue in Post is “Did disagree. Similarly, the owner of a piece be exercised. Post have a right enforceable by a court of real estate may own the right to do Rights are limited by what you and to take the fox and did Pierson have an some things on and with that land, but others will agree is acceptable. My right equivalent duty to not interfere with not to do other things. to do something is a function of what Post’s hunting?” While the notion of property rights is you’re going to let me get away with, What does it mean when we say a per- essential to transactions in any kind of a both in a formal sense and in a less for- son has “property rights”? market context, those rights are separate mal sense. and defined, and they may differ from Legal and economic commentators one transaction to another. Property rights are transferable frequently indicate that property con- In order for a market to function, sists not of a singIe right but rather—as Rights as social agreement rights to the flow of benefits associated the definitions above suggest—an aggre- A right exists only if you and others with a tangible object must be transfer- gation or bundle of rights. in society, collectively and reinforced by able from one person to another. They

Property Rights: A Primer 7 may be transferred collectively or sepa- produce something of monetary value. ty with a license to fish gains, even rately. may not include According to this argument, the owner though their rights are interspersed. surface rights. Your rights to use water has an inherent right to that land adjacent to your land are limited by the because of the efforts that turned the Open access impact your actions may have on other basic resource into a flow of services, , in fact, described people who are also dependent on that with value associated to them. This is a open access resources. When rights to a water. prominent theory of property rights in resource are thrown wide open without many current discussions. formal or informal restrictions, it is diffi- Rights differ according to circumstance The second argument regards owner- cult to separate one user from another, The property rights movement most ship and property as a social conven- to avoid overuse, or to encourage stew- familiar to people in the United States tion, something created by people to ardship. Unrestricted access may cause today relates to (land) and accomplish community purposes. loss of quality. to the flow of services that comes from According to this view, property owner- Publicly owned land ownership. ship is a function of human institutions A landowner has certain exclusive that establish sets of land services for Publicly owned resources are another rights that others cannot exercise. society. No set of rights is natural or per- category. Government can acquire prop- These rights are not absolute, however. manent. All are relative to prevailing erty rights, or opportunities, from indi- Members of the general public may views about natural resources and land viduals either through market transac- have interests that impose limits on a services that come from those resources. tion, eminent domain, or some other property owner’s rights. The interest of way. The government then manages the non-owners is reflected in the institu- Common property resource for the public at large and tions and policies that evolve around Rights to property are complicated in decides the mix of services to be gener- the flow of services, the flow of , some cases by the character of the ated. and the flow of opportunities from a process that creates those rights. What Public trust piece of land that are not necessarily Garret Hardin has famously called the limited to the person who holds the “,” really The public trust is a particularly land title. describes open access to a set of interesting doctrine in law that asserts When a property owner’s income resources. There is an important distinc- the right of government to protect the from a piece of land is compromised by tion between common property unorganized public from actions taken public actions of some kind, for exam- resources and open access resources. by individuals in the private sector, or ple, by a new law, does the owner have Hardin overlooks the reality that both from the arbitrary actions of other gov- a right to compensation because the formal and informal rules govern the use ernments. In other words, according to government has taken away a land use of property that is held in common by a the doctrine of public trust, it is the opportunity? Or is the government group of like-minded individuals. These responsibility of government to protect reclaiming rights that were granted to rules encourage stewardship of the land the quality of the Great Lakes, the qual- the owner when demand for land servic- or resource and discourage exploitation. ity of the oceans, and the quality of es were different? The lobster fishery along the coast of other water resources because those Range policy in the western United Maine is one example of common prop- resources are fundamental to the public States is a good example of these ques- erty. A set of formal rules exists about good. The same can be said for air quali- tions. Rights in range land were granted the size of lobsters that can be taken, ty and public health. at a time when it was clearly in the pub- but the real governance of that lobster The resources are used by individu- lic interest for private individuals to fishery is the informal way that lobster als, but ultimately there are safeguards invest in and operate those resources for fishers themselves keep track of each that allow government to step in and the income generated by raising beef or other. monitor the way they are used, to pro- wool. More recently, there is interest in It would be impossible for me, as tect the public trust. In California, resource services other than the com- someone from “away,” to come to actions on development were restricted modity values associated with cattle or Winter Harbor, Maine, put out a string near Mono Lake to protect the quality sheep. Government is saying, “We’re of lobster traps, and expect to get any- of the land and water making up that going to take back from you the right thing out of it. I could get the license, resource. Acting in the public trust, that we gave you years ago.” but the other lobster fishers in that government stepped in to protect the Debates over “the public interest” town would not take kindly to an inter- basic environmental and scenic quality frequently call for a reallocation, or a loper; eventually my traps would disap- of the lake and adjacent lands. rethinking of the distribution of rights pear. My ability to make an income Perhaps the public trust doctrine in real property. Whether a change of would be compromised because I am not could be applied to protection of the property rights is a cost or a benefit real- part of the community that is attempt- basic productivity of farmland, requiring ly depends on one’s point of view and ing to gain a living from those resources. that it be preserved not only for the the existing allocation of property Within the coastal lobster fishery, next generation, the next ten, twenty, rights. people know that their fishing is or even thirty years, but for all future Two basic lines of argument exist on restricted to a certain part of the coast- generations. Perhaps there is some over- this question. First is the natural rights line. No one goes from one harbor to riding, compelling obligation of govern- theory, which asserts that ownership the next. The boat numbers are known, ment to shepherd that resource. The arises from the natural order of things as are the color of the traps. There is a public trust is an important concept to and is not subject to the whims of gov- strong, informal system governing that explore in resource policy. ernment. That is, land becomes proper- fishery, which has sustained it for a long Current status ty through the effort of an individual to time, and there is a clear incentive for make that land generate income and stewardship. Everyone in the communi- No set of property rights is perma- nent. The distribution of rights reflects

8 Property Rights: A Primer the interest of non-owners as developed through public policies of various kinds, and these policies change with time. Why Property Rights Certainly, no set of property rights is absolute. It is fair to say, however, that the current distribution of opportunity Matter! and rights is sanctioned and protected by the government. by George McDowell, Department of Agricultural and Applied Economics Property rights protection statutes are Virginia Institute of Technology being discussed around the country, with citizens calling for a statutory For purposes of this discussion, prop- deteriorated as they defended their father approach that would require any depri- erty rights are all of the laws, rules, cus- against her deprecations. vation in value be compensated. Only toms, conventions, and presumptions Things became so acrimonious Florida and Texas have mandatory com- that influence the social and economic between the mother and daughters that pensation when private rights are com- behavior of individuals or groups as they by mutual agreement of all family mem- promised by public action. Of the oth- act in society. No distinction is made bers the girls went to live with their ers, eighteen or so require that govern- between property rights and institutions; father. The courts still held that the ments weigh the property rights conse- they are synonymous and the words are mother was custodial parent while the quences before enacting new laws. interchangeable. The emphasis is on girls lived with their father. Under the U.S. and state constitutions, exchange. By their mutual agreement the family owners cannot be deprived of property The market is not an exchange of created a new set of rights, contrary to without due process and just compensa- goods but rather an exchange of claims. the court’s ruling. Of course, had the tion. The existing structure has some The futures market makes that clear. mother not agreed, the courts would sanctions and is protected in law. One wishes to possess only the claims to have preserved her custodial care and the wheat or pork bellies—the property girls making their home with her. References rights—not the boxcars of . In addition to clarifying the relation- Becker, John C. 1996. Exercising prop- If all exchange is with respect to prop- ship of rights to the law, the example erty rights: For individual or commu- erty claims, where does the property above also illustrates the point that nity benefit? Farm Economics, Penn come from? “It’s mine, I can do what I Taylor makes about the origins of proper- State Extension. want with it!” is a common cry of chil- ty. “It’s mine!” not because I assert it, but Bromley, Daniel W. 1993. Regulatory dren at play. It’s also the cry of the because you agree. “My right of property takings: Coherent concept or logical landowner whose farm has been in the in a thing depends not upon my claim to contradiction? Vermont Law Review family for generations and who now it, but precisely upon your readiness to 17(3)647-682. wants to establish an intensive hog oper- admit my claim as privileged,” says Cordes, Mark W. 1997. Leapfrogging ation without community interference. Taylor. the constitution: The rise of state But what makes it “mine?” This is the paradox: your property takings legislation. Ecology Law rights in anything depend, not on your Quarterly 24:187-242. Origins of property claims, but on others’ acknowledgement Dragun, Andrew K. 1983. , According to , property and forbearance, which may or may not property rights, and power. Journal of comes from the incorporation of labor be codified in law. This radical sense that Economic Issues. 17(3)667-680. into something that creates value. For all property in a degree is “public” is the Schmid, A.A. 1987. Property in a example, argues Locke, the value incor- fundamental basis, says Taylor, of all social context. Chapter 2 in Property, porated into nuts by the effort put forth peaceable intercourse between people. Power, and Public Choice, New York: to gather them from the forest floor There is no property without community. Praeger. makes those nuts the property of the This is a concept not fully understood by gatherer. However, by the same logic, the some in the “property rights” movement person who snatches the bundle of nuts around the country. from the gatherer and flees the scene becomes the proper owner of the nuts. Formal and informal property rights The thief incorporates superior guile and As indicated earlier, some property swiftness into the value of the nuts. rights are formal, and codified in law, We are also quick to assert that prop- administrative rules, and practices, while erty is established by law, but according others are customary and informal, most- to J.F.A. Taylor, the law and police only ly unconscious and embedded in culture preserve property, they cannot establish or habit. According to John R. it. For example, the property right with Commons, “If we endeavor to find a uni- respect to custody of the children was versal circumstance, common to all awarded to their mother in the rancorous behavior known as institutional, we may divorce of a friend. My friend resolved define an institution as collective action not to pursue his grievances with his ex- in control, liberation, and expansion of wife through his daughters and told me individual action.” In another reference, he would say nothing about their mother Commons states that institutions, or that he could not justify to them when rights, “order the relationships between they were 25 years old. The ex-wife did people.” not similarly restrain herself, however, One of the most graphic institutions, and her relationship with the daughters or property rights, is the line down the

