The Value of Secure Property Rights: Evidence from Global Fisheries
Property rights are commonly touted as a solution to common pool resource problems. But in practice the security of these property rights varies substantially owing to differences in design. In fisheries, the design of individual transferable quotas (ITQs) varies widely; the consequences of these design differences on economic outcomes has not been studied. To test whether the security of these property rights affects asset values, we compile a unique dataset to examine the relationship between the exclusivity of property rights and the dividend price ratios for ITQs. We find evidence that stronger property rights lead to higher asset values and lower dividend price ratios in ITQ fisheries. This pecuniary effect of property rights security informs the current policy debate on the design of property rights institutions for managing natural resources.
The authors thank Spencer Banzhaf, Robert Deacon, Steven Gaines, Donald Leal, Gary Libecap, Marty Smith, and Wally Thurman. We also thank seminar participants at the NBER, Columbia, UC-Santa Barbara, University of Minnesota, University of Washington, University of Wisconsin, and Yale. Research funding was provided by the Paul G. Allen Family Foundation and PERC. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.