The basic environmental problem is to prevent the overuse and abuse of “environmental goods,” including clean air, water, and wildlife, by controlling access and use. As control implies the assignment of private (individual or common) or public rights and duties with respect to otherwise open-access resources, this book posits that all approaches to environmental protection ultimately are property-based. On this view, even government regulation constitutes a property-based approach to environmental protection. Regulations impose private duties with respect to the use of environmental goods, and in doing so necessarily create concomitant public rights of enforcement. Consequently, the choice in environmental protection is not whether to take a property-based approach but which property-based approaches to use under various circumstances.

As to the latter question, there is no universal, first-best property-based solution to all environmental problems in all circumstances. This book assesses the utility of public, common, and private property-based approaches to environmental protection, and finds them all useful but within limits. Each has advantages and disadvantages, which may be maximized or minimized, respectively, depending on the ecological, institutional, technological, and cultural circumstances. One property system may work better than another in one set of circumstances, but compare very poorly under different conditions. No single property regime is demonstrably superior to all others, in all circumstances, across all dimensions of policy concern.

That conclusion should not surprise anyone.

This chapter assesses the utility and limitations of public property-based approaches to avoiding the tragedy of open access. There are, generally speaking, two distinct methods of imposing public property rights on environmental goods. One is the explicit assertion of public/state ownership. The other is public regulation, which constitutes an implicit assertion of public property rights sufficient to accomplish the regulation's purpose. The first section of the chapter deals with outright public ownership. The second section addresses regulation as a public property-based approach to environmental protection. The chapter will conclude with a preliminary assessment of some of the problems arising from public ownership of environmental goods, which prompt efforts at partial or complete privatization.

Public ownership of environmental goods

In the western world we are accustomed to believing that private ownership of resources is not just efficient but the norm. The first belief – that private ownership is efficient – is correct often enough, but the second belief is dubious. Even today in the United States, where the concept of private ownership is as well entrenched as anywhere, the federal government is by far the country's largest landowner. The United States government owns 33 percent of all lands in the fifty states. Adding the acreage owned by state and local governments, the total amount of publicly owned lands in the United States rises to 42 percent (National Research Council 1992). That is a comparatively high percentage of public landownership for a noncommunist country.

This chapter describes the theoretical relations between pollution and property and provides a framework for the analysis that follows in subsequent chapters. Sections 1 and 2, respectively, rehearse and critique the conventional but too simplistic notion that environmental problems are at bottom property problems. In fact, the structure of property rights and environmental problems are both largely consequences of other factors, most notably transaction costs, which in turn are substantially determined by institutional and technological circumstances. Section 2 illustrates this point by describing an ideal, frictionless economy, in which well-defined property rights are clearly not a precondition to optimal environmental protection. In a world of zero transaction costs, the optimal level of environmental protection would be attained regardless of the existence and initial allocation of property rights. This is not to argue, however, that the structure of property rights is irrelevant to environmental protection. As I will show in section 3, where I take readers from the ideal world of perfect markets and costless transacting to the real world of imperfect institutions and costly transacting, the structure of property rights can significantly influence environmental performance, and has done so throughout history. Section 3 introduces the “tragedy-of-open-access” model and discusses one of its most important but often overlooked implications: that all means of averting the tragedy, including regulatory measures, are property-based.

A small but highly productive group of economists and libertarian legal scholars reject both the public property/regulatory approach and the mixed property/regulatory approach to environmental protection. The former they consider a form of “feudalism,” with government “lords” imposing Byzantine and irrational obligations on regulated “tenants” (Yandle 1992); the later a form of “market socialism,” with the government creating, overseeing, and limiting market transactions (Anderson and Leal 1991, pp. 158–9; McGee and Block 1994). Just as society has rejected both feudalism and market socialism as forms of economic organization, so they claim society should reject them as approaches to environmental protection. These self-styled “free-market environmentalists” deny the need for any form of government-sponsored environmental regulation. Instead, they promote a nonregulatory, complete private property “solution.” This chapter assesses their claims.

The worldwide trend toward privatization

Privatization has been sweeping the globe. Since the Reagan–Thatcher revolution of the 1980s, governments throughout the world have been selling off public assets to private owners in order to improve efficiency and increase production. Between 1985 and 1994, $468 billion worth of state-owned enterprises were sold off to private investors (Poole 1996, p. 1). But privatization so far has been limited to economic enterprises. Governments have not, with a few notable and highly controversial exceptions, begun selling off their vast natural resource holdings, including forests, parks, waterways, wildlife, and the atmosphere.

I have examined four basic property-based approaches to environmental protection (defined in terms of avoiding the tragedy of open access): public/state property, mixed public/state and private/individual property, pure private/individual property, and common property. Each approach has proven useful for resource conservation in some circumstances. None, however, has proven optimal for averting the tragedy of open access in every circumstance. Hence, this book's mantra: there is no universal, first-best property-based solution for environmental protection in this second-best world.

The next task is to assess the myriad factors that explain property regime choice in various ecological, technological, institutional, and economic circumstances. The objective is not to develop a normative theory, or even to generate useful predictions (although that would be a welcome consequence), but to understand and appreciate the complexities of property regime choice. This chapter offers an informal model that is, of necessity, rudimentary. To elaborate a fully fledged model for selecting property-based regimes would require an entire book of its own, if it could be done at all.

Section 1 of the chapter sets out the informal model and compares it with models offered by other authors. Section 2 introduces various complicating factors – everything from resource location and size to historical contingency and ideology – that limit the normative and predictive capability of any theoretical model.

Discussions of property rights for environmental protection tend to focus on the choice between public and private/individual property regimes, to the exclusion of common property regimes. This neglect may stem from the unfortunate conflation of common property with open access discussed above in chapter 1. Common property regimes have, however, proven capable of averting the tragedy of the commons in various circumstances and over long periods of time. Common ownership may even be preferable in some circumstances to alternative public and private property regimes for environmental protection (see Ostrom et al. 1999, p. 278; Stevenson 1991, p. 70; Dagan and Heller 2001, p. 572).

This chapter assesses the utility and limitations of common property regimes for environmental protection. The first section defines common property regimes, in contradistinction to public/state and private/ individual property regimes. Section 2 explains how common property regimes can, and in some places do, provide a useful solution to the tragedy of open access. The third section probes the limits of common property solutions. Section 4 discusses a theoretical framework for explaining and predicting the success or failure of common property regimes. And section 5 concludes with a caveat about judging the “success” of common property regimes from an environmental point of view.

What is common property?

As explained in chapter 1, the “tragedy of the commons” is a misnomer to the extent it implies that the problem of resource conservation and environmental degradation is one of common property.