учебный год 2023 / (Encyclopedia of Law and Economics 5) Boudewijn Bouckaert-Property Law and Economics -Edward Elgar Publishing (2010)

Private and common property rights 65

diverse purposes. Netting identified five attributes that he considered to be most conducive to the development of communal property rights:

1.low value of production per unit of area;

2.high variance in the availability of resource units on any one parcel;

3.low returns from intensification of investment;

4.substantial economies of scale by utilizing a large area; and

5.substantial economies of scale in building infrastructures.

Steep land where rainfall is scattered may not be suitable for most agricultural purposes, but can be excellent land for pasture and forests if aggregated into sufficiently large parcels. By developing communal property rights to large parcels of such land, those who are members of the community are able to share environmental risks due to the unpredictability of rain-induced growth of grasses within any smaller region. Further, herding and processing of milk products is subject to substantial economies of scale. If individual families develop means to share these reduced costs, all can save substantially (Agrawal 1999). Building the appropriate roads, retaining walls and processing facilities may also be done more economically if these efforts are shared.

While the Swiss peasants were able to devote these harsh lands to productive activities, they had to invest time and effort in the development of rules that would reduce the incentives to overgraze and would ensure that investments in shared infrastructure were maintained over time. In many Swiss villages, rights to common pasturage were distributed according to the number of cows that could be carried over the winter using hay supplies produced on the owners’ private parcels. In all cases, the village determined who had use rights, what the specific access and withdrawal rights were, how investment and maintenance costs were to be shared, and how the annual returns from common processing activities were to be shared. All of these systems included at least village proprietorship rights, but some Swiss villages developed full ownership rights by incorporating and authorizing the buying and selling of shares (usually with the approval of the village). Netting’s findings are strongly supported by studies of mountain villages in Japan, where thousands of rural villages have held communal property rights to extensive forests and grazing areas located in the steep mountainous regions located above their private agricultural plots (McKean 1982, 1992a, 1992b). Similar systems have existed in Norway for centuries (Ørebech et al. 2005; Sandberg 1998).

The importance of sharing risk is stressed in other theoretical and empirical studies of communal proprietorships (Gupta 1986; Nugent and Sanchez 1993). Unpredictability and risk are increased in systems where

66 Property law and economics

resource units are mobile and where storage facilities, such as dams, do not exist (Schlager, Blomquist, and Tang 1994). Institutional facilities for sharing risk, such as formal insurance systems or institutionalized mechanisms for reciprocal obligations in times of plenty, also affect the kinds of property-rights systems that individuals can devise. When no physical or institutional mechanisms exist for sharing risk, communal property arrangements may enable individuals to adopt productive activities not feasible under individual property rights. In the Sudan, for instance, the variance in the productivity of land over space – due largely to the fluctuation in rainfall from year to year – is strongly associated with the size of communally held parcels allocated to grazing (Nugent and Sanchez 1993). Ellickson (1993) compares the types of environmental and personal security risks faced by new settlers in New England, in Bermuda, and in Utah to explain the variance in the speed of converting jointly held land to individually held land in each of these settlements.

A consistent finding across many studies of communal property-rights systems is that these systems do not exist in isolation and are usually used in conjunction with individual ownership. In most irrigation systems that are built and managed by the farmers themselves, for example, each farmer owns his or her own plot(s) while participating as a joint proprietor or owner in a communally organized irrigation system (Coward 1980; Sengupta 1991, 1993; Tang 1992; Vincent 1995; Wade 1992). Water is allocated to individual participants using a variety of individually tailored rules, but those irrigation systems that have survived for long periods of time tend to allocate water and responsibilities for joint costs using a similar metric – frequently the amount of land owned by a farmer (E. Ostrom 1990, 1992). In other words, benefits are roughly proportional to the costs of investing and maintaining the system itself.

Further, formally recognized communal systems are usually nested into a series of governance units that complement the organizational skills and knowledge of those involved in making collective-choice decisions in smaller units (O. Johnson 1972). Since the Middle Ages, most of the Alpine systems in both Switzerland and Italy have been nested in a series of self-governing communities that respectively governed villages, valleys, and federations of valleys (Merlo et al. 1989). In modern times, cantonal authorities in Switzerland have assumed an added responsibility to make periodic, careful monitoring visits to each alp on a rotating basis and to provide professional assessments and recommendations to local villages, thereby greatly enhancing the quality of knowledge and information about the sustainability of these resources.

Contrary to the expectation that communal property systems lacking the right to alienate ownership shares are markedly less efficient than property-

Private and common property rights 67

rights systems involving full ownership, substantial evidence exists that many communal proprietorships effectively solve a wide diversity of local problems with relatively low transaction costs (Gaffney 1992; Hanna and Munasinghe 1995a, 1995b; Kaul 1996; Sandberg 1998). Obtaining valid and reliable measures of outputs and costs for a large number of propertyrights systems covering similar activities in matched environmental settings is extremely difficult. In regard to irrigation, a series of careful studies of the performance of communal proprietorship systems as contrasted to government-owned and managed systems, clearly demonstrates the higher productivity of the communal systems controlling for relevant variables (Tang 1992; Benjamin et al. 1994; Lam 1998). Schlager’s (1994) studies of inshore fisheries demonstrate that fishers who have clearly defined proprietorship are able to solve difficult assignment problems and assign the use of space and technology so as to increase both the efficiency and equity of their systems. James Wilson and colleagues’ studies also demonstrate that communal proprietorship systems are more efficient than frequently thought (Wilson et al. 1994; Wilson, Yan, and Wilson 2007).

Performance of communal property-rights systems varies substantially, however, as do the performance of all property-rights systems. Some communal systems fail or limp along at the margin of effectiveness just as private firms fail or barely hang on to profitability over long periods of time. In addition to the environmental variables discussed above that are conducive in the first place to the use of communal proprietorship or ownership, the following variables related to the attributes of participants are conducive to their selection of norms, rules, and property rights that enhance the performance of communal property-rights systems (E. Ostrom 1993):

1.Accurate information about the condition of the resource and expected flow of benefits and costs is available at low cost to the participants (Blomquist 1992; Gilles and Jamtgaard 1981).

2.Participants share a common understanding about the potential benefits and risks associated with the continuance of the status quo as contrasted with changes in norms and rules that they could feasibly adopt (E. Ostrom 1990; Sethi and Somanathan 1996).

3.Participants share generalized norms of reciprocity and trust that can be used as initial social capital (Cordell and McKean 1992).

4.The group using the resource is relatively stable (Seabright 1993).

5.Participants plan to live and work in the same area for a long time (and in some cases, expect their offspring to live there as well) and, thus, do not heavily discount the future (Grima and Berkes 1989).

6.Participants use collective-choice rules that fall between the extremes

68 Property law and economics

of unanimity or control by a few (or even bare majority) and, thus, avoid high transaction or high deprivation costs (E. Ostrom 1990).

7.Participants can develop relatively accurate and low-cost monitoring and sanctioning arrangements (Berkes 1992).

Many of these variables are, in turn, affected by the type of larger regime in which users are embedded. If the larger regime recognizes the legitimacy of communal systems, and is facilitative of local selforganization by providing accurate information about natural resource systems, providing arenas in which participants can engage in discovery and conflict-resolution processes, and providing mechanisms to back up local monitoring and sanctioning efforts, the probability of participants adapting more effective rules over time is higher than in regimes that ignore resource problems or presume that all decisions about governance and management need to be made by central authorities.

Two additional variables – the size of a group and its homogeneity – have been noted as conducive to the initial organization of communal resources and to their successful performance over time (Agrawal 2000; Libecap 1989a, 1989b). As more research has been conducted, however, it is obvious that much more theoretical and empirical work is needed since both variables appear to have complex effects (Poteete and Ostrom 2004, 2008). Changing the size of a group, for example, always involves changing some of the other variables likely to affect the performance of a system. Increasing the size of a group is likely to be associated with at least the following changes: (1) an increase in the transaction costs of reaching agreements;

(2) a reduction of the burden borne by each participant for meeting joint costs such as guarding a system, and maintenance; and (3) an increase in the amount of assets held by the group that could be used in times of emergency. Libecap (1995) found that it was particularly hard to get agreements to oil unitization with groups greater than four. Blomquist (1992), on the other hand, documents processes conducted in the shadow of an equity court that involved up to 750 participants in agreeing to common rules to allocate rights to withdraw water from groundwater basins in Southern California. The processes took a relatively long period of time, but they have now also survived with little administrative costs for half a century (Blomquist, Schlager, and Heikkila 2004). Agrawal and Goyal (2001) have shown that communal forestry institutions in India that are moderate in size are more likely to reduce overharvesting than are smaller groups because they tend to utilize a higher level of guarding than smaller groups.

