Property Rights

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Property Rights

• Principle 4 Incentives Matter.
• Principle 5 Markets work with competition,
  incentives, information and property rights.

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After one hunting season No Property Rights
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After one hunting season With Property Rights
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Whats the Difference?
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PROPERTY RIGHTS

• The rights to use, control, and obtain the
  benefits from a good or service
• Property rights
• exclusively held by an owner (clearly defined)
• easily enforced
• transferable at low cost at the owners
  discretion

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Property rights conserve and develop resources

• Your desk
• Your walls at home vs. your walls at school.
• Your dog and your lawn at home vs. your dog and
  the lawn at the city park.

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The Tragedy of the Commons

• A scarce resource owned in common is overused
  since no individual pays the full cost of using
  the resource.

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The Tragedy of the Commons

• The Llama Children

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Maximizing Family Income
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Property owned in common will be overused.
Establishing rights helps use the resource most
efficiently.
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Examples

• Commonly owned European forests.
• Coca in South America
• Irish potato famine landlords unsure of length
  of ownership pillage the land.
• Condominium dweller pays flat rate for utilities.
  Will he overuse the utilities?
• Its nice to share, but its not efficient!

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Preserving Endangered Species

• Why dont we see deer, elk, antelope, and bear
  roaming the streets
• of San Bernardino?

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Two reasons some animals are disappearing.

• If the dead animal is valuable, and there are no
  property rights, if I dont kill it, someone else
  will.
• To some, animals are nuisances and compete with
  humans for scarce land.
• Bears, wolves, prairie dogs, alligators,
  crocodiles, mountain lions, bison

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It is easier to establish property rights if

• the animal does not travel widely,
• the animal is contained in one nation,
• the animal does not flow as fish in streams,
• enforcement costs are not high, and
• people are willing to come together to preserve
  the species and to police themselves.

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Whats the Difference?
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Saving Elephants in Zimbabwe with Property Rights
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Some facts

• African wildlife is a food source, a nuisance to
  crops and a danger to humans. They look at them
  as oversized, dangerous rodents.
• From the villagers perspective, they are far
  more valuable dead than alive. (A villager can
  earn up to 100 times the average income by
  poaching ivory.)
• There is no incentive to preserve them and actual
  incentives to destroy them.
• Just say no?????

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Poachers and Villagers

• There are huge profits to be made from poaching.
• The villagers are glad to see the pests go.
• In Kenya where elephant hunting is banned, the
  population has gone from 40,000 to 4,000 in 20
  years.
• In Zimbabwe, where hunting is permitted the
  elephant population is increasing.
• Why?

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Saving Wildlife through Property Rights

• CAMPFIRE program established property rights
  (incentives for villagers) and disincentives for
  hunters.
• Permits to hunt elephants are sold at 10,000.
• Villagers own elephants and get 75 of the
  revenue from the permits.
• The meat belongs to the villagers.
• The villagers are compensated for crop damage.
• Average village income has increased by 25.

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Saving Wildlife through Property Rights

• Results
• In Zimbabwe, land dedicated to game conservation
  has grown from 12 to 17
• In Kenya, elephant population has declined from
  40,000 to 4,000 in 20 years of banned hunting.

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Saving Wildlife through Property Rights

• What has happened to the benefits to villagers of
  preserving the elephants?
• What has happened to the costs of the villagers
  from preserving the elephants.

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The near extinction of the beaver

• Europeans had overhunted them.
• French came to new world for beaver.
• Beaver increasingly scarce in America due to
  overhunting
• with exception of Cheyenne territory where
  property rights were rigorously enforced
• Beaver saved by silkworm

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The near extinction of the bison

• Indians live on less and less land, increasing
  competition for bison on that land
• Bison hunted for robes and cows and calves were
  most desirable
• Number of bison killed
• 1874 20,000
• 1875 100,000
• Today, bison are raised for meat and tourism

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Native Americans Preserved Wildlife without
Property Rights??
What happened to the Wooly Mammoth or the Sable
Toothed Tiger?
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Will wildlife become extinct?

• .02 of all animal species exist today.
• There is an inevitable competition between humans
  and animals for land.
• Profits in illegal poaching are high.
• Banning ivory or other trade is not effective.

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Will wildlife become extinct?

• .02 of all animal species exist today.
• There is an inevitable competition between humans
  and animals for land.
• Profits in illegal poaching are high.
• Banning ivory or other trade is not effective.

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Will wildlife become extinct?

• Establishing property rights to valuable animals
  provides an incentive to preserve the animals.

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How to destroy endangered species

• Enforce the ESA (endangered species act)
• If an endangered species is found on my land, I
  lose the right to deal with my land as I like.
• I must take certain precautions to preserve the
  animal at my expense.
• I have an incentive to s., s.., and s..

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Cleaning the air efficiently, Policy 1
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Cleaning the air efficiently, Policy 2
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Cleaning the air efficiently, policy 3
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Compare the Policies
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Main Points

• Effective property rights have three
  characteristics they are
• 1) clearly defined, 2) effectively enforced, and
  3) easily transferable.
• The Tragedy of the Commons occurs as a scarce
  resource owned in common is overused since no
  individual pays the full cost of using the
  resource.
• Elephants, bison, beaver, water, air, rain
  forests, are all examples of the Tragedy of the
  Commons.
• The Endangered Species Act can create negative
  secondary effects because it deprives people of
  their property rights.

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Main Points

• Establishing property rights for wildlife is
  easier if
• the animal does not travel widely,
• the animal is contained in one nation,
• the animal does not flow as fish in streams,
• enforcement costs are not high,
• people are willing to form an agreement to
  preserve the species

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Main Points

• Establishing property rights by creating a market
  for pollution permits maximizes the efficiency of
  cleanup.