Open-Access Losses and Delay in the Assignment of Property Rights
Even though formal property rights are the theoretical response to open access involving natural and environmental resources, they typically are adopted late after considerable waste has been endured. Instead, the usual response in local, national, and international settings is to rely upon uniform rules and standards as a means of constraining behavior. While providing some relief, these do not close the externality and excessive exploitation along unregulated margins continues. As external costs and resource values rise, there finally is a resort to property rights of some type. Transfers and other concessions to address distributional concerns affect the ability of the rights arrangement to mitigate open-access losses. This paper outlines the reasons why this pattern exists and presents three empirical examples of overfishing, over extraction from oil and gas reservoirs, and excessive air pollution to illustrate the main points.
Very helpful comments were provided by Thomas Merrill, David Adelman, Carol Rose, Henry Smith, Bob Deacon, Katrina Wyman, Kathy Segerson, Roger Sedjo, Marc Miller, Bruce Johnsen, Dean Lueck, and Kirsten Engel as well as other participants at the conference on Property Rights in Environmental Assets: Economic and Legal Perspectives, Rogers Law School, University of Arizona, Tucson, October 26, 2007. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.