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Social-Ecological Systems Meta-Analysis Database: Theory

Private property rights and conservation

Variable relationship:

This theory views private property (Property Regime) as an important cause of behaviors that favor environmental conservation. The main argument here is that "owners of private property have an incentive to protect and make investments in it because they can be assured that they, and only they, receive the benefits" (Acheson 2006: 120). Private property is seen to most tightly couple responsibility, ownership, and benefits in a way that highly incentivizes owners of the environment to protect it. The more secure the property rights are, the more likely these effects are to occur (Property Security). In the absence of property security there is no guarantee that individuals will receive the benefits of their investments. Additionally, as pointed by Coase (1960) and illustrated in empirical studies, secure property rights and low transaction costs (Transaction Costs) enable bargaining among rights holders (Conflict Resolution) and the reallocation of rights in cases of unattended externalities.

This theory is often stated in relation to the tragedy of the commons, whereby a lack of private property is seen to cause environmental destruction. As Gordon (1954: 130-131) states:

"In the sea fisheries the natural resource is not private property; hence the rent it may yield is not capable of being appropriated by anyone. The individual fisherman has no legal title to a section of ocean bottom. Each fisherman is more or less free to fish wherever he pleases. The result is a pattern of competition among fishermen which culminates in the dissipation of the rent of the intramarginal grounds."

This theory supports several policy instruments and initiatives, such as individual transferable quotas (ITQs) in fisheries, and the settlement of the arid Western United States via the Homestead Act, which granted individual settlers plots of privately owned land. It is important to note, however, that private property is not the only kind property (many discussions of property rights imply this by conflating property rights generally with private property rights specifically), and that private property rights need not necessarily be transferable (thus creating a market in such rights) to ensure environmental conservation. In the literature it is also sometimes implied that whenever we have private rights, we have a market in such rights, which is in part caused by the predominance of cap-and-trade and ITQ-based policies that do involve markets in private property rights.

Finally, we have not included the variable of Centralization to this theory, (which could aid in indicating that private property is highly decentralized), because of the observation that much of what is termed private property is essentially corporate property, and corporate decision-making structures are frequently highly centralized. Therefore we have not included this as a central element to this argument.

Project
SESMAD
Sector(s)
 
Scientific Field
Component Type(s)
Governance System
Status
Public

Variables

VariableRoleRole ExplanationValue
Property regimeUnderlying independent variableWhen rights are assigned to individuals, or corporate actors that are capable of acting in their own self-interest, it is predicted that each individual will be highly motivated to conserve their own plot of land, thereby ensuring the maintenance of commons condition.Private property or Corporate property
Property securityModerating independent variablePrivate property rights are seen to be more effective when there is strong tenure security.High
Conflict resolutionModerating independent variableConflict resolution, in accordance to the Coasian story, enables property owners to bargain with each other and thereby internalize externalities produced by one of them.Yes
Transaction costsModerating independent variableConflict resolution is possible largely if transaction costs are low. If they are high, then bargaining cannot occur.Low
Commons condition trendFinal outcomeWhen private actors are able to steward their own property, and/or bargain to internalize externalities associated with the management and use of other property, the condition of the commons is predicted to be sustained or improved.Remained the same or improved

Related Theories

TheoryRelationshipCharacterizing Variables
Individual transferable quotas (ITQs)related
Rational depletion of natural resourcescontradictory
The tragedy of the open-access commonsrelated
Payment for ecosystem services (PES)related

Related Studies

StudyRelationship

Acheson, James M. 2006. Institutional Failure in Resource Management. Annual Review of Anthropology 35 (1): 117-134.

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Ostrom, Elinor. 1990. Governing the Commons. New York: Cambridge University Press.

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Gordon, H.S., 1954. The economic theory of a common-property resource: the fishery. The Journal of Political Economy 124–142.

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Coase, Ronald Harry. 1960. “Problem of Social Cost, the.” JL & Econ. 3: 1.

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Larson, Bruce A., and Daniel W. Bromley. 1990. "Property rights, externalities, and resource degradation: Locating the tragedy."  Journal of Development Economics 33 (2):235-262. doi: http://dx.doi.org/10.1016/0304-3878(90)90023-5.

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