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PROPERTY

RIGHTS:A PRIMER

BUL 834 (Revised)


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Support for this project was generously providedby the following organizations:

Western Rural Development Center

Farm Foundation

More information on the Western Rural Development Center can be found at

http://extension.usu.edu/WRDC/

The purpose of the Western Rural Development Center (WRDC) is to strengthen ruralfamilies, communities, and businesses by facilitating rural development research and extension

(outreach) projects cooperatively with universities and communities throughout the West.

More information on the Farm Foundation can be found at

http://www.farmfoundation.org/

The Farm Foundation focuses its programming on six priority areas: globalization, environ-mental and natural resource issues, consumer issues, role of agricultural institutions, rural com-

munity viability, and new technologies.

Technical Editor: Kathleen Painter


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Property Rights: A Primer

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Page

Introduction to Property Rights . . . . . . . . . . . . . . . . . . . . . . . . 4 Neil Meyer, University of Idaho

Property and Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 6Alan Schroeder, The University of Wyoming

Why Property Rights? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Larry Libby, The Ohio State University

Why Property Rights Matter! . . . . . . . . . . . . . . . . . . . . . . . . . 9George McDowell, Virginia Institute of Technology

Property Rights In Historical Perspective . . . . . . . . . . . . . . . .11 Jerry L. Anderson, Drake University Law School

Common Property and Natural Resource Management . . . .13Robert Gorman, University of Alaska, Fairbanks

Economics of Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . 17Steve Medema, University of Colorado

State Property: Wildlife, Lands, AndOpen Spaces In Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Andrew Seidl, Colorado State University

Property Rights: A Philosophical Perspective . . . . . . . . . . . . .22Paul B. Thompson, Purdue University

Edited by Neil Meyer


4/284 Property Rights: A Primer

We all have opinions about propertyrights. Many of us are surprised when wemeet someone with a different point of view about property rights. Certainlythere is not one, universal view of prop-erty rights today.

Property actually refers to the rightto a stream of benefits from a given setof resources. In the U.S., access to thosebenefits is controlled in four basic ways:private ownership plus three forms of public ownershipopen access, closedaccess, and state.Where do property rights come from?

Property rights come from cultureand community. A person living totallyapart from others, on a remote island,for instance, or in the American Westof the early nineteenth century, doesnot need to worry about property rights.When people come together, however,the need for specific arrangements aboutproperty ownership becomes apparent.This group or community then definesand enforces rules of access to the bene-fits that come from owning land orother property.

Who really owns my property?This land is mine, mine to use and

enjoy, mine to treat as I wish, is a com-mon sentiment among many ownersconcerning their rights to land. This iscalled the human territorial impera-tive. Landowners obviously possessmany rights in the properties they hold,but do they really have all the rightsthey claim? Various actions by govern-ments and courts in recent years suggestthat private owners property rights areshared with the public, and that theserights are limited and can change overtime. We are all part of a society that

defines our rights and has the power toredefine them over time.

What are property rights? Property rights establish relationships

among participants in any social andeconomic system. Property is actual-ly the stream of benefits from a partic-ular resource. The right to thatstream of benefits is an expression of the relative power of the bearer.Ownership of a property right com-

mands certain responses from otherpeople that are enforced by the gov-ernment and culture.Producers who own a hundred acresof cropland are entitled to the returnsfrom their property, managementskills, and good sense. They are pro-tected from trespass by their neighborsand by agents of the state. The pro-duction from their land, or stream of benefits, is theirs to sell or give awayas they see fit.

Property rights are a function of whatothers are willing to acknowledge. Aproperty owners actions are limitedby the expectations and rights of other people, as formally sanctionedand sustained in law.The boundary between an obligationand a right varies. Patterns of rightsand obligations reflect prevailingjudgments about fairness, based onpeoples values. Government has theoverall responsibility to protect publichealth and safety, and to promotegeneral welfare through selectiveexercise of discretion that sustainsquality of life (Libby, 1994, p. 1000).

Property rights can be likened to a

bundle of sticks, with each stick repre-senting a right, or a stream of benefits(Fig. 1). The bundle expands as sticksare added and it contracts as they aretaken away. Important sticks, forexample, may be the right to sell, tomortgage, to subdivide, to lease, andto grant easements.The culture or community that

grants the rights also reserves a numberof sticks for its own use. The most com-mon rights reserved by the communityas a whole are the right to tax, the rightto claim property for public use, the

right to control the type of private use,and the right to dispose of the propertyin case of death. More recently, issuessuch as water quality protection, speciespreservation, and even the preservationof visual landscape have also been with-drawn from the individual owners prop-erty rights bundle.

Governments, acting for the publicand for society as a whole, have longexercised the power to tax private prop-erties. They also have the time-honored

right to take property for public useunder eminent domain, with just com-pensation. Police powers can be used inmaking and enforcing regulations thataffect owners and their use of land(Barlowe, R., 1990, Southern RuralDevelopment Center).