Group heterogeneity is also multifaceted in its basic causal processes and effects. Groups can differ along many dimensions including their assets, their information, their valuation of final products, their production

70 Property law and economics

subtractive from what is available to others – is so well established that it does not merit attention here. Industrial and agricultural commodities clearly fit the definition of private goods. Individual rights to exclusion and to transferring control over these goods generate incentives that lead to higher levels of productivity than other forms of property arrangements.

It has frequently been assumed that land also is clearly always a private good and therefore best allocated using market mechanisms based on individual ownership rights. Agricultural land in densely settled regions is usually best allocated by a system of individual property rights. Gaining formal title to land, however, may or may not increase efficiency. Feder et al. (1988) conducted an important econometric study that showed that agricultural land in Thailand without a formal title was worth only onehalf to two-thirds of land with a formal title. Further, increasing the security of private-property rights also led to an increased value of the crops produced (between one-tenth and one-fourth higher than those without secure title). More secure titling also provided better access to credit and led to greater investments in improved land productivity (see also Feder and Feeny 1991). Insecure property rights may lead potential users to arm and engage in violent conflict so as to gain control over land through force or by negotiation to avoid force. Several types of economic losses result from conflict over ownership (Umbeck 1981a, 1981b).

Title insurance is another mechanism used to reduce the risk of successful challenges to ownership of land. Registering brands is still another technique used to increase the security of ownership over resource units in the form of cattle that may range freely over a large area until there is a communal effort to undertake a round-up. Gaining formal titles is, however, costly. In societies that do not yet have high population densities and where customary rights are still commonly understood and accepted, formal titling may be an expensive method of increasing the security of a title that is not associated with a sufficiently higher return to be worth the economic investment (see Migot-Adholla et al. 1991). In addition, it should now be clear that the cost of fencing land by physical and/or institutional means is nontrivial and that there are types of land and land uses that may be more efficiently governed by groups of individuals rather than single individuals.

A commonly recommended solution to problems associated with the governance and management of mobile resource units, such as water and fish, is their ‘privatization’ (Christy 1973; C. Clark 1980). Implementing operational and efficient individual withdrawal rights to mobile resources is far more difficult in practice than demonstrating the economic efficiency of hypothetical systems. Simply gaining valid and accurate measurements of ‘sustainable yield’ is a scientifically difficult task. In systems where resource units are stored naturally or by constructing facilities such as

Private and common property rights 71

a dam, the availability of a defined quantity of the resource units can be ascertained with considerable accuracy, and buying, selling, and leasing rights to known quantities is relatively easy to effectuate in practice. Many mobile resource systems do not have natural or constructed storage facilities, and gaining accurate information about the stock and reproduction rates is very costly and involves considerable uncertainty (Allen and McGlade 1987; J. Wilson et al. 1991). Further, as Copes (1986) has clearly articulated, appropriators from such resources can engage in a wide diversity of evasive strategies that can destabilize the efforts of government agencies trying to manage these systems. Further, once such systems have allocated individual withdrawal rights, efforts to further regulate patterns of withdrawal may be very difficult and involve expensive buy-back schemes. Experience with these individual withdrawal-rights systems has varied greatly in practice (see McCay 1992; Wilson and Dickie 1995).

Exactly which attributes of both physical and social systems are most important to the success of individual withdrawal rights from commonpool resources is not as well established as the attributes of common-pool resource systems conducive to group proprietorship or ownership. On the physical side, gaining accurate measurements of the key variables (quantity, space, technology) that are to be involved in management efforts is essential. Resource systems that are naturally well-bounded facilitate measurement as well as ease of observing appropriation behavior. Storage also facilitates measurement. Where resource units move over vast terrain, the cost of measurement is higher than when they are contained (for example, it is easier to develop effective withdrawal-rights systems for lobsters than for whales).

Considerable recent research has also stressed the importance of involving participants in the design and implementation of such property-rights systems. When participants do not look upon such rules as legitimate, effective, and fair, the capacity to invent evasive strategies is substantial (Seabright 1993). The size of the group involved and the heterogeneity of participants also affect the costs of maintaining withdrawal-rights systems (Edwards 1994). And, the very process of allocating quantitative and transferable rights to resource units may undo some of the common understandings and norms that allowed communal ownership systems to operate at lower day-to-day administrative costs.

8.Communal property regimes in the twenty-first century

The focus of this chapter has been primarily on natural resources. Many of the lessons learned from the operation of communal property regimes in these sectors, however, are quite relevant for a wide diversity of similar property regimes that are currently in wide use and likely to

72 Property law and economics

have a substantial presence in the next century. A very large number of housing developments – both apartment houses and individual family dwellings – involve individual property to the housing unit itself combined with communal property to the grounds, recreational facilities, and other joint facilities. While individuals can buy and sell their individual housing units, at the time of purchase they assume a set of duties in respect to the closely related communal properties. Monthly assessments for the repair and maintenance of these common facilities are not unlike the assessments made by a community of irrigators on themselves for the maintenance of their own system. Further, purchase and sales frequently require the permission of other members of the group. Similarly, many sports clubs allocate use quotas to members and assess members’ regular fees for the maintenance of the commonly owned facilities.

The modern corporation is frequently thought of as the epitome of private property. While buying and selling shares of corporate stock is a clear example of the rights of alienation at work, relationships within a firm are far from being ‘individual’ ownership rights. Since the income that will be shared among stockholders, management, and employees is itself a common pool to be shared, all of the incentives leading to free riding (shirking) and overuse (padding the budget) are found within the structure of a modern corporation (Ghoshal and Moran 1996; Putterman 1995; Seabright 1993). Thus, where many individuals will work, live, and play in the next century will be governed and managed by mixed systems of communal and individual property rights.

Acknowledgments

Support from the National Science Foundation (Grant Nos. SBR-9319835 and SBR-95 21918), the Ford Foundation, and the Andrew W. Mellon Foundation is gratefully acknowledged. Comments on an initial draft of this entry by Arun Agrawal, David Feeny, Vincent Ostrom, Peter Ørebech, and Jimmy Walker are gratefully acknowledged. The comments of two anonymous reviewers were of considerable value. The editing skills of Patty Lezotte have been, as usual, of immense assistance – particularly in a paper involving such an extensive bibliography as Charlotte Hess and I have prepared for this chapter. Thanks also to Emily Castle for her assistance in updating the information in footnote 1.

Notes on the bibliography

The updated and revised bibliography1 adds well over 200 additional citations to the earlier version. We have selected articles and books that continue the tradition of common property scholarship as well as those that reflect new trends in this area of study. Noteworthy stronger foci are

Private and common property rights 73

sustainability, the global commons, property regimes in transition, and the intersection of intellectual property rights and environmental goods.

The crucial questions surrounding common-property management have continued to be ones of equity, efficiency and sustainability. Since the turn of this past century, however, the issue of sustainability has increased in its importance and visibility in the commons literature (see, for instance, Agrawal 2001; Anderies et al. 2007; Bressers and Kuks 2004; Costanza et al. 2001; Kamara, Kirk, and Swallow 2004; Marshall, Fritsch, and Dulhunty 2005; McMahon 2006; Meinzen-Dick and Di Gregorio 2004; Ørebech et al. 2005; Oses-Erasoa and Viladrich-Grau 2007; Pasqual and Souto 2003; Smajgl and Larson 2007; Veeman and Politylo 2003). Ecological economist Robert Costanza (2000) writes:

The most critical task facing humanity today is the creation of a shared vision of a sustainable and desirable society, one that can provide permanent prosperity within the biophysical constraints of the real world in a way that is fair and equitable to all of humanity, to other species, and to future generations.

Some authors argue that developing new common-property regimes may be helpful in achieving sustainability (Brunckhorst 2003; Buck 2002; Buxton 2004; Marshall, Fritsch, and Dulhunty 2005; Williamson, Brunckhorst, and Kelly 2003).

New research demonstrates the urgent need for effective approaches to commons problems that are global in scale (E. Ostrom et al. 1999). Particular areas of focus on the global commons in this bibliography are biodiversity (Choudry 2005; Coban 2004; Goeschl and Igliori 2006; Tisdell 2004; Trommetter 2005) and water resources (Becker and Easter 1999; Dilworth 2007; Dinar 2000; Fisher 2004; Smets 2004).