Property Rights: A Primer 9 middle of the road. Its physical presence vention of accidents involving children lowing quote from an article on Albania helps you know your place vis-a-vis the while keeping the road useable for trans- in the Wall Street Journal of March 4, other users of the road. To get some portation. Groups will argue over the 1998: sense of the effectiveness of the physical choice of the institution even when all “While pyramid schemes are com- aspects of this institution, one need only agree that some degree of speed limit in mon in post-communist countries, they drive a newly paved road without any the neighborhood is essential. grew to more than $1 billion in lines on a dark, rainy night. Examined Albania, swallowing a small economy, further, the line represents a set of legal Open market economies are not free which lacked the basic regulatory insti- arrangements that can result in a ticket Property rights in practice tutions common in the free market.” from the police if you pass another car Debate about property rights fre- The sentence is contradictory. The when the line is solid. quently refers to specific legal or admin- rhetoric is wrong. The trouble in The effective functioning of the line istrative rights that are codified in law. Albania is that there are free markets, as an institution depends on more than Rights that are culturally or informally and free markets do not describe what its physical attributes and the formal we have or want in the United States. legal rules related to use of the road. It That internally inconsistent statement As an illustration of how the attributes of also depends on public understanding, things matter in relationships, consider in the most prominent economic news- to such a degree that the rules have the following communication between paper in the U.S. suggests that many become a part of our culture. Step off Canadian authorities and the commander misunderstand the real basis of a market the curb and look to the left for oncom- of a U.S. Navy ship off the coast of economy. ing traffic in London. The red, double- Newfoundland in October, 1995: The changes in Eastern Europe and decker bus coming from the right will the former Soviet Union offer a per- remind you that there is something else Americans: Please divert your course 15 spective on our own economic system. at work in addition to law. degrees to the North to avoid a collision. Economists and non-economists alike Canadians: Recommend you divert your give evidence of misunderstanding our Interdependence of people course 15 degrees to the South to avoid a own market system and its underlying So long as everyone is in agreement, collision. basis in persistently calling it a free mar- keeping either to the left or to the right Americans: This is the Captain of a U.S. Navy ship. I say again, divert your course. ket system rather than an open market of the center line in the road is equally economy. convenient in predicting where the Canadians: No. I say again, you divert your course. Informal property rights including a other guy will be. The tougher property Americans: This is the aircraft carrier general lawfulness and trustworthiness rights issues are when there is disagree- U.S.S. Lincoln, the second-largest ship in are necessary to the successful function- ment about what is convenient—who the United States’ Atlantic Fleet. We are ing of our economy. Broken knees are a owns the land where the road might go; accompanied by three destroyers, three substitute to secure contracts where how it can be acquired for that purpose; cruisers, and numerous support vessels. I mafia or black market organizations demand that you change your course 15 and whether there is need to protect degrees North, That’s one-five degrees operate in the absence of trust and/or a swamps in its path. North, or counter measures will be under- willingness to follow commercial law. Property rights are needed because taken to ensure the safety of this ship. The same system operates in our society people are interdependent. Property Canadians: This is a lighthouse. Your call. in the underground economy, where rights sort out the conflicts that come normal property rights don’t function. from that interdependence and provide No matter the relative authority of the In Taylor’s terms, this is another predictability about outcomes—part of individuals in command, the physical example of an absence of covenant, or the stability function of rights in a soci- attributes of their charges determine the outcome of the conflict in the relationship. community. There are no property ety. The conflicts, or interdependencies, Lighthouses don’t divert their course. rights to permit any transactions beyond between people are influenced, or even cash exchange under the rule of caveat partly determined by, people’s relation- emptor (“let the buyer beware”), which ships to things. enforced, however, are a neglected area applies to both the buyer and the seller. worthy of consideration, particularly the Attributes of things Currency and commodities alone do not rights implicit in market transactions constitute a market. The physical characteristics, or that make it possible for the market to A market exchanges claims, and the attributes, of things make a real differ- function. Some of these rights are for- existence of claims is contingent upon ence in relationships among people and mal, but many are informal and embed- some sense of community, something in the property rights that may be useful ded in culture. more than physical possession of the in ordering those relationships. James Fallows says, in his book More good. Community requires a degree of Different attributes create different types Like Us, “In the long run, a society’s civility, trustworthiness, and goodwill. of interdependencies, which lead to dif- strength depends on the way that ordi- ferent choices of property rights. nary people voluntarily behave. New rights Choice Ordinary people matter because there As a society grows and develops, new are so many of them. Voluntary behav- rights emerge to control and manage Frequently, alternative rights, or ior matters because it’s too hard to advances in technology. New technolo- institutions, will achieve similar out- supervise them all of the time. This vol- gy means new things, new interdepen- comes. Speed limit signs, “children at untary behavior is what I mean by ‘cul- dencies between people, and thus new play” signs, and speed control bumps are ture.’” rights. all intended to order the relationships Our own rhetoric about our econom- Without new technology, however, between children at play and drivers of ic system is one reason it is difficult to the only way to achieve development is cars through the neighborhood. Each see the voluntary behavior, or culturally to create new rights that bring more has advantages and disadvantages in based property rights, that helps make productivity, or more satisfaction from achieving the desired relationship—pre- our economy function. Consider the fol- better use of existing resources. It is like-

10 Property Rights: A Primer ly that new covenants about the use of References and other reading: Schmid, A. Allen. 1987. Property, other resources will come in informal Commons, John R. 1931. Institutional Power, and Public Choice (2nd edi- agreements that expand people’s radius economics. American Economic Review tion). Praeger, New York. of trust and control over their destiny. 21:648-657. Shabman, Leonard. 1995. Fallows, James. 1989. More Like Us. Demosclerosis: Assessing the argu- Houghton Mifflin Company, Boston. ment. American Journal of Agricultural Frank, Robert. 1998. Albania’s pyramid Economics. 77(December):1135-1140. Al Schmid’s book, Property, Power and schemes look sick. The Wall Street Shabman, Leonard and David White. Public Choice, lists a set of attributes that 1995. Understanding Federal Taking he argues creates different types of rela- Journal March 4, p. A-14. tionships between people. Lancaster, Kelvin J. 1966. A new Legislation. Staff paper, Department of approach to consumer theory. Journal Agricultural and Applied Economics, • Incompatible use: Like apples—if of Political Economy 74:853-58. Virginia Tech. you eat it, I can’t. Litwack, John M. 1991. Legality and Stone, Christopher D. 1972. Should • Exclusion costs: Children can make market reform in Soviet-type trees have standing—Toward legal money selling apples or lemonade, economies. Journal of Economic rights for natural objects. Southern but they probably won’t do as well Perspectives 5(4):77-89. California Law Review 45:450. selling views of their snow sculptures. Ostrom, Elinor. 1990. Governing the Taylor, John F.A. 1966. The ethical • Economies of scale: I like hamburg- Commons: The Evolution of Institutions foundations of the market. Chapter 5 ers and fries, but I also like hummus. for Collective Action. Cambridge in The Masks of Society. Appleton- I have to make hummus at home, Century-Crofts, New York because it isn’t generally available in University Press, Cambridge and New the grocery store. Because of others’ York. shared tastes and fast food scale economies, the unit cost of hamburg- ers and fries is low. For exactly the opposite reasons, the per unit cost of hummus is high. • Joint impact: People prefer to live next to a conservation area instead of Property Rights in a landfill. • Transaction costs: It’s what small claims court is about. Historical Perspective • Surpluses and peak loads: Retired people, without kids at home, take by Jerry L. Anderson, Associate Dean and Professor of Law vacations when schools are in ses- Drake University Law School sion, demand is low, and therefore, so are prices. Prices vary by season. Pricing is a property right. In a recent speech, the president of ear, but schizophrenic and dynamic in the American Farm Bureau complained nature. that “rats and bats, bugs and weeds are On one hand, we firmly believe that claiming title to our lands.” He argued people should be able to do what they Summary that restrictions imposed by laws such want with the property they own. The The lay community tends to view as the Endangered Species Act amount- desire to maintain strong property property rights as rights in land. In ed to a “taking” of the property rights of rights protection is based not only on recent years, the general public has farmers and ranchers. He apparently utilitarian grounds (that is, we need to acknowledged the notion of intellectual believes that property rights are protect property to give people incen- property rights to cover the results of absolute and self-defining: if farmers tive to produce), but also on fairness creative efforts—from computer pro- can’t do what they want on their prop- grounds (if you worked hard to get the grams to popular songs—but such views erty, then their rights must have been property, you should be able to use it). of property rights are much too limiting. infringed. On the other hand, we hold an Here we’ve considered property Most constitutional provisions, how- equally strong conviction that there is a rights to be all the laws, rules, customs, ever, are not absolute. The second public interest in how property is used, conventions, and presumptions that amendment, for example, clearly states and at some point, the public’s interest influence the social and economic that we have a right to bear arms, but outweighs the individual’s rights. behavior of individuals or groups as they no one questions the government’s relate or act in society. John R. right to prevent your neighbors from The Federalist perspective Commons’s notion is that property arming themselves with nerve gas or Both of those perspectives are well rights are collective action in control, nuclear weapons. Thus, “arms” is not a represented in history, beginning with liberation, and expansion of individual self-defining concept and is certainly the framers of the Constitution. On action. Property rights are necessary not absolute. one side was classical liberalism, because we get into each other’s hair. At some point, lines must be drawn embodied in Federalist thinkers such as “No free lunch,” is a fundamental and terms defined. We must go outside James Madison, who believed that indi- precept of economists. Much more the words themselves to determine vidual property rights were of crucial interesting, however, is who prepares their meaning. History is one place we importance and deserved stringent pro- lunch, serves lunch, sets the menu, and can get that context. tection. “Government,” Madison said, pays for the lunch. That’s the domain of History shows that property rights “is instituted no less for the protection property rights. have evolved over time. Our recogni- of property than of individuals.” tion of property rights has not been lin- Federalists understood that other