In addition to the formal rights of government, communities can use otherpowers to influence private propertyowners. These other powers includepublic spending, public ownershippower, and public opinion.

History shows that concepts of prop-erty that were accepted in the pastchange with new conditions and thepassing of time. Early communitiestreated land and other natural resourcesas a communal resource held in jointownership. Under feudalism, every per-sons status in society was directly relat-ed to the rights that person held inland. The distribution of those rightsdiffered greatly from the ones we havetoday, but they are important because

they provide the basis for our presentconcept of property rights.

How are property rights defined?Five legal terms come down to us

from the feudal era. These termsprop-erty, fee, estate, interest, and righthave similar meanings and can generallybe used as substitutes for each other.Fee simple ownership signifies thatthe owner enjoys all the rights one canhold in property.

Many citizens still cherish the indi-vidualistic views that were popular onthe American Frontier. However, reviewof the many programs adopted by local,state, and federal governments in recentdecades indicates that, as a society, wehave moved towards acceptance of alarger role for government. The reasonsfor this change over the past 200 yearsinclude increasing population, risingincomes and standards of living, morecompetition for available resources, ris-ing literacy rates, wider suffrage (womenand minorities have the right to vote),and conservation and environmentalconcerns.

From a historical point of view, it

appears that the rights we hold in prop-erty spring from society. Individuals maybelieve that their rights are God-givenor endowed by natural law, but in prac-tice, the nature of ones rights dependsupon the interpretations accepted bythe society in which we live. Rights arereal only when the sovereign power orgovernment, which acts as the agent of society, recognizes them and is willing todefend and enforce them.

Subtractions from fee simple owner-

Introduction to PropertyRights

by Neil Meyer Department of Agricultural Economics & Rural Sociology, University of Idaho


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ship do not necessarily mean that prop-erty has less value, or that it providesfewer satisfactions to its owners.Residential easements that deliver powerand water while putting utility under-ground usually enhance property values.The same can be said for covenants andzoning rules that protect landscapeviews, control noise levels, or affectarchitecture. More recently, the right topollute air and water has been takenaway from individual owners.Why are property rights important?

Because property rights are culturallydefined and enforced and because differ-ent groups gain and lose power, no onecan be certain how far the currentmovement will go to broaden publicpowers over private property. The inter-ests of different groups vary greatly.Those seeing private ownership as anopportunity for making money andacquiring wealth have obvious reasonsfor trying to stop or reverse the trend

toward more public power. Others, whoview land as a scarce and fragileresource, the use of which is closelyintertwined with community concerns,argue for even more public supervision.Most Americans attitudes lie betweenthese two points.

With the prospect of strongerdemands and pressures for public pro-grams to direct land use, individualowners may very well fear that attitudechanges will strip them of certain rights.

A growing sentiment for wideracceptance of a public trust view of rights calls for recognition that therights enjoyed by owners of privateproperty are balanced by their responsi-bilities. It is to societys advantage thatowners use land for productive purposes.Owners have the responsibility to useland, or other streams of benefits, inways that do not cause injury or loss of benefits to others or work against thebasic interests of others in the commu-nity.

What is common property?Common property is joint ownership

of a stream of benefits. Management of common property cases is more compli-cated and often becomes controversialbecause groups and individuals have dif-ferent values and opinions about how tomanage a given resource. Many propertyrights conflicts today concern manage-ment of commonly owned resources.

What are the different types ofcommon property?

Ownership and management areoften confused when the term commonproperty is used. Everyone is familiar

with the concept of private property.Other types of property regimes includeopen access, communal, and state orgovernmental.

Open access property has no gover-nance, and everyone can use and takepart of the benefit stream. This situationof uncontrolled use often results in dete-rioration of the resource. Fishing on theopen seas is an example of this manage-ment regime.

Communal management of propertymeans it is jointly owned but there arelimits to access and use of the benefitstream. Those who jointly own theresource exercise control over use of thebenefit stream. Many New England lob-ster fisheries are managed in this man-ner.

Governmental managers make deci-sions and rules for access and use of ben-efit streams to state-owned property.Rules for use and allocation of the bene-fits from publicly owned property often

become controversial, for example, graz-ing and logging on public lands in thewestern U.S. The same is true for pub-lic parks in all areas of the U.S.

Final points Property is a benefit that a society and

a culture agree to protect.A property right is a claim to the ben-

efits or stream of benefits derivedfrom the property.

References:Barlow, Raleigh. 1990. Who Owns Your

Land? Southern Rural DevelopmentCenter, Mississippi State University,Starkville.

Libby, Lawrence W. 1994. Conflict onthe Commons: Natural resourceentitlements, the public interest, andagricultural economics. American

Journal of Agricultural Economics,76(5):997-1009.

M o r t g a g e

S u b d iv id e

D e v i s e

Gr an t E a s e m e n t s

S e l l

Le a s e

T a x

Ta ke For Pu blic Use

Contro l Use Of

E s ch ea t

The Bundle of Rights in Land

Landowner Rights Public Rights

5 Property Rights: A Primer

Table 1. