The Fearon Corollary: Private Property Rights as War

Environmental Markets: A Property Rights Approach, by Terry L.Anderson and Gary D.Libecap. Published by Cambridge University Press, Cambridge, UK, 2014, pp. 240, ISBN: 978 0 5212 7965 9, AUD$ 37.59 (paperback) AUD$ 94.03 (hardcover).

Natural resources, agriculture and property rights

PRICE or rent control is but one of many forms of legislative action which interfere with private contracting in the market place. To delimit the scope of my analysis, I shall use the term "price control" to refer only to any set of regulations which satisfies the following three conditions. First, the control must fix the price (or income)' terms of private contracts; this categorically excludes any laws which regulate the distribution of income among the contracting parties on a share or percentage basis.2 Second, the control must involve no appropriation of proceeds to or from the government; taxation and subsidization are thus excluded. Finally, the fixing of price must not be associated with direct government sales, purchases, or manipulation of resources so as to maintain the regulated price;3 by this stipulation, price "support" is also excluded. Even on such terms, legal regulations to control price are still many and varied. To evaluate our understanding of the class of phenomena which we seek to explain it is essential that we discover implications refutable by facts. By this criterion the available body of economic theory pertaining to price control is deficient indeed: the massive literature on the subject offers few such implications.4 An alternative approach to analyzing the observable effects of price control is presented here.

We address a debate over the effects of private versus customary property rights on external investment. Despite political economists’ claims that external investors favor private property rights, other experts argue that customary systems enable large-scale “land grabs.” We organize these competing claims, highlighting trade-offs due to differences in legibility versus the ability to displace existing landholders under both systems. We study a natural experiment in Liberia, where law codifies parallel private and customary property rights systems. We use this institutional boundary and difference-in-differences methods to isolate differential changes in external investment under the different property rights systems following the global food crisis of 2007–08. We find a larger increase in land clearing where private property rights prevailed, with such clearing related to more concession activity. Qualitative study of a palm oil concession reveals challenges external investors confront when navigating customary systems.

Market value is the most common compensation basis for expropriation of both private and customary property rights. Private property rights are generally exchangeable while customary property rights are conceptually not as exchangeable. It is hence critical to analyse the applicability of current compensation theories, which are founded on private property rights, to different property rights and in different social settings. By using existing literature and empirical evidence from Africa and other countries where customary property rights dominate, this paper undertakes a theoretical analysis of the applicability of existing compensation theories and the methodologies used to achieve the desired compensation goals. The analysis concludes that whilst current compensation theories are broadly applicable to customary property rights as they aim to protect property rights and prevent expropriatees from impoverishment, various ontological and methodological factors limit the realisation of these goals in settings dominated by customary properties. Such factors include ontology and dominance of customary property rights, use of market value as a compensation basis, and capacity of compensation assessors. Broadly, these factors lead to inadequate compensation and impoverishment of affected people.

This paper, prepared for a Lincoln Institute conference on Evolution of Property Rights Related to Land and Natural Resources, and the forthcoming book Property in Land and Other Resources (D.H. Cole and E.Ostrom, eds, forthcoming 2011, Lincoln Institute), argues that, contrary to both the suppositions of some legal scholars and the theoretical underpinnings of Regulatory Takings doctrine, government regulations do not only impose on existing private property rights but also vindicate, and sometimes even create, public, private, and/or common property rights. After examining conflicting common law and Roman law rules relating to property rights in the atmosphere, the paper focuses on how assertions of state sovereignty and regulations combine to create Hohfeldian rights and duties respecting the atmosphere, where none previously existed or were unclear. An explicit (but hardly novel) claim is advanced that acts of sovereignty themselves amount to assertions of public property. The claim is supported by evidence from both civil aviation regulation and air pollution control. The paper also addresses how regulations have created private property rights to pollute in emissions trading programs (regardless of congressional assertions to the contrary). In some cases, assertions of public property via acts of sovereignty are a prerequisite to the allocation of private property rights, and not just in the atmosphere but in other natural resources, such as marine fisheries. The paper concludes with a discussion of normative implications for property theory generally and Regulatory Takings doctrine in particular. A more dignified treatment of public regulations that are designed to protect public rights would raise a serious question about which set of property rights should prevail in the several Regulatory Takings cases where privately-owned lands meet publicly-owned waters. That question cannot, however, be answered reasonably until a theory (or multiple theories) of public property are better developed to complement existing theories of private and common property. So, the paper ends with a call for more research into the theory and empirics of res publica (beyond equally naive public interest and public choice models).

This article argues that public property rights should be recognised as a separate category of property interest, different and distinct from private and common property interests and conferring distinctive rights and obligations on both “owners” and members of the public. It develops a taxonomy to differentiate private, public and common property rights. The article concludes that it is a mistake to think in terms of “private property”, “common property” or “public property”. The division and allocation of resource entitlements in land can result in private, common and public property rights subsisting over the same land simultaneously, in different combinations and at different times. The categorisation of property interests in land (as private, common or public) may also shift and change from time to time. The article considers the importance of distinguishing between private, common and public property interests for developing new strategies for environmental governance, and for implementing the effective protection of natural resources.

The Evolution of Property Rights: A Study of the American West

This chapter examines the effect of occupation on private property and contract rights within the context of the U.S.-led invasion of Iraq in 2003. In doing so, I examine how the treatment of private property in the Iraqi occupation compares and contrasts with Japanese, Italian, and German occupations after World War II. Furthermore, I show how non-European occupations have been characterized by a disregard of occupation rules safeguarding private property as opposed to European occupations. This disregard of the private property under occupation is similar to the disregard with reference to territorial acquisitions of a much earlier period, which I addressed in Chapter 2. In this chapter, I also demonstrate the importance placed on the private property of Europeans in non-European contexts and the lack of focus on the private property rights of non-Europeans. It is therefore not surprising that, following the U.S.-led conquest of Iraq in early 2003, most scholarly and press coverage focused on the status of foreign corporations’ property in Iraq before the war.

This paper contributes to the debate on whether private or common property rights are better for advancing the sustainable management of natural resources. This contest between public and private ownership is often exaggerated, we claim, because in the real world, complex entitlements with varying degrees of privateness/publicness prevail. Property rights belonging to families, companies, clubs, corporations, and communities are simultaneously common to the members/shareholders and private to the entities. We call these entitlements private-common entitlements. When we acknowledge this complexity, it becomes evident that neither private nor common ownership rights are alone responsible for resource depletion. Instead, depletion is caused by freeriding or evading the payment of the full price of natural resources. This invites Coase’s solution to resource allocation. Therefore, the key problem is whether and how Coasean bargaining is employed to allocate ownership over resources threatened by depletion. We contribute to the debate by showing that Coase’s approach promotes not only economically efficient but also ecologically sustainable resource management. Often, this approach would lead to the establishment of largely private property or control rights by largely collective/public entities. We apply this theoretical framework to the development of a ski resort in Pirin Mountain, Bulgaria.

Ecological compensation is an important means to maintain the sustainability and stability of ecosystem services. The property rights analysis of ecosystem services is indispensable when we implement ecological compensation. In this paper, ecosystem services are evaluated via spatial transferring and property rights analysis. Take the Millennium Ecosystem Assessment (MA) as an example, we attempt to classify the spatial structure of 31 categories of ecosystem services into four dimensions, i.e., local, regional, national and global ones, and divide the property rights structure into three types, i.e., private property rights, common property rights and state-owned property rights. Through the case study of forestry, farming industry, drainage area, development of mineral resources, nature reserves, functional areas, agricultural land expropriation, and international cooperation on ecological compensation, the feasible ecological compensation mechanism is illustrated under the spatial structure and property rights structure of the concerned ecosystem services. For private property rights, the ecological compensation mode mainly depends on the market mechanism. If the initial common property rights are “hidden,” the implementation of ecological compensation mainly relies on the quota market transactions and the state investment under the state-owned property rights, and the fairness of property rights is thereby guaranteed through central administration.

The Real Right Law of the People’s Republic of China is the basic law for regulating and protecting the property rights. The Constitution, as the fundamental law, adjusts the property right relationship too. The protection from Constitution is the precondition and base for protecting property right. The Real Right Law is to fulfill the principle of Constitution that ensures citizen’s private property right. To protect the property right, Constitution mainly aims at defending the country against outside. Its basic function is to define the country activity. As for the Real Right Law, it is to protect the property right by defining the property in case of invasion of other civil subjects. Both Constitution and Real Right Law offer protection for private property right and also impose restrictions on private property right. That is the national requisition system. This system imposes strict restrictions to private property right. Therefore, it is necessary to set up firm restrictions and constraints on the requisition system. According to the legislation of other countries, we can restrict and constrain this system from three aspects, namely the intention of requisition, the complement standards, and the process, driving the government to realize lawful administration, and protecting the private property right properly.

We use household survey data to investigate the effects of formal, private property rights to agricultural land on agricultural investment, land valuation and access to credit in Tanzania. Results show that while there are no detectable effects of formal, private land property rights (written documentation of ownership) on agricultural investment, land ownership documents nevertheless increase the market value of land substantially (more than 25 percent). One reason appears to be that well-documented private property rights facilitate the use of land as collateral for loans and therefore eases access to credit. The findings suggest that there are potentially significant, economic returns to systematic land titling in Tanzania and other countries, although more research is needed to firmly establish this conclusion.

This Article models private ownership as a conflict resolution mechanism and contends that for the Coase Theorem (as defined here) to be consistent, private ownership must yield the Pareto-optimal use of scarce resources among all feasible conflict resolution mechanisms. Conflict over a scarce resource may be better resolved, however, by eliminating the possibility of private ownership and “forcing” parties to share ownership of a contested scarce resource. A corollary to the Coase Theorem is introduced which states: In the absence of transaction costs, the distribution of private and shared ownership is efficient. Provided transaction costs are high and shared ownership is socially-optimal, a role for the courts is suggested wherein de facto shared ownership is established by rendering private property rights random or unclear — judicial behavior that stands in contrast to the normative implications of the Coase Theorem.

Private property rights security is currently seen as central to explaining cross-country differences in economic development. Variation in private property rights security itself is perceived to be best explained by differences in the degree to which the political system is able to constrain the despotic power of state executives. I reassess the existing evidence for these two hypotheses and find that: (1) higher levels and significant changes in private property rights security and constraints on the executive are not correlated with higher levels of income and (changes in) growth rates; (2) the commonly used instrument for constraints on the executive and private property rights security - the natural log of European settler mortality - is invalid because it is associated with current levels of income besides its effect through private property rights security and constraints on the executive; and (3) the regularly cited Korean case is in fact evidence against these hypotheses. I provide explanations for these findings and call for a rethinking of which type of institutions and policies are decisive for growth.