Property Rights: A Primer 11 rights were of no use unless property was Legal history Grand Central Station, which they said safe. Arthur Lee, of Virginia, said that Mugler vs. Kansas, 123 U.S. 623, 8 resulted in a taking of their property. “the right of property is the guardian of S.Ct. 273 (1887) In the 1880s Kansas Justice Brennan wrote the majority every other right, and to deprive people passed a prohibition law against the opinion, and once again the Republican of it is in fact to deprive them of their manufacture or sale of alcoholic bever- position won out. Brennan relied on liberty.” For example, the right of free ages. This was not good for Mugler, who Mugler and held that the public’s inter- speech would be worthless if the gov- owned a brewery. He sued the state, est in preserving landmarks outweighed ernment could threaten your property in claiming the law had destroyed the the harm to the landowner. Justice retaliation. value of his property, and was therefore Rehnquist, in dissent, followed the Federalist philosophy and found that The Republican perspective a “taking” of property in violation of the constitution. even though this might be a very good Colonial republicans, such as The Supreme Court rejected that law, the restriction on private property Thomas Jefferson and Benjamin claim. Justice Harlan wrote that society was too great and required compensa- Franklin, placed more emphasis on the must be able to control the use of prop- tion to the landowner be sustained. limitations of individual property rights. erty for the general good and that prop- Keystone Bituminous Coal Assoc vs De Of course, they believed strongly in erty is held under an implied obligation Benedictus, 480 U.S. 470, 107 S.Ct. property—Jefferson maintained that the that its use not be injurious to the com- 1232, (1987) This case is fascinating key to democracy was a nation populat- munity. At this time, the Republican because the facts appear to be virtually ed by small landowners secure in their philosophy—that property is a creature identical to those in Pennsylvania Coal possessions. of society and therefore its use can be some 60 years before. Again, it involved They also believed that property limited—was more persuasive to the a Pennsylvania law prohibiting coal itself is a creature of society, and is Court. mining that could cause subsidence. It therefore subject to limitations imposed Pennsylvania Coal vs. Mahon, 260 provides a good illustration of the ebb for the . Jefferson, for exam- U.S. 393, 43 S.Ct. 158 (1922) This and flow of viewpoints, because the ple, had been to France and had seen landmark case adopted instead the Court decided the opposite way. rich landowners’ fields lying idle while Federalist philosophy, articulated in the The majority opinion relied on the poor people starved. In a letter to majority opinion by Justice Oliver Republican philosophy of the public Madison, Jefferson declared that in that Wendell Holmes. The case involved the good. Justice Stevens emphasized the case, private property rights had been Kohler Act, by which Pennsylvania pre- public interest in preventing the harm taken too far: Property is “the common vented coal companies from mining of subsidence, holding that it out- stock of all men to live on and use,’’ he coal in such a way as to cause the subsi- weighed the private property interest in concluded. dence of the surface. That seems like a the coal. Justice Rehnquist again dis- Franklin had a similar opinion: reasonable thing to want to prevent, sented, stressing the Federalist view that “Private property is a creature of society and Holmes did not deny it, but he property rights cannot be trampled even and is subject to the calls of that society believed that the law deprived the coal for public good. where its necessity shall require it.” companies of their property interest in Lucas vs South Carolina Coastal They recognized that property exists in the coal that must now be left unmined. Commission, 505 U.S. 1003, 112 S.Ct. the first place only because we agree as a The coal companies had purchased 2886 (1992) Just six years later, society to respect a person’s claims. the mineral interests from the surface Rehnquist’s Federalist position prevailed Therefore, to protect the broader com- owners. Now the government had come due to some major changes in the munity, society has the right to limit the along and basically transferred the inter- Court’s composition. The Lucas case use of property. est back, without compensation. That it involved some restrictions on some Dynamic debate might be a good law is irrelevant, beachfront lots on the South Carolina Holmes said: if society wants this done, coast. Lucas claimed that the restric- These fundamentally different ways tions imposed by the state to prevent of viewing property have been imbed- it must pay the individual whose proper- ty is taken. This view is reminiscent of erosion and for other environmental ded in the U.S. Constitution from its reasons totally destroyed his property inception and are nicely described by the Federalist position, stressing individ- ual rights over society’s interests. interest. Justice Scalia, writing the Professor Philbrick: “One was looking to majority opinion, said that if property individualism to save society. The other Justice Brandeis wrote a powerful dis- sent that echoed the Republican view- interests are destroyed, they must be was looking to society to save the indi- paid for, no matter how beneficial the vidual.” point. Brandeis argued that society must be able to limit property uses that are restrictions. Justices Brennan and The same sort of debate, between Stevens, whose Republican view was individualism and society, goes on today harmful, without having to pay the owner. As Jefferson and Franklin might ascendant in Keystone and Penn over topics like welfare, social security, Central, now wrote in dissent that the gun control, and affirmative action. have said, he noted that property is held always subject to an implied limitation prevention of harmful property uses Viewpoints stressing individual rights should not require compensation. can be traced back to the Federalists, that its use not be injurious to the pub- while those stressing society’s interests lic. A healthy balance are rooted in the colonial Republicans. Penn Central Transportation Co. vs New York City, 438 U.S. 104, 988 S.Ct. The two philosophies have seesawed Property rights should really be back and forth in our jurisprudence: understood as a balance between these 2646 (1978) Fifty years later, this case involved a modern example of property Republican view in 1887, Federalist in competing interests. Several Supreme 1922, back to Republican in the 1970s Court decisions illustrate how our legal limitation: New York City’s landmark preservation law. Penn Central claimed and 80s. Now the Federalist position is decisions have favored one side or the once again dominant. other at various times in history. the law basically prohibited them from building an office tower on top of the We must conclude that both views

12 Property Rights: A Primer are legitimate parts of our constitutional References tection of the environment. culture. Neither one is absolute—there Ely, James W. Jr. 1992. That due satis- Environmental Law Reporter is a balance between them that makes it faction may be made: The Fifth 24(10231). difficult to predict the outcome of a par- Amendment and the origins of the McElfish, James M. Jr., Philip Warburg, ticular case. The balance is probably a compensation principle. The and John Pendergrass. 1996. healthy one, as neither the individual American Journal of Legal History, Property: Past, present, future. The nor society should be allowed to go 36(1). Environmental Forum, Environmental unchecked, and both philosophies are so McElfish, James M. Jr. 1994. Institute. clearly a part of our culture. Rights, Property Roots: Pennsylvania Coal Co. v. Mahon et al., 1922 Evolving rights Rediscovering the basis for legal pro- History also teaches us that property rights are constantly evolving to fit the changing conditions of society. There has never been an absolute “right” to do Common Property and anything with property. Restrictions result from evolving societal needs. After the great fire of the 1600s in Natural Resource London, stringent restrictions were placed on the type and location of new buildings. When the fear of highway- Management men reached a peak, the English gov- ernment outlawed bushes and trees near Robert Gorman, Associate Professor, Cooperative Extension Service the roads where the robbers could hide. University of Alaska Fairbanks The public need for safety justified pri- vate property limitations. Introduction rights as strictly a matter of economics In America, property rights were In the United States, property typi- and law often results in exploitation of rightfully emphasized by an overwhelm- cally belongs in one of two classes: pri- natural resources. It can also erode or ingly agrarian society in which eighty vate or public (state). Another form, destroy local cultures that have effec- percent of the people derived their liv- common property, has elements of both tively managed these natural resources ing from the land. Government restric- private and . Common through common property management tions on property were naturally suspect, property is found worldwide in natural regimes. given the desire of Americans to be free resource management, most notably in Property rights terminology of the feudal tendencies and the oppres- fisheries management. In contemporary The American Heritage Dictionary sion of the English crown. economics literature, the term common of the English Language (Morris, 1981) But as the nature of the economy property is often confused with open defines terminology as, “The vocabulary changed, property rights changed with access property. Open access property of technical terms and usage appropriate it. Jobs and benefits, or stock ownership, lacks any defined ownership so that the to a particular trade, science or art; became just as important as land. The resource is open to harvest or use by nomenclature.” Terminology is the law changed to give employees some anyone wishing to exploit it. essence of communication within and protection and to recognize intangible This paper attempts to define com- between disciplines. When incorrect property as well as real property. mon property within the American per- terminology is used, concepts, theories, As the information age has evolved, spective of property and to look at how issues, and solutions will be distorted we have seen additional changes in other cultures manage common proper- and misunderstood. The commons and property. Trademarks and copyrights ty resources. Examples will be presented common property have been subject to may be far more valuable than land. of the effects of shifting resource man- a variety of academic studies by biolo- The framers of the Constitution could agement from common property to gists, economists, sociologists, anthro- not have foreseen property rights in either private or public property. While pologists, geographers, lawyers, and his- Internet web sites, body parts, and fertil- much of the literature on common torians, each with their own terminolo- ized human eggs, and yet we must adapt property focuses on fisheries, there are gy. The commons and common property their ideas to fit these new realities. examples of common property manage- are frequently misunderstood concepts History teaches that what we mean ment regimes for grazing, communal in natural resources and economics lit- by “property” and “property rights” has forests, irrigation, and groundwater, erature. The precise definition of com- never been set in stone. Instead, our among other resources. Finally, the mon property varies among scholars. recognition of these interests is con- authors discuss the use of common prop- However, most definitions of common stantly evolving—what may have been erty as a means to manage land and nat- property rights include these elements: allowed yesterday may be unacceptable ural resources to achieve optimal utiliza- 1) A well-defined group of co-owners, to society today. Particularly in the tion in American society. who 2) develop and adhere to a well- environmental area, the absolutist view Although property rights issues are defined management regime that of property rights seems misplaced— often considered the domain of econo- includes 3) proscribed access by owners what we see as the proper use of land mists and lawyers, this paper demon- and exclusion of non-owners, and 4) (and therefore the “right” of the proper- strates that anthropologists, sociologists, rights and duties of owners with regards ty owner) is bound to reflect the con- and other social scientists have provided to rates of use of the common property stantly changing needs of our society. much research into property rights in general, and common property in par- resource (Bromley 1991; McCay 1996; ticular. Furthermore, treating property Swaney 1990; Feeny et al. 1990). Common property is frequently con-

Property Rights: A Primer 13 fused with open access property, in with sole rights to the resource, includ- private property rights), user governance which the resource is available to any- ing resource access and the rate of use, if (where local-level decision-making one who can access and use it. Swaney applicable. Private property vests the manages a common pool resource), and (1990) and others suggest that the Latin individual with rights to exclude others state governance (property over which term res nullius be used to describe open from the benefits stream and to use it at the state governs, irregardless of owner- access or non-property and that res com- a rate and in a manner determined by ship). Separating property rights and munes be used to describe common the individual. Private property is a cor- property management regimes is useful property. The confusion between the nerstone of contemporary economic and when dealing with common property. commons and open access has led to legal systems in the United States and Common property management regimes notable misunderstandings within con- most western societies. It is the property will be discussed later. temporary natural resource users. For rights regime that best fits economic An important distinction between example, in The Tragedy of the analysis. Private property has a specific, common property and private property Commons, Hardin (1968) confuses open defined rights structure consisting of is how ownership changes. Private prop- access for common property using an universality, exclusivity, transferability erty rights may be readily and voluntari- example of an overgrazed meadow. This and enforceability (Swaney, 1990). ly exchanged between owners. For single citation has been used by a num- Private property ownership is most often example, under private property regimes ber of policymakers in determining nat- associated with readily degraded the individual owner may sell portions ural resource management schemes. A resources like agricultural lands, grazing of the private property, such as mineral natural resource management scheme and forest lands. rights. However, if that same private reflective of Hardin’s findings will likely Common property ownership is most land was in Nebraska or Oklahoma and lead to privatization or a strong govern- frequently associated with transient had groundwater irrigation wells (recog- ment role (McCay, 1997). resources like fish, wildlife, groundwater, nized by state governments as common Increased government involvement and irrigation water (Ostrom, 1990). property), the water rights could not be in property use will likely place limits in The common property management sold without also selling the land (Emel the way property rights may be used. regime used in the Swiss Alps exists and Brooks, 1988). Common property Any reduction in property rights is within a land ownership system where rights are generally tied to the commu- called attenuation (Quiggin, 1988). private and common property exists side nity of common property owners; unlike Attenuation of common property is a by side. Factors that favor common private property, access and use cannot likely consequence of accepting property management regime include: be exchanged separately. Hardin’s tragedy of the commons as fact. 1) a low value of production per unit of Methods of property exchange have Limited work has been done in the land, 2) low dependability/frequency of important consequences. One type of United States to manage natural use and yield from the resource, 3) a low property exchange occurs voluntarily resources within a common property potential for improvement or intensifi- between individuals within a property regime, despite numerous examples of cation of the common property rights structure as described above. This successful natural resource management resource, 4) a large area of land needed exchange of property rights is typical of as common property. Historically, failure for effective use of the resource, and 5) a private property market. The second to recognize common property has led large groups of owners needed for capital type of property exchange occurs when to exploitation of resources as described investment activities (Ostrom, 1990). there is a change in the structure of by Brox (1990) in the northern Norway property rights, such as when common fishery and Matthews (1995) in the col- Property management systems property becomes private property lapse of the Grand Banks fishery off Property is more than an object and, (Quiggin, 1988). Changes in property Newfoundland. Another example is the in fact, considering property as an rights structure usually result from gov- disregard of Native American common object has led to confusion. Bromley ernment action, such as when the property rights throughout the course of (1991) describes property as a benefit United States extended the economic the settlement of the United States that society agrees to protect. Property exclusion zone from 12 miles to 200 (Swaney, 1990). rights are claims to a benefit stream miles from coastal areas, thereby creat- Property is, in fact, the right to a (access and use of a natural resource). ing common property rights from previ- stream of benefits. It includes the right McCay (1996) separates property rights ous open access resources. Privatization to exclude others. Property is a reflec- from property management regimes. It is of state property in Russia, eastern tion of the culture where it is recog- a useful concept, especially when study- European countries, China, and Mexico nized. Property rights in western culture ing or designing common property sys- are further examples of changing prop- have evolved to assist in the harvest of tems. The different types of property erty rights structure. These changes in limited resources, usually for economic have been described above. However, property structure demonstrate that purposes. However, cultures less driven McCay describes four management property rights are not static and that by economics may define property pri- regimes that are separate institutions the consequences of changing property marily to support resource sustainability from property rights. The management rights are significant. Consider, for and community survival (Quiggin, 1988 regimes include: laissez-faire (frequently example, the privatizing of open access, and Matthews, 1995). associated with open access), market commons, and state property. The bene- Generally, four categories of property regulation (most commonly related to rights are recognized: open access, com- mon property, private property, and Table 1. Property management systems defined by type of property ownership state (public) property (Ostrom, 1985; Management system Owner Bromley, 1991; Feeney et al., 1990). Laissez-faire Open access Open access and common property have Market regulation Private property been described above. Under state prop- User governance Closed access common pool erty rights, the government is vested State governance State governance for all owners