Common-property regimes in transition is another noteworthy recurrent theme (see Banner 2002; Dekker 2003; Majumdar 2007; J. Marshall 2001; John McCarthy 2000; Moyo 2005; Muñoz Piña, de Janvry, and Sadoulet 2003; Mwangi 2006, 2007a, 2007b; Okello 2005; Rao et al. 2005; D. Thompson 2006). Mwangi (2007b), for instance, illustrates the complexity of regime change in her research on the transition from collective to individualized rights in Kenya’s Maasailand and the complications of politics and procedural problems. The ambiguity of certain property regimes leads a number of researchers to examine ‘who owns’ various resources (Barnes 2001 [sky]; M.F. Brown 2003 [native culture]; Gepts 2004 [biodiversity]; Ho 2001 [land]; Macinko and Bromley 2002 [fisheries]). Privatization is another kind of regime transition of great concern regardless of which kind of resource is involved (for representative works see Hannesson 2006; Hedlund 2001; Lesorogol 2003; Mansfield 2004; National Research Council 2001).

74 Property law and economics

Another growing area of study is the intersection of traditional property rights and intellectual property rights. Drahos and Mayne (2003) write that patents, as types of intellectual property rights, can reduce access to knowledge in such life-sustaining areas as genetics, health, and agriculture – a problem even worse in developing countries. Aoki calls one of these intersections ‘seed wars’ – battles ‘over the ownership of intellectual property rights of germplasm – arguments over weeds, seeds and deeds’ (Aoki 2003; see also Borowiak 2004; Dutfield 2000; C. Thompson 2004). A number of works focus on rights to plant genetic resources and threats to indigenous knowledge and systems of agriculture (Barnett 2000; Dickenson 2004; Eyzaguirre et al. 2004; Kennedy 2006; Rifkin 2002; Spier 2001).

Note

1.The commons database in the library of the Workshop in Political Theory and Policy Analysis contains 59,192 records of literature on the commons, common-pool resources, and common property. Of those, 848 have ‘common property’ in the title.

Bibliography

Acheson, James M. (1988), The Lobster Gangs of Maine, Hanover, NH: University Press of New England.

Acheson, James M. (2000), ‘Clearcutting Maine: Implications for the theory of common property resources’, Human Ecology, 28, 145–169.

Acheson, James M. (2003), Capturing the Commons: Devising Institutions to Manage the Maine Lobster Industry, Lebanon, NH: University Press of New England.

Adger, W. Neil and Cecilia Luttrell (2000), ‘Property rights and the utilisation of wetlands’,

Ecological Economics, 35, 75–89.

Adhikari, Bhim (2005), ‘Poverty, property rights and collective action: Understanding the distributive aspects of common property resource management’, Environment and Development Economics, 10, 7–31.

Agrawal, Arun (1999), Greener Pastures: Politics, Markets, and Community among a Migrant Pastoral People, Durham, NC: Duke University Press.

Agrawal, Arun (2000), ‘Small is beautiful, but is larger better? Forest-management institutions in the Kumaon Himalaya, India’, in Clark Gibson, Margaret McKean, and Elinor Ostrom (eds), People and Forests: Communities, Institutions, and Governance, Cambridge, MA: MIT Press, pp. 57–86.

Agrawal, Arun (2001), ‘Common property institutions and sustainable governance of resources’, World Development, 29, 1649–1672.

Agrawal, Arun (2005), Environmentality: Technologies of Government and the Making of Subjects, Durham, NC: Duke University Press.

Agrawal, Arun and Elinor Ostrom (2001), ‘Collective action, property rights, and decentralization in resource use in India and Nepal’, Politics and Society, 29, 485–514.

Agrawal, Arun and Sanjeev Goyal (2001), ‘Group size and collective action: Third-party monitoring in common-pool resources’, Comparative Political Studies, 34 (1), 63–93.

Aguilera-Klink, Federico (1994), ‘Some notes on the misuse of classic writings in economics on the subject of common property’, Ecological Economics, 9 (3), 221–228.

Alchian, Armen A. (1965), ‘Some economics of property rights’, Il Politico, 30, 816–829. Alchian, Armen A. and Harold Demsetz (1973), ‘The property rights paradigm’, Journal of

Economic History, 33, 16–27.

Alcock, F. (2002), ‘Bargaining, uncertainty, and property rights in fisheries’, World Politics, 54, 437–461.