Global Property Rights: The Kyoto Protocol and the Knowledge Revolution

Abstract

This paper is about the origin of today's global environmental problems, and how to resolve them. At stake are catastrophic risks from global warming and damage to the world's biodiversity that ranks as the planet' sixth great extinction. The origin of today's global nvironmental problems is a historic difference in property rights regimes between industrial and developing countries, the North and the South. The solutions we suggest involve redefining property rights in the use of the global environment as well as in knowledge. We discuss the Kyoto Protocol's new systems of property rights on the use of the planet's atmosphere, and propose a parallel system of property rights on knowledge. Resources such as forests and oil and other mineral deposits are owned as private property in industrial countries but they are treated as common or government property in developing countries. Illrdefined protected property rights lead to the overrextraction of resources in the South, such as timber and oil. They are exported at low prices to the North that over-consumes them. The international market amplifies the tragedy of the commons, leading to inferior solutions for the world economy as a whole (Chichilnisky 1994). Updating property rights on resources in developing countries would face formidable opposition. The lack of property rights in inputs to production, such as timber and oil, could be compensated by assigning property rights on by-products of outputs. The 1997 Kyoto Protocol provides an example as it limits the countries' rights to emit carbon, a by-product of burning fossil fuels. Our suggestions for trading emissions rights (Chichilnisky 1995, 96) was adopted in the Kyoto Protocol, yet the atmospheres carbon concentration is a global public good, which makes tradingtricky. Trading rights to forests' carbon sequestration services or to genetic blueprints would also be trading global public goods. Markets that trade public goods have been shown to require a measure of equity to ensure efficiency (Chichilnisky 1996, Chichilnisky and Heal 2002). This conclusion has been validated theoretically and is also in line with what was agreed by 160 nations in the Kyoto Protocol. Somewhat surprisingly, the same conclusion applies also to trading knowledge goods. Knowledge is a global public good. This paper proposes a new property rights regimes for knowledge goods and for environmental assets that seem crucial for economic progress in the era of the Knowledge Revolution.