14 Property Rights: A Primer fit to the individual gaining the private day-to-day enforcing use of common One example of government interfer- property rights from previous open property); collective rules (involving ence is the change in structure of prop- access, commons, or state property can management, policymaking, and adjudi- erty from common property to state lead to less than optimal resource use or cation of common property resources); property under the guise of environmen- resource exploitation. and constitutional rules (concerned tal protection. Feeney et al. (1990) The role of economic development with formulation, adjudication, and describe the government of Nepal’s through the privatization of state prop- modification of the fundamental com- attempt to halt deforestation of its erty was a central feature in the United mon property process). Under common recently nationalized forests by convert- States Homestead Laws (Anderson and property ownership, all changes to com- ing de facto common property forests Hill, 1990). Of course, the public prop- mon property rules are carried out in into state property. Lacking resources to erty disposed through homesteading had formal and informal forums open to all enforce government access and use originally been common property of var- the common property owners of the restrictions, the forests became open ious Native Americans until economic resource in question. access and deforestation accelerated. exploitation for furs and other resources The fact that rules are not written or Ultimately, the government re-estab- shifted these unrecognized common are not recognized by a governmental lished the common property rights to property resources into de facto open body makes no difference, as long as the forests (thereby creating de jure common access and then public property. common property users adhere to the property rights). The failure of resource Government take-over of open access rules. Economic development of natural protection when governments expropri- and common property may be viewed as resources held as common property ate common property managed resources necessary for some resource manage- often begins with non-owners disregard- has been observed numerous times ment, such as mineral extraction and ing or discounting the rights of common (Ostrom 1990). the expansion of a coastal 200-mile eco- property owners and failing to follow Buck (1989) and Lambert (1995) dis- nomic exclusion zone for fisheries man- common property rules. The recent cuss the evolution of western ranchers agement. However, government take- demise of Newfoundland’s near shore grazing livestock on public lands. The over of private property rights is univer- fishery (Matthews, 1995) and the settle- ranchers arrived soon after the govern- sally considered an economic and legal ment of the western United States are ment created de facto open access to pre- travesty. It is notable that existing rights examples of economic expansion at the viously common property of Native of displaced indigenous and local com- expense of unrecognized common prop- Americans. Development of the western mon property owners seldom receive erty rights and rules. Again the result is livestock industry resulted in conflicts consideration and the injustices they unsustainable resource use and commu- within grazing users for the limited graz- suffer are rarely recognized when proper- nity deterioration (Swaney, 1990; Feeny ing lands. Eventually some of the range- ty rights structures change in favor of et al, 1990; Matthews, 1995; McCay, land was de jure designated public (state) economic ventures (Berkes, 1985, and 1996). lands. Ranchers utilized the land under a Swaney, 1990). Property rights may be facts of law common property management regime and enforced by government. These are for a number of years although the land Common property concepts and de jure rights. These de jure rights appeal was under public property ownership. terminology to economists and others who wish to Recent conflicts with non-ranchers An understanding of common prop- have a definable, predictable view of have centered on two critical issues of erty concepts and terminology is neces- resource access and use. However, these public property: access and use. sary in order to protect existing sustain- de jure rights often discredit local knowl- Government managers and persons able common property resources, or to edge and local common property man- excluded by the livestock owners have structure common property regimes for agement regimes. focused on the issues of their right to natural resource management. Rights In other situations, natural resource access public rangeland and the use of refer to actions authorized by law or users may develop and enforce informal public resources such as water and plants convention, while rules are prescriptions rights among themselves without any by livestock. The conflict has centered that authorize action. Common proper- government recognition, in which case on use and access of public property ty carries two clearly recognized rights: the rights are de facto. De facto rights are managed as a de facto common property access or exclusion, and withdrawal or important because they have worked in management regime. The ironic result harvest. These rights clearly distinguish many areas and they are likely to pro- of this conflict has been to strengthen common property from open access vide rules that best fit the local environ- the livestock owners’ de facto common property. Every right has a rule authoriz- ment and economy. Recognizing the property management regimes: they ing particular actions in the use of that value of de facto rights will increase poli- were allocated to public right (Schlager and Ostrom 1992). cymakers’ awareness of the value of local lands. Rules should be clear, with little room knowledge in natural resource manage- The success or failure of any property for interpretation. For example, Emil ment. Finally, de facto rights and rules rights structure to protect resources is and Brooks (1988) describe groundwater are self-enforced, so they are cheaper to more a feature of the ability to regulate rules in the American High Plains, administer (Schlanger and Ostrom, access and use of the property than including the proviso that groundwater 1992). There are a number of examples whether the property is private, com- wells must be spaced 1,230 feet apart. of de facto rights that have become de mons or state property (Feeny et al., Common property rules are often this jure rights over time, as government has 1990). Ostrom (1990) proposes eight specific in order to avoid misinterpreta- accepted the conventional knowledge of principles found in studying common tion. common property management regimes property management regimes that have Ostrom (1990) describes three types (Ostrom, 1990). lasted for centuries. These principles of rules used in common property insti- Government involvement with com- include: tutions: operational rules (concerned mon property management regimes may 1) Clearly defined boundaries of access with appropriating, monitoring, and threaten these management regimes. and use

Property Rights: A Primer 15 2) Relevance of rules to local resource Technology is an important feature The development of such a common conditions of common property regimes. As long as property management regime requires 3) Collective choice arrangement for all the owners have the same technology, grassroots involvement and self-gover- decision-making access and use of the property is nance. Such community management 4) Effective monitoring of access and equitable. However, if individual regimes should include the features of uses of the common property common property owners use more effi- common property listed previously. The resource cient technology to access and harvest rules of access and use of communally 5) Graduated sanctions for violators of the resource, the regime will deteriorate managed claims must be clear and based rules unless the rules change. The unequal on local knowledge. 6) Conflict resolution mechanisms adaptation of more efficient technology Shared values and a common interest 7) Minimal recognition of rights to by a limited group of common property in local natural resources will foster vol- organize by external authorities owners is called vertical growth by Brox untary compliance of common property 8) Nested management of larger com- (1990). He describes a common property management rules (Swaney, 1990). mon property systems (each layer of groundwater resource in India. Increased Shared norms reduce the direct cost of management fits within the higher population using a traditionally dug well monitoring and enforcing common management layer) to access groundwater had no adverse property rules. The role of community These principles expand the previ- impact on the existing water users’ values in monitoring and preventing ously mentioned attributes of common access to the groundwater. However, of common property resources is property management, including self- when government assisted some of the influenced by the number of owners, the government at the local level of a com- landowners with deep well water with- cost of monitoring, the benefit from monly used resource in a way to exclude drawal technology as part of an agricul- stealing, the punishment if caught steal- outsiders, and involves the recognition, tural development project, groundwater ing, and the reward for monitors who monitoring and enforcing of rules to use levels dropped to the point that owners uncover stealing (Ostrom, 1990). the common resource. lacking the new technology lost access Conflicts are unavoidable, but con- to the water. Matthews (1995) likewise flicts within common property owners Common property and natural notes that technological improvements should be dealt with quickly, fairly, and resource management (larger fishing boats with greater trip openly (Quiggins, 1988). infor- Sustainability is an inherent feature capability and more sophisticated fish- mation and open communication with- of common property. Hardin’s Tragedy of finding and catch gear) were a major in the group of common property users the Commons greatly contributed to the factor in the collapse of the will reduce conflicts and uncertainties confusion between open access and Newfoundland coast fishery. and increase common interests (Swaney, common property. More importantly, it Matthews and others note the 1990). Ostrom’s (1990) studies of long- discredited the sustainability and value impact that changing economic and time common property resources report- of local knowledge intrinsic to common political conditions have on common ed that extensive norms evolved that property management regimes. property regimes. When common prop- defined proper behavior and enabled Common property resources have sever- erty owners adopt different economic individual common property users with al elements that foster sustainability, values, the common property regimen many interdependencies to avoid con- including the ecology of the resource, must either adapt or privatization will flict. More importantly, however, was the technology used to extract the likely occur. Studies of the medieval homogeneity among all common prop- resource, and community values. The commons note that the commons erty users with regard to assets, skills, resource may only be available within worked well (Feeny et al. 1990). knowledge, ethnicity, and any other the community for a limited period. However, the shift from subsistence to divisive feature within the group. The ecology of the resource will aid in production agriculture led to the privati- Within a local area, the use of common its sustainable extraction. For example, zation of the medieval commons property management regimes can be an the transient nature of fish enable (Quiggin, 1988). effective tool to manage natural nearshore fishermen to access the Whether a common property regime resources. resource for a limited time with their will survive changes in technology, eco- Common property regimes have limited nearshore fishing resources. nomics, and ecology is largely a feature been used effectively in both the United Common property management rules of the strength of the values of the com- States and other countries. This man- reflect community values and usually mon property owners. The fact that so agement regime is not a panacea for concentrate on how, when, and where many common property management natural resource conflicts. It will only common property resource use may regimes exist, whether de jure or de facto, work to the extent that the local com- occur (Wilson, 1996; Schlager and is proof of the potential of common munity and the holders of property Ostrom, 1992; Matthews, 1995; Berkes, property management regimes in sus- claims agree to participate. However, 1985). In contrast, centralized govern- tainable natural resource management the success of the system in fishing man- ment sets limits to resource extraction (Ostrom, 1990). In 1995, the state of agement, grazing, and groundwater based on arbitrary, although biologically Maine recognized the de facto common management warrants its consideration based, quotas. Because fish are by nature property regime of the nearshore lobster in a wide variety of natural resource and transient and the access to most fish fishing to develop de jure lobster fish- environmental quality situations. stocks is seasonal, fisheries lend them- eries that include democratic involve- Conflicts regarding environmental qual- selves well to common property man- ment and grassroots oversight (Wilson, ity, watershed management, and forest agement regimes from the standpoint of 1996). Local communities and groups management may benefit from utiliza- ecological sustainability. with some claim to a valuable resource tion of common property management will be motivated to effectively develop regimes. and manage the resource if allowed Technology and common property (McCay, 1996, and Feeny et al., 1990).

