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A third theory is that certain resources should remain open to all in order to promote sociability.25 The model here might be the agora of ancient Greece, where citizens gathered every day to trade, gossip, hear the latest news, and see and be seen. The agora provided the social glue that kept the society together. Similarly, keeping parks, beaches, and even navigable rivers open to all encourages random meetings and encounters, and allows for spontaneous gatherings of citizens. This unplanned mixing of people can help develop tolerance for persons of different backgrounds and ideas, and can perhaps build bonds of community among individuals who otherwise have few occasions to interact.
• Hybrid Resources
There are also some important resources that are hybrids, in the sense that they share attributes of both ordinary goods subject to exclusion rights and public goods that remain in an open-access state. Water is a prime and interesting example. Water can be captured in a tank or bottle, in which case it is much like other commodities that are generally treated as private property and are subject to exclusion rights. But in its unconfined state—in a river or stream or pond or an underground aquifer—water has unique features that make it difficult to assimilate to the world of ordinary commodities. Water is subject to the hydrological cycle, in that it evaporates, falls as rain, and evaporates again. It also flows downhill and seeps into the ground if not kept in an impermeable container. There is thus a public-rights aspect to water, in the sense that certain uses or misuses of water by one person will affect the interests of others who might benefit from the water after it evaporates or flows away from the first user.
25. See id. at 775–81.
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Given the unique attributes of water, the law has responded by creating regimes of rights that are unique to water. One general principle here is that water rights are usually linked to the ownership of land. In areas where water is relatively plentiful—generally speaking, in England and the eastern states of the United States— rights attach to the land where water is found. Ownership of land that abuts a body of water, called riparian land, confers rights to the water, which go with the ownership of the land. Under the natural flow theory that prevailed in the early common law, a riparian owner could block any diversion that significantly modified the natural flow of a river or stream or level of a lake or pond. Under the reasonable use theory that is more commonly used today, courts will balance the interests of different riparian owners to determine whether diversions or other uses are permissible.
In dry areas where water is scarce—generally speaking. the western states in the United States—rights to water attach to the ownership of land where the water is used, which may or may not be the land on which it is initially found. In its original form, this system established rights to water in accordance with temporal priority in appropriation of the water for a beneficial use. The first appropriator had the first claim, the second appropriator the next claim, and so forth. Hence this system is often called the prior appropriation system. Unlike riparian rights, water rights in a prior appropriation system can be sold separately from the land they are currently being used on, but the new use must not harm return flows that have been appropriated by downstream users. Over time, the pure system of temporal priorities has been extensively modified by an overlay of regulation that limits what constitutes a beneficial use and protects other users who may be harmed by diversions. Some states, notably California, have developed systems that combine features of riparian rights and the prior appropriation system.
A common feature of all water rights is the attachment of the rights to land, either the land where the water is found or where it is used (recall the discussion of accession Chapter 2). An explanation might be that this allows for water rights to be uniquely assigned to
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particular persons. The owners of these rights can therefore deploy the resource to maximum advantage, and internalize externalities. Yet another common feature of water rights, at least in the modern era, is extensive public regulation of uses, so as to protect the interests of other persons interested in drawing on the resource.26 For example, consumptive uses may be restricted to amounts deemed reasonable, in light of the needs of other competing users. Similarly, transfers of water rights, especially diversions outside the watershed, typically require regulatory approval to assure that third parties are not harmed. Thus, water law simultaneously has both an exclusionary aspect, and strong public rights aspect. Which aspect dominates is driven in part by the nature of prevailing uses: Water law in the eastern United States has historically been less intense and more oriented around nonconsumptive uses such as waterpowered mills, whereas Western uses such as irrigation and mining tend to be intense and make the water used unavailable to other local users.27
Intellectual property is another prominent resource that has a hybrid private-public quality. Here, the mixing does not mainly occur simultaneously, as with water rights, but rather by carving out “islands” of exclusion within a general sea of open access. The background rule for information goods—ideas, expressions, images, symbols—is one of open access. Anyone and everyone can use, copy, or elaborate on information goods without obtaining the permission of anyone else. The justifications for this background rule are similar to those previously mentioned for inherently public property: Exclusion rights would create high transactions costs; information goods often have network effects (certainly this is true
26.See Henry E. Smith, Governing Water: The Semicommons of Fluid Property Rights, 50 Ariz. L. Rev. 445 (2008).
27.Terry L. Anderson & P. J. Hill, The Evolution of Property Rights: A Study of the American West, 18 J.L. & Econ. 163, 176–78 (1975); Carol M. Rose, Energy and Efficiency in the Realignment of Common-Law Water Rights, 19 J. Legal Stud. 261, 290–94 (1990).
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in the case of language systems and many computer programs); and making information goods freely available may enhance social interaction. In addition, once an information good is produced, it can be used or copied over and over at little or no additional cost. It costs no more for a thousand people to think a thought or recite a poem than for one to do so. Economists say that information goods are “nonrivalrous,” with the implication that the correct price for such goods is zero.
This is not the whole of the story, however. As mentioned in Chapter 2 in connection with hot news, if all information goods were subject to open access and consequently priced at zero, there might be insufficient incentives for creative individuals to devote themselves to producing and commercializing new information goods. Inventors, novelists, and songwriters—some of them at any rate—might decide that there is little point in laboring to create new information goods if they have no way to appropriate the value these goods provide for others. In addition, industrial firms, publishing houses, and recording studios might decide that there is little point in improving, marketing, and distributing information goods (or things produced with information goods) if they have no way of assuring a return on their investments in these activities.
For these reasons, the U.S. Constitution authorizes Congress to create “exclusive rights” in certain information goods for “limited times”28—what are known as patents and copyrights. (Other intellectual property rights, such as trademarks and publicity rights, have also been created, under the federal Commerce Clause and state law, respectively.) These intellectual property rights, which give owners the exclusive right to use certain delineated information goods, are limited in scope. They apply only to a subset of information goods that meet certain prescribed criteria, such as novelty and usefulness (in the case of patents) and originality (in the case of copyrights). And they typically last for a limited time, such as the
28. U.S. Const. art I, § 8, cl. 8.