Contracting for Control of Landscape-Level Resources

Abstract

I. INTRODUCTIONPolicy discussions increasingly envision a role for private actors in a wide variety of governance contexts.1 Growing awareness that industry actors and nongovernmental organizations play vital leadership roles in the development of law and policy call traditional notions of the government as a unilateral decisionmaker into question.2 Environmental law is a particularly fertile ground for studying public-private approaches.3 Collaborative environmental governance4 and new governance5 approaches are increasingly evaluated for their flexibility and nimbleness in addressing complicated environmental problems.6We focus on a specific subset of private governance of environmental resources: the use of contract. Contracts govern multiple natural resources on vast western landscapes. Any single land parcel is potentially subject to a multitude of contracts. Contracts governing landscape-level resources7 range from oil and gas extraction to exploitation of mineral rights, reciprocal use of private roads to conservation of endangered species. Yet, we know little about the conditions under which contractual regimes are likely to emerge, and even less about their substantive content or normative desirability.The need for contract-or some form of governance arrangement-to control landscapes emerges from tension between manmade property divisions, such as land parcels, and natural resources.8 Legal discussion about land operates almost exclusively through the construct of property, in which land is divided and owned.9 Chopping land into neat bundles serves human purposes by reducing conflict and encouraging investment through the establishment of entitlements and boundaries. However, the property paradigm that divorces land from landscapes also imposes costs on those seeking to govern large-scale natural resources that cannot be constrained into neatly defined lines.10 As a result, areas of shared public-private control emerge.11Landscape-level resources are often imagined to be controlled almost entirely by agencies operating under state and federal laws.12 Yet, the majority of American lands, and the natural resources upon them, are privately owned. Effective resource management thus requires participation by private parties. Land itself is managed on a parcel-by-parcel basis, but resources can seldom be effectively managed, exploited, or conserved in the same way. Synergistic uses produce more effective resource outcomes than competing or conflicting uses on a parcel-by-parcel basis. Transaction costs subsume small-aquifers, scale attempts to monetize resources. Conservation, preservation, recreation, and wildlife resource management operate best when there is a single, cohesive landscape-level management approach. The need for coordination among private actors gives rise to private bargaining, which can be understood in part as a system of private ordering.13 Private bargaining leading to contractual arrangement is one form of governance for landscape-level resources crossing multiple property lines.14We examine how laws, landowner-resource-use preferences, and transaction costs affect the choice of a governance mechanism to manage landscape-level resources. We provide an overview of several areas in which contractual arrangements govern resource management, including: groundwater, oil and gas, wildlife, marine fisheries, scenic landscapes, and conservation. Then, we turn towards exploring the conditions under which private contacting emerges.15 A series of case studies of the various contractual arrangements used to manage wildfire illustrate that the homogeneity of resource use among landowners, low transaction costs, and laws that favor individualistic outcomes promote the use of contracting as a resource-management tool. These observations suggest that contracting is most difficult when land is fragmented and land uses are heterogeneous among landowners. Yet, this is precisely the setting in which the use of contract can be most important to effective resource use and conservation. …