Agricultural Business 450 Natural Resource Economics

1
Agricultural Business 450 Natural Resource
Economics

• Chapter 5
• Common Property Resources
• Public Goods
• Dr. Susan Watson

2
Goals for Chapter 5

• Develop an Understanding of Common Property,
  Open-Access, Property Rights
• Be Able to Discuss the Environment as a Public
  Good
• Be Able to List and Evaluate the Global Commons

3
Property Rights

• At the heart of economic analysis
• Private property rights are central in market
  economies
• Other property rights
• Held in common grazing grounds
• Not owned at all animals hunted for food
• Specialized river is considered common property
  resources

4
Economics of a Fishery

• Fisheries in the open ocean are typically
  open-access resources
• Open-access Resources
• A common property resource that lacks any system
  of rules governing use
• Anyone can fish in nonterritorial waters no one
  owns the basic resource

5
Figure 5-1 Total Product of the Fishery
6
Revenues Costs for the Fishery
7
Tragedy of the Commons

• Because common property resources belong to no
  one in particular, no one has an incentive to
  conserve them

8
Policies for Fishery Management

• License Fee
• Achieve more efficient equilibrium
• Protect the fishery ecosystem
• Improve social net benefit
• A 4200 fee

9
Quotas

• May be controversial in deciding who gets the
  rights to a limited fish catch
• Alternatives are
• Individual Transferable Quotas ITQs
• Selling quotas at auction

10
Environment as a Public Good

• Public Goods
• Benefit a large number of people often the
  whole society
• Are nonexclusive that is, they are available to
  all for consumption
• Are nonrival use by one person does not reduce
  the availability to others
• Examples National Park System of U.S. the
  highway system national defense

11
Questions?