16 Property Rights: A Primer Conclusions References McCay, B. J. 1997. Forms of property Common property resources exist in Anderson, T. J. and P. Hill. 1990. The rights and the impacts of changing an uncertain and complex environment. race for property rights. Journal of Law ownership. Increasing Understanding of Unlike open access resources, common & Economics 33:177-197. Public Problems & Policies – 1996, property resources have a defined user Berkes, F. 1985. The common property Proceedings, Farm Foundation group with limited access. They also resource problem and the creation of National Public Policy Education have locally constituted usage rules that limited property rights. Human Conference, Providence, RI pp. 127- are monitored and enforced within the Ecology 13(2):187- 208. 138. framework of community norms. Bromley, D. W. 1991. Testing for com- Morris, W. (ed.). 1981. American Heritage Common property resources are by mon versus private property: com- Dictionary of the English Language. nature a sustainable, self-governing ment. Journal of Environmental Houghton Mifflin: Boston. institution that reflects community val- Economics and Management 21:92-96. Ostrom, E. 1990. Governing the Commons: ues. Rules for monitoring and enforcing Brox, O. 1990. The common property The Evolution Of Institutions For access and use of common property theory: epistemological status and ana- Collective Action. Cambridge resources are developed over a long peri- lytical utility. Human Organization University Press: New York. od of time. These rules are developed in 49:227 - 234. Quiggin, J. 1988. Private and common formal and informal forums open to all Emel, J. L. and E. Brooks. 1988. Changes property rights in the economies of common property resource owners. In in form and function of property rights the environment. Journal of Economic the United States, existing common institutions under threatened resource Issues 22:1072-1087. property resources include fisheries, irri- scarcity. Annals of the Association of Schlager, E. and E. Ostrom. 1992. gation and groundwater systems, and American Geographers 7:241-252. Property-rights regimes: a conceptual western grazing lands. Feeny, D., F. Berkes, B. J. McCay, and J. analysis. Land Economics 68:249-262. Although successful, long-term com- M. Acheson. 1990. The tragedy of the Swaney, James A. 1990. Common prop- mon property resources generally exist commons: twenty-two years later. erty, reciprocity, and community. within homogenous communities, com- Human Ecology 18:1-19. Journal of Economic Issues 24:451-462. mon property management regimes Hardin, G. 1968. The tragedy of the Wilson, J. A. 1997. Maine's lobster fish- could be crafted to fit the diversity of commons. Science 62:1243 - 1248. ery - managing a common property users found in local natural resource Lambert, D. 1995. Grazing on public resource. Increasing Understanding of management in this country. The rangelands: an evolving problem of Public Problems and Policies - 1996. Tragedy of the Commons has fueled an property rights. Contemporary Proceedings, Farm Foundation unfounded fear that local users will Economic Policy 13:119-128. National Public Policy Education exploit and destroy common property Matthews, David Ralph. 1995. Common Conference, Providence, RI, pp.145- resources. As a result, decision-makers versus open access: the collapse of 160. have either privatized common property canada's east coast fishery. The resources or made them public property Ecologist. 25:86-96. with a strong government role. Privatizing common property resources does not guarantee sustainable use and it will exclude former common property Economics of Property users. Centralized government manage- ment of public property resources often disregards years of local management Rights knowledge, resulting in costly or ineffec- Steve Medema, Department of Economics tive monitoring. Government manage- University of Colorado ment may also implement unilateral sanctions, alienating local users and Economics and law is valued at a million dollars and that increasing monitoring and enforcement Of the four basic economic the cost of abating the nuisance is two costs. Common property management approaches to property rights, the first million dollars. The “first in time” rule, regimes have the proven potential to and most well known is the economic a traditional, common law rule for deal- assist local users in self governance and analysis of law, primarily common law, ing with nuisances, states that the per- in developing rules of access and use of but also statutory or constitutional law son who is there first has the property local natural resources, whether a com- as it pertains to property. Here the eco- right. mon property resource or publicly nomic model is applied to analyze the This rule would protect the interest owned resource. As the cost and role of way individual agents respond to incen- of the farmers, because they were there governance come under continued tives generated by alternative rights first. If this protection takes the form of scrutiny, the role of common property structures. an injunction, the factory would be management regimes may become This aspect of law and economics is forced either to abate the nuisance or to increasingly valuable in providing sus- not concerned so much with the eco- shut down, thereby generating an ineffi- tainable use of natural resources for a nomic system as with the legal system cient outcome. nominal public investment. Ultimately, and the evaluation of the incentives for If the protection of the farmers came the success of a common property man- efficient behavior generated by alterna- under a liability rule, however, the situa- agement regime rests on the local com- tive legal rules. For example, suppose tion would be very different. The factory munity. that a new, upstream factory that dumps could continue to pollute so long as it waste into a river causes substantial compensated the farmers for their dam- damage to the crops of downstream age. Faced with a choice between abat- farmers. Suppose that the crop damage ing and compensating, the factory

Property Rights: A Primer 17 owner would obviously do the latter, for continuity. This is the old problem of mentary and sometimes competing) and thereby generating an efficient outcome. continuity versus change. It occurs at the fact that no normative conclusions both the judicial and legislative levels necessarily follow from law and eco- Property rights and economics and is examined from several perspec- nomics. A second approach to the economics tives in the law and economics litera- While the vast majority of the eco- of property is a growing body of litera- ture. nomic analysis of rights, normatively ture focusing on the impact of property An example of this problem would done, is couched in terms of efficiency, rights on the economic system. Much of be harvesting beaver pelts in Labrador. the economic approach also provides a this work is positive rather than norma- Prior to the arrival of Europeans, native great deal of insight into the effect of tive in nature, entailing descriptions of tribesmen held beaver habitats as com- alternative property rights regimes on property rights, institutions, their ori- mon property. Sometime after the the distribution of income and wealth, gins, evolution, and effects. arrival of the European, however, these among other issues. For example, the economic condi- habitats became private property. There tion of American Indian tribes is very are different stories about what changed Behavior much an issue today. A study by Gary and why, but an economic explanation There are several important issues Libecap and Ronald Johnson about a is that because of the European settle- facing legal economic analysis, and, by decade and a half ago suggests that the ments, European markets became acces- extension, the economics of property U.S. Department of the Interior and the sible. The resulting increase in the value rights. Some of the more interesting Navaho Tribal Council Policies estab- of beaver pelts made it worthwhile, recent literature in law and economics lished a system of private property rights then, to establish private property rights and economics of property rights con- on Navajo lands in such a way that, in over that which had previously been cerns the behavioral underpinnings of spite of a private property rights regime, held in common. the theory. The economic analysis of the rights remained defacto common. According to economists, the costs law developed largely as a body of Very small plots were assigned to each associated with establishing private deductive theory. Its empirical validity family. The transaction costs associated rights were not worth incurring prior to was placed foursquare on the shoulders with fencing and/or consolidation of the opening of the European market. of the economic theory of choice, these grazing lands so as to achieve accompanied by the standard axiom of economies of scale were incredibly high. Positive/normative dichotomy behavioral transitivity. If we grant that The result was erosion of grazing lands, Wrapped up within all the preceding the economic theory of choice is empir- reduced income per sheep, and a mass perspectives is a fourth: the ically robust in standard economic con- exodus from the traditional practice of positive/normative dichotomy. This is texts, the question is whether the sheep farming into the regular work the attempt to come to grips with the assumed transitivity is accurate for force or onto the welfare rolls. This pri- legal-economic nexus on the one hand, behavior within the legal arena. The vate property system destroyed the very and to prescribe particular property Coase Theorem (if transaction costs are form of pastoral native culture that it rights relationships on the other. Within relatively low people will tend to nego- was designed to preserve. the law and economics community the tiate to relatively efficient positions) Common pool fisheries are another latter is often based on efficiency or and the “doing what comes naturally” area that has been a source of con- wealth maximization. This normative justification for the efficiency criteria tention among various interest groups baggage is responsible for the vast previously mentioned both turn on the over a long period of time. The common majority of hostility towards law and validity of this depiction of individual pool problem is well known. Elimination economics and public choice approach- behavior and the transitivity of the of the common pool appears to accom- es to property rights analysis, and to law choice axiom into the legal arena. plish the goals both of certain environ- and economics generally. The experimental and empirical lit- mental activists, who are against over- But this “efficiency as justice” line of erature assessing the propensity of fishing, and those in favor of resource use thinking is not one that ought to be agents to bargain along the lines sug- that maximizes wealth. casually tossed aside. The Coase theo- gested by the Coase Theorem have gen- Even fisheries economists have usually rem tells us that individuals will bargain erated very mixed returns. Several sets ignored the often-substantial cost of around initial rights assignments to an of experiments undertaken by Betsy enforcing private rights structures, at efficient allocation so long as transac- Hoffman and Matthew Spitzer, at times least until recently. In the case of ocean tion costs don’t preclude them from with others, showed that agents do fisheries under U.S. control, enforcement doing so. We will end up being at this indeed, when transaction costs are very costs runs into the hundreds of millions particular point regardless of how rights low, have a high propensity to bargain of dollars per year. Economists have only are assigned. People will arrive at that to the wealth-maximizing outcome, recently begun to analyze the enforce- point voluntarily, through negotiation, including cases in which a sort of quasi- ment costs associated with alternative irrespective of initial rights assignments. experimental is introduced rights regimes. If this is the outcome to which individu- into the process. als would voluntarily agree if transaction Even in these relatively sterile envi- Continuity versus change costs did not preclude them from doing ronments with practically no transac- A third approach comes from the so, then why shouldn’t the courts assist tion costs, however, efficiency is only recognition that property rights create them in attaining this outcome via judi- maintained about 93 percent of the winners and losers. Changes in circum- cial fiat? time. Equally interesting is the fact that stance influence the relative opportunity Much of the normative criticism of the Hoffman and Spitzer experiments costs of different courses of action and of law and economics is misplaced in the reveal behavior that is very much at different structures of rights (particularly sense that it fails to recognize both the odds with the dictates of individual the existing one), giving rise to pressures diversity of approaches in economics rationality, even in the presence of effi- for change in property rights regimes (approaches that are sometimes compli- cient bargains. That is, individuals and, of course, countervailing pressures

18 Property Rights: A Primer exhibit something less than individual legal decision-making process. We face Hoffman, Elizabeth and Matthew L. rationality, failing to take full advantage very similar problems with the applica- Spitzer. 1985. Entitlements, rights, of the opportunities for gain open to tion of the efficiency criterion, which and fairness: An experimental exami- them, exhibiting behavior that seems to involves the use of circular reasoning. nation of subjects' concepts of distrib- be more Lockeian in nature than utili- Efficiency can only be determined by an utive justice. Journal of Legal Studies tarian. evaluation of benefits and costs, but 14:259-297. Still other experiments show that benefits and costs themselves are a func- Hoffman, Elizabeth and Matthew L. endowment effects significantly impact tion of rights. Therefore, to determine Spitzer. 1985. Experimental law and the willingness of agents to bargain. It rights based on efficiency is to reason in economics: An introduction. appears that entitlement creates an a circle because one cannot examine Columbia Law Review, 85:991-1024. endowment effect and reduces one’s efficiency without granting privileges for Hoffman, Elizabeth and Matthew L. willingness to effectively bargain, essen- a certain set of rights, which in turn Spitzer. 1986. Experimental tests of tially by increasing one’s reservation generate a certain set of benefits and the Coase theorem with large bar- price. This has particular import for the costs. gaining groups. Journal of Legal Studies economics of property rights. The fact Another problem associated with the 15:149-171. that parties have litigated over the efficiency criterion involves the calcula- Johnson, R. and Libecap, G. 1980. rights in question can create particularly tion of benefits and costs. The amount Agency costs and the assignment of strong attachment, or feelings of entitle- of knowledge required of government property rights: The case of south- ment, on the part of the individual policymakers is simply too great to sus- western Indian reservations. Southern assigned the rights. In addition, the tain the efficiency argument and belies Economic Journal 47:332-347. rights in question are often unique. If the simplicity that is often ascribed to it. Libecap, Gary D. and Ronald N. what was being contested could be easi- Johnson. 1980. Legislating commons: ly obtained from other sources, litiga- Personal perspective The Navajo tribal council and the tion would be unlikely in the first place. In my view, ultimately, rights are Navajo range. Economic Inquiry The normative prescriptions of law rights because government protects 28(1)69-86. and economics basically rest on the them. The others are interests, norms, Mercuro, Nicholas and Steven G. Coase Theorem. The preference for whatever you want to call them, but Medema. 1997. Economics and the property rules verses liability rules when rights are rights because government Law: From Posner to Post Modernism. transaction costs are low presupposes protects them. Let me quote Bentham: Princeton: Princeton University that individuals would bargain around “There are no rights anterior to the Press. the property rule to an efficient out- law.” come. Of course, the whole efficiency Lockeian and other notions of prop- criterion in law and economics gets a erty that attempt to provide an extra- great deal of its justification from the governmental justification for rights are behavioral-based idea that courts should normative theories describing how gov- facilitate allowing people to do what ernment ought to act rather than posi- they would do naturally of their own tive theories describing the origins of volition if the law did not prevent them rights. Claims that rights somehow are from doing so. Extensive and rapidly pre-existent or adhere in nature and accumulating literature calls into ques- thus ought to be protected by govern- tion the behavioral underpinnings of ment are wrong; these interests are not law and economics, and is stimulating a rights unless they are given government push towards a new, more behaviorally protection. grounded approach to the field—one Government is an inevitable and with a more accurate depiction of agent necessary component of the economic behavior that nonetheless employs system. There is no such thing as more- many of the basic tools of economic versus-less government intervention in analysis. the economy. There is only government giving rights to this group versus gov- Valuation and choice ernment giving rights to that group. Another significant issue here is that The only question is to whom shall gov- of valuation and choice. The relation- ernment give the rights, and this is just ship between government and property as true within a market system as it is has bound up within it, inexorably, the with any other. That is, government is notion of choice. The government’s the basis for the market. basic role is to determine who will have rights, and to what extent, and who will References be exposed to the exercise of those Coursey, Don L., Elizabeth Hoffman, rights by others. As such, the role of and Matthew L. Spitzer. 1987. Fear government here is critically involved and loathing in the Coase theorem: in the process of valuation, evident both Experimental tests involving physical in the choice of criteria upon which discomfort. Journal of Legal Studies rights are to be based, and the applica- 16:217-248. tion of the criteria. Hoffman, Elizabeth and Matthew L. Any natural rights-based resolutions Spitzer. 1982. The Coase theorem: are necessarily affected by the meaning some experimental tests. Journal of given to the term “natural” within the Law and Economics 25:73-98.

Property Rights: A Primer 19 or suburbanites and rural people, between agriculturists and urbanites, State Property: between developers and “no growth- ers,” and between agriculturalists and recreationists are increasing in many Wildlife, lands, and areas of Colorado and in the West. The natural resource base is stressed. Infrastructure is stressed. The very way open spaces in Colorado of life that brought people to Colorado is threatened. As a result, innovative by Andrew Seidl, Asst Professor & Extension Specialist—Public Policy solutions to land use and natural Dept of Agricultural and Resource Economics resource management have been sought Colorado State University in Colorado. Management of natural resources on million acres) or federal government The appropriate role for state property behalf of citizens is among the most (25 million acres). According to the important and daunting tasks facing 1996 National Survey of Fishing, The goods and services provided by states. The state defends the rights and Hunting and Wildlife-Associated Colorado’s natural resources may fall responsibilities of its citizens from Recreation, more than one million resi- completely, partially, or not at all under regional and national claims. It also dents and out-of-state visitors hunted, the control of a branch of the state gov- saves the citizenry from itself by manag- fished or watched wildlife in Colorado ernment. Traditionally, citizens of the ing individual property rights to benefit in 1996, spending a total of $2.6 billion. state have strongly supported the notion the state as a whole. Wildlife, open Colorado’s population has grown that only those things (e.g., land, miner- spaces, view scapes, water quality and from 3.2 million in 1990 to 4.3 million als, wildlife) that are not privately quantity, land use, cultural and archeo- people today. About three-fourths of the owned and controlled may be appropri- logical heritage, and extraction of min- people live in the I-25 corridor within ate for government ownership or con- eral wealth all fall within the auspices of about 25 miles of the foothills of the trol at some level (municipality, county, state governments to one extent or Rocky Mountains. Several of the state, or federal). Moreover, only when another. Zoning, , regulations, nation’s fastest growing counties are the public good at whatever level can licenses, use permits, and other tools are located in Colorado. The state popula- clearly be shown to outweigh the pri- available to the state to influence the tion is predicted to increase by 2 per- vate good should complete or partial behavior of individuals regarding the cent annually through the year 2001, control of privately owned natural management of the state’s natural her- compared to about 1 percent nation- resources be wrested from the owner. itage. States aspire to tailor its tools to wide. Colorado personal incomes are Public schools, parks, forests, wildlife, reflect the needs of the natural resource predicted to increase by 5 to 7 percent, police protection, groundwater supplies, base and the unique composition and annually, through the year 2001, out- clean air, prairie, city and mountain vis- outlook of its citizenry. Policies that pacing the United States average by tas, and roadways are common examples prove effective in one context may not about 1 percent. Similarly, Colorado of public property demonstrating some work as well under other conditions. employment is expected to grow from 2 degree of state control (e.g., McCloskey, The policies and examples reviewed to 4 percent annually over the period, 1985; Oakerson, 1992). Indeed, our here are specific to the state of compared to 1 to 2 percent nationwide. judicial and legislative systems could Colorado. However, an illustration of Retail sales and, unfortunately, inflation also be considered local, state, and fed- the Colorado experience should be use- in Colorado are expected to follow simi- eral level public property. The state sets ful to states encountering similar natural lar patterns (State of Colorado, 1998). speed limits, automotive emissions stan- resource policy challenges, particularly More people, jobs, and income mean dards, and legal blood alcohol levels. It in the American West. increased demand for outdoor recreation regulates the transportation of toxic sub- and increasing stress on the state’s natu- stances, implements regular road main- Factors affecting the identification ral resources. tenance, and administers driving tests in and management of Colorado State Like much of the western United order to decrease the risk of injury or property States, Colorado was settled in the tra- death to its citizens on its roadways. This state’s great outdoor amenities ditions of the Old West. A curious mix Even the purist of private goods has and western lifestyle, in conjunction of adventurers, risk-takers, explorers, some characteristics of a public good with other factors, have created an eco- entrepreneurs, and other “fringe ele- and, therefore, has some need for man- nomic boom in much of Colorado. ments” provided the human milieu that agement as public property. Alar apples, Colorado is in transition from an econo- began to form the cultural, legal, and irradiated strawberries, organic lettuce, my based primarily on mineral extrac- economic institutions of the West. Self- e-coli in hamburgers, “Made in the tion and agriculture to a more diverse sufficiency and staunch individualism USA” and “Fat Free” labels, “generic” economic base, including service indus- were rewarded in this environment. drugs, “kosher” and graded beef are tries based on natural resources (e.g., These values pervade the culture of the examples of the public good aspects of tourism), hi-tech or “clean industry” West even today, and influence the otherwise highly private products. (e.g., Hewlett Packard, Merrill Lynch, appropriateness and effectiveness of the Through its support and its votes, the Level 3 Communications, and Sun natural resource management tools that public provides the financial wherewithal Microsystems), traditional and custom are available to western states. to influence the behavior of its individ- agriculture, and an increasing role in Rapid economic development has ual constituents to improve the wellbe- providing medical and other services to not been without costs. Conflicts ing of the whole. retirees. Some 42 percent of Colorado between new residents and those with lands is directly managed by the state (3 somewhat deeper roots, between urban In Colorado, the most local, most

20 Property Rights: A Primer individual, available, and effective form this division. policies, the state exerts some partial of management is preferred. As a result, The Colorado Oil and Gas claim over the dispensation of natural only those goods and services that can- Conservation Commission is charged resources within Colorado through use not be adequately provided to the state’s with promoting responsible develop- incentives or regulations, but leaves citizens by individuals, localities, or ment through the efficient exploration management to more local authorities. counties, in that order, fall within the and production of oil and gas resources The legal system and culture of the state generally accepted role of the state. In and the prevention of waste. It also pro- often require that these initiatives be turn, it is the responsibility of the state tects public health, safety and welfare, locally-driven, incentive-based, and vol- to maintain control over its natural the environment, and the correlative untary. Three programs for the manage- resources against claims from other rights of mineral owners. This division ment of wildlife, lands, and critical states or the national government, is responsible for mineral and energy habitats are in place in Colorado: the unless it can be shown that alternative development, policy, regulation, and Great Outdoors Colorado Trust Fund; management is strongly in the regional planning. the State Land Board’s Stewardship or national interest. For example, the The Division of Water Resources Trust; and the Habitat Partnership headwaters of the Colorado, Arkansas, provides services to the water users in Program. Platte rivers, and the Rio Grande lie the state of Colorado. The major func- within the state of Colorado. The state, tions of the office include surface water The Great Outdoors Colorado Trust on behalf of its citizens, negotiates the administration, dam safety, groundwater Fund proportion of the water from these rivers well permitting and administration, and The Great Outdoors Colorado Trust to which it has legal claim relative to hydrographic data collection and analy- Fund (GOCO), which was established the claims of other concerned states, sis. in 1992 by constitutional amendment, is including Kansas, Nebraska, Texas, New The State Soil Conservation Board charged with making matching fund Mexico, Nevada, and California. provides oversight and technical assis- grants to local governments, park and tance to Colorado’s 78 soil conservation recreation districts, and non-profit land Current structure for the management districts. It also oversees the state’s liv- protection organizations to facilitate the of Colorado State natural resource ing snow fence program, provides guid- purchase and protection of land. property ance on stream bank erosion and ripari- Programs include trail construction, The Colorado Department of an concerns, assists farmers and ranchers environmental education, park promo- Natural Resources (DNR) is the state on various water and energy efficiency tion, wildlife, outdoor recreation, and government agency primarily responsi- programs, and helps sponsor Camp open space, wildlife, and river preserva- ble for management of geology, soils, Rocky, an outdoor environmental pro- tion. mineral and energy resources, water, gram. Soil conservation districts have State Land Board parks, wildlife, forests, plains, and open the responsibility to inventory the natu- spaces. The DNR includes the divisions ral resource concerns within their areas The Colorado State Board of Land of Parks, Wildlife, Water Resources, and to develop a plan to address these Commissioners, or State Land Board, Minerals and Geology, the Geological concerns. was established along with statehood in Survey, State Land Board, Soil The Division of Wildlife manages 1876. The federal government gave the Conservation Board, Oil and Gas the state’s 960 wildlife species. It regu- state approximately 3 million acres of Conservation Commission, and the lates hunting and fishing activities by surface rights and 4 million acres of Avalanche Information Center. issuing licenses and enforcing regula- mineral rights, primarily intended to Colorado State Parks manages the tions. The Division also manages more provide support for public education. state’s forty parks. The division’s mission than 230 wildlife areas for public recre- These rights are managed by five part- is to meet the needs of visitors today ation, conducts research to improve time citizen commissioners and a staff of while protecting our parklands for the wildlife management activities, provides 29 to benefit the School Trust and future. Camping, fishing, hiking, and technical assistance to private and other seven smaller trusts. Most of the surface watersports draw nearly 12 million visi- public landowners concerning wildlife acres are leased for farm and ranch use. tors per year to Colorado’s state parks. and habitat management, and develops In 1996, Colorado voters amended User fees are charged at all Colorado programs to protect and recover threat- the state constitution to redefine the State Parks. Entrance fees for state parks ened and endangered species, including Land Board’s mission. Recognizing the are not designed to maximize revenue. acquiring, monitoring, and enforcing intergenerational nature of the School Rather, they are kept low to maximize conservation easements against private- Trust and of potential land management visitation for a given level of services. ly managed lands. Wildlife regulations alternatives, the Land Board is directed The perspective is that access to parks is are established by the eight-member to designate from 295,000 to 300,000 among the rights afforded to all citizens. Wildlife Commission appointed by the acres of trust lands into a special trust Hunting licenses are commonly allocat- governor. The Commission is also called The Stewardship Trust. The ed by lottery for similar reasons. responsible for buying or leasing proper- Stewardship Trust lands are to be man- Colorado State Parks also houses the ty for habitat and public access and for aged to preserve their natural value for Colorado Natural Areas Program, a sys- approving the Division’s annual budget future generations of Colorado children. tem for identifying and seeking protec- proposals. The Division receives no These lands had to be designated by tion for unique natural areas in state tax revenue. January 1, 2001. More than 600,000 Colorado, and the State Trails Program, acres were nominated for Trust designa- a system for developing and managing Examples of natural resource manage- tion during the 3-month nominating trail use. In addition, Parks oversees all ment policies currently in place period ending March 31, 1998. boat, snowmobile, and off-highway Through a number of policy meas- Maintaining future land use options vehicle registration as well as regulating ures, the Colorado state government through land value preservation is an state river outfitters. A five-member encourages lower level government and objective of the Stewardship Trust. Parks Board establishes regulations for individual management. Through these However, trust designation does not

Property Rights: A Primer 21 necessarily imply physical preservation References Schmid, A.A. 1987. Property in a social of the lands or their attendant resources Becker, John C. 1996. Exercising proper- context. Chapter 2 in Property, Power, in pristine open space. Trust land may ty rights: For individual or community and Public Choice, New York: Praeger. be leased, sold, or exchanged, although benefit? Farm Economics, Penn State Amendment 16 requires the Board to Cooperative Extension. Information was compiled from a vari- include provisions for the protection of Bromley, Daniel W. 1993. Regulatory ety of internet sources including the natural values within any contractual takings: Coherent concept or logical State of Colorado Homepage arrangement regarding the dispensation contradiction? Vermont Law Review [http://www.state.co.us/gov_dir/gov- of Trust lands. 17(3)647-682. menu.html], Colorado By the Numbers [http://www.colorado.edu/libraries/gov- Habitat Partnership Program Cordes, Mark W. 1997. Leapfrogging the constitution: The rise of state takings pubs/online.htm], the Colorado Dept of The Colorado Division of Wildlife legislation. Ecology Law Quarterly Natural Resources Homepage has been liable for wildlife damage to 24:187-242. [http://www.dnr.state.co.us] and the US private property since 1931. The Dragun, Andrew K. 1983. Externalities, Dept of Agriculture Economic Research Division has been liable for rangeland property rights, and power. Journal of Service Colorado State Fact Sheet forage damage since 1979, but the Economic Issues. 17(3)667-680. [http://www.econ.ag.gov/epubs/other/usfa statute was ineffectively implemented. ct/co.htm]. Authorized by the Colorado Wildlife Commission, the Habitat Partnership Program (HPP) began in 1990 to help alleviate crop, rangeland forage, and fence conflicts between big game ani- Property Rights: mals and livestock on private and public lands. The HPP seeks to develop partner- A philosophical per- ships among landowners, land managers, outdoor enthusiasts, the public, and the Division of Wildlife in order to resolve spective their conflicts. It hopes to ensure appro- priate public involvement, on a local by Paul B. Thompson basis, in identifying range management Purdue University problems and recommending solutions Philosophical discussions of property tomary right in the United States, but supported by adequate financial rights are a subclass of problems that perhaps not so robust in other parts resources. The program strives to ensure come up in the development of general of the world. that private land habitat issues are con- philosophical theories about rights. For • Moral rights that are normative sidered in management plans for big philosophers, property rights raise issues claims about what sorts of rights peo- game herds. that differ from the problems encoun- ple have in a normative sense or in a Summary and conclusions tered with other sorts of rights. Many of moral sense. Our convention is to say Natural resources, including fish, the “property rights” referenced by insti- that people have moral rights even in wildlife, parklands, open spaces, soil, tutional economists would be thought of cases where those rights are frequently water, and critical habitats, are among as rights by philosophers, but not prop- violated or where there’s a failure of the greatest and most daunting property erty rights. This may simply be a termi- legal institutions or customary norms management responsibilities afforded to nology difference between the disci- to make those rights effective and cer- states. Intra- and interstate conflicts plines of philosophy and economics. But tainly in cases where there’s no over the management of natural the approach in philosophy is to begin enforcement of those rights. resources are particularly contentious in with a general discussion of rights, then Philosophers tend to be most inter- the American West. to discuss property rights as a subclass. ested in moral rights. Certain conven- Due to the cultural heritage of the What is a right? tions in the way that philosophers uti- lize rights terminology can be confusing West, state-level policies to manage nat- A person has a right to X, whether X ural resource property are more likely to to social scientists and legal scholars. In is a good, a service, or even an action or law and social science, asserting that a be accepted and adopted if they are activity, if and only if that person can locally-driven, incentive-based, and vol- right exists typically means that people make a valid claim to X. That’s the actually do adjust behavior in accor- untary, with Colorado being a case in basic logical definition of a right in phi- point. Crafting innovative solutions to dance with the claims that are made by losophy. What philosophers find inter- the rights holder. But it is typical to say resolve property-based conflicts among esting about this definition is the “valid individuals, localities, states, and federal that people “have moral rights” even claim” part, because rights can be vali- when it is not in fact typical for these authorities will continue to occupy poli- dated on a number of different bases. cymakers, researchers, and lay citizens rights to be observed or respected by The three most commonly mentioned others. Thus, while legal or customary for the foreseeable future. Through a bases for validation are: discussion of state property rights issues, rights can be operationally defined in management structure, and some of the • Legal rights that are validated by terms of conduct and expectations, policies and programs in Colorado, fur- the law, including common law. moral rights depend wholly on their val- ther innovations and solutions might be • Customary rights that are valid “just idating principles. facilitated. because,” for example, expecting to be served next if you’re at the front of the line. That’s a pretty robust cus-

22 Property Rights: A Primer Non-interference and opportunity provide opportunities, it shouldn’t be although we can negotiate about what rights done. Similarly, if it’s too costly to con- we will say, we cannot transfer that right There are two broad classes of moral strain rights to purely non-interference from one person to another. rights and, although there isn’t much considerations, it shouldn’t be done Of course there is a tendency to use standardization in the terminology, the either. Most philosophers who describe the phrase “inalienable rights” from the distinction between them marks an themselves as rights theorists probably Declaration of Independence in connec- important and robust difference in the would not be utilitarians. tion with property rights. Most people who argue that property rights are way that philosophers discuss rights in Property rights moral theory. inalienable in this sense are probably Non-interference rights protect your Philosophers generally think of prop- just focusing on the fact that they are person and your freedom. As the name erty rights as a sub-class of non-interfer- non-interference rights, or noting their implies, they are rights that allow the ence rights that are protecting a person’s centrality and more fundamental char- rights holder to claim that others should use or disposal of private property acter with respect to other kinds of pub- not interfere with the rights holder in against interference by others. Rights in lic goods and opportunities. exercising certain powers or undertaking the form of basic liberties, such as free- dom of speech, are not property rights. What makes the claim based on a certain activities. They constrain others property right valid? from acting in ways that would harm Rights are also created by promises, for you or prevent you from exercising a example, but philosophers do not think Philosophers, of course, are most personal liberty. Standard rights such as of these of as property rights. What are interested in justifications of property freedom of speech and security of person the characteristics that distinguish prop- claims that stress morality. In this con- are examples of non-interference rights. erty rights from other valid claims to nection John Locke’s chapter on proper- “My right to swing my fist ends at the non-interfence? One of the key notions ty from the 2nd Treatise on tip of your nose” illustrates the relation- is alienability. Government simply can’t be avoided. It ship between liberty and non-interfer- Property rights are alienable rights. is difficult to overstate the importance ence. These rights establish constraints Transferable may be just as good a term, of those 30 pages in the way philoso- that are extremely important for indi- but the word alienable was pretty clear phers continue to look at property viduals to have meaningful lives. They within the context of eighteenth centu- rights. Both in his political philosophy could be established on the basis of a ry philosophy. Alienable rights could be and his epistemology, Locke was less social contract agreement, a consent transferred from one person to another. interested in building a system than he basis, or strictly an enlightened self- These were the rights to control and use was in mid-level theory, in finding interest kind of argument. for a productive purpose the benefits points where arguments with a lot of The duties required by these rights associated with certain goods and serv- very different, fundamental beginnings are negative, which means that they ices. These rights could be given away, converge. In practical issues, such as require other people not to perform cer- or perhaps bought and sold, but even forming governments or conducting sci- tain sorts of actions. They don’t require though they could be alienated from the entific research, we can build institu- you to do anything on my behalf or any- person who held them the rights still tions from this mid-level agreement thing on behalf of society at large, but retain the capacity to make valid claims. without settling all of our fundamental they require you to refrain from certain Typically, promises do not create differences, which may be religious and sorts of actions. Non-interference rights property rights for philosophers, because impossible to settle. are sometimes called negative rights. the rights that are created by making an Four key claims from Locke’s argu- Opportunity rights reflect a broader ordinary promise are not transferable. ment each establish a different founda- set of rights, or entitlements. Examples Suppose I promise to meet Pat for din- tion for making normative judgments include the right to education or health- ner but Larry decides he wants to have about property. In a brilliant piece of care. These rights do require somebody dinner with me and asks Pat for how philosophical work, Locke gives a con- else to do something on behalf of the much would she sell that promise. vincing reason for thinking that these rights holder. Paying taxes is, of course, Generally speaking, I have to keep my all converge on a central theme. the most controversial thing that people promise to Pat, but if she decides to sell Actually, I don’t think his argument are required to do. Entitlements, or that promise to Larry, my promise is not works but I do admire its sophistication. opportunity rights, are established by considered to be valid anymore. Here I The first claim is that property rights different kinds of normative arguments, am citing a customary basis for distin- are natural rights. Locke was working in appealing to notions of fairness and guishing between a property right and a the natural law tradition. He thought equal opportunity, and require action on different sort of right. My promise to Pat that in some sense these rights were the part of others. entails some duties on my behalf and woven into the fabric of the universe. One group of theorists, who usually allows her to make a valid claim against Second, property rights are essential to call themselves libertarians, essentially me, but this would not be thought of as liberty. Third, property rights promote hold that non-interference is the limit an alienable sort of claim. efficiency, in exactly the way that most of rights that can and should be Certainly, basic liberties are thought economists understand efficiency. And enforced by a state apparatus. A second to be inalienable rights. I can’t sell or finally, he stresses that property rights group, often appealing to principles of transfer my right to speak freely. I can are limited by equality, so that one fairness, basically argues that we don’t agree as a matter of promise not to say would be limited in the acquisition and have a just society until certain opportu- something, not to object to a particular the extension of property rights by a nity rights are guaranteed into the mix. claim, or not to speak out in defense of principle of equality. A third philosophical group is called a right that I may actually have, but I We are left with a question, which is the utilitarian school. For utilitarians, cannot sell a right that is inherently where I think the property rights debate the costs and benefits at the end are only mine. Each of us has an individual in philosophy has been ever since what really matter. If it’s too costly to right to freedom of speech, and Locke: Do these criteria entail a coher-

Property Rights: A Primer 23 ent theory of rights, or does each criteri- the freedom and autonomy of another approach to morals stressing the way on establish an independent and per- person. that moral principles are naturally evi- haps contradictory standard for violat- Locke and Kant are somewhat simi- dent to rational people. Utilitarians see ing rights claims? Let’s examine each of lar in the way that they arrive at argu- all rights, including property rights, as the criteria in a little more detail. ments for respecting property. People arbitrary social conventions, or legal Natural Law The main idea in natu- who have invested labor in the manu- rules, that are validated in terms of their ral law is that the rationale for moral facture of a particular good deserve effects or consequences on individual principles is naturally evident to any respect for Kant, and taking that labor health and welfare. Utilitarians would rational person. With respect to proper- with compensation would be a form of be interested in whether the institution- ty rights, it is plausible to think that disrespect. But Kant clearly wouldn’t alization of a given property right pro- that highly rival and excludable goods support Locke’s view that we have a motes the most efficient distribution of will “naturally” be treated as items of property right in our own person. For costs and benefits for society as a whole. property, while goods that are non-rival Kant, it’s a mistake to think there is any Thus, the efficiency criterion becomes or with high exclusion costs will not moral theory that validates the notion the key to a utilitarian approach to tend to be treated as items that are that human beings are property. property. owned and exchanged according to a Plausibly this means that it is always Then there are views that take rights regime of property rights. Non-rival and immoral to regard human beings as a to be very fundamental to moral philos- non-excludable goods, such as a public form of property. Property rights are ophy. Libertarian philosophy, another park, clean air, or public defense, cannot alienable rights to use in pursuit of other fairly systematic approach to the ques- be easily placed under the control of a human purposes, and exploiting the tion of justifying property rights, asserts private rights holder, however. They are labor of others is to regard them as a that the non-interference right is “held in common,” the phrase that mere means to an end. mandatory and absolute. As such, it is Locke actually uses. So the natural law Efficiency We could develop a justifi- appropriate to use state power to enforce criterion would suggest that goods such cation of property rights by arguing that non-interference rights. Other moral as an apple, a house, or even permission property claims are justified when doing principles must be left to the discretion (a ticket) to enter a theater and watch a so produces “the greatest good for the of individuals. A libertarian would thus performance might naturally come to be greatest number,” that is, when they be most impressed by the liberty argu- regarded as items of private property, promote efficiency. Locke clearly ment, that property rights are crucial to while goods such as air, ideas or sun- thought that a system of property rights protecting individual liberties. Finally, shine would not. would enhance productivity in agricul- we have an egalitarian view that stresses Liberty A second type of criterion for ture. “He that encloses ten acres of land the need to provide every person in establishing the validity of a property and produces more than a hundred left society with equal opportunities. This is claim is to argue that property rights are in common may be truly said to return an area of some of the hottest action in important for the protection of personal 90 acres to mankind.” Richard Epstein, philosophical work on property. liberty. Locke writes that each person a more modern theorist, has basically Followers of John Rawls have the view has a property right in his or her own the same argument. “Like all rights, that his difference principle provides a person, that in some sense we own our- property rights are justified to the degree new approach to property rights: selves or some right about ourselves. that they promote the health, wealth, “Systems of property rights are justified Because of this property right, as we and satisfaction of every individual, all only when they tend to improve the lot invest our labor into the extraction or things considered.” Where Epstein dif- and promote the interests of the worst- manufacture of natural resources, we fers from Locke is his treatment of rival- off group in society.” create a property right in the finished ry and ; he felt these factors Contemporary philosophers would good. In failing to recognize a laborer’s have a tremendous influence on the expect that people taking each of these valid claim over the manufactured item, social benefits and costs that are gener- basic viewpoints will reach very differ- you essentially put the laborer into ated. ent conclusions about which claims are forced servitude, a violation of liberty, Equality It is also possible to argue valid, and will subsequently have very which philosophically is usually thought that property rights should promote not different views about the moral justifica- of as a more fundamental right. efficiency, but some other social good, tion of property. Those who are inclined Another argument for validating such as equality. Locke says, “Each per- toward egalitarianism may be most hos- property rights as protecting personal son has an equal right to acquire proper- tile to the general notion of private liberty is set forth by Kant. Although ty up to the point that it limits another’s property, while those who are inclined not regarded as a great theorist of prop- ability to do so.” On this view, property toward libertarianism may be most erty rights, Kant would argue that it is systems are valid when they are equaliz- accepting. immoral for people to regard either ing. The point at which they cease to themselves or others merely as a means equalize is also the point at which they Locke’s view to some further end. One cannot moral- cease to be valid. In contrast to these approaches, each ly regard oneself or others as simply of which sees these principles as at least tools for getting something done. One Philosophical systems for justifying potentially in conflict with one another, has to respect the integrity and autono- property rights Locke himself seemed to think that all my of the individual. Respect for per- We have four possible arguments were mutually compatible, and that all sons translates into respect for the that might be put forward to validate a could be (and should be) satisfied under claims that others would make to con- property claim on moral grounds. Let us . The key to social trol the use of things that they have now look at how these principles would contract arguments is that people with made or otherwise fairly acquired. Thus be used in a general philosophical somewhat different philosophical start- property rights are valid when failing to approach to questions in ethics. As ing points will agree on rules for the respect such claims is a failure to respect already noted, natural law is an organization of society.

24 Property Rights: A Primer We can see how certain strands of Summary Locke’s view on property rights can be Philosophers make a broad distinc- woven together fairly easily. In natural tion between moral theories (such as law, and excludability are impor- utilitarianism) that validate a rights tant because they are natural character- claim in terms of the consequences that istics of goods. In utilitarian theories follow from its general observance, and they are important because they entail moral theories (such as those of Locke costs and benefits. Up to a point, at or Kant) that validate rights on the least, we would expect utilitarians to ground of protecting liberty or autono- agree with natural law theorists about my. Property rights are, in either case, a the definition of property rights. subclass of non-interference rights deal- But why would we expect libertarians ing specifically with control and or egalitarians to wind up at the same exchange of alienable goods. Economic place? The idea that institutions such as approaches to property rights are easily and money could actually accommodated within utilitarian moral increase the amount of wealth available theory, and an economic analysis of effi- throughout society may have been at ciency can be readily applied within a the root of Locke’s belief that his view utilitarian argument on the validity of of property was commensurate with specific property rights. Libertarian, nat- egalitarianism. What is more, he ural law, and egalitarian approaches use thought that the discovery of new lands a different logic for validating property in America made natural resources into claims, though they might converge free goods that were simply there for the with utilitarian arguments to support a taking. With respect to the connection given configuration of property rights in between efficiency and liberty, one key specific cases. Whenever these multiple to Locke’s view may be a reliance on rationales for assigning and validating the labor theory of value. If the value of property rights converge, the particular a good can be reduced to the labor configuration of property rights will be invested in it, then the utilitarian calcu- regarded as ethically well supported. lation of cost and benefit will match up Whenever they diverge, property claims with property rights designed to protect are likely to be contested on ethical each laborer’s contribution to the manu- grounds. facture or creation of the good. But with the advent of neo-classical economics, utility is not calculated in terms of labor, and we should expect the rationales for utilitarian and libertarian views of prop- erty to diverge.

Property Rights: A Primer 25

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• The economy is an exchange of claims, or property rights, not of things. • Property rights have their origin in some sense of community or some level of agreement among people. • Property rights are collectively (publicly) chosen. • Some property rights are formal, codified in law, administrative rules, and practice. Other property rights are customary, informal, mostly unconscious, and embedded in culture or habit. • Property rights order the relationships among people. • Property rights are needed because people are interdependent and often con- flict. • Conflicts that arise out of interdependencies among people are influenced, or even partly determined by, people’s relationships to things. • Attributes of things create different types of interdependencies, which lead to different choices of property rights. • Alternative rights, or institutions, will resolve conflicts in different ways with different performances and different distributions of costs and benefits. • New things (technological changes) may create new relationships, and new rights may emerge. New things certainly create new opportunities. • It may be possible to create new rights and thus development without techni- cal change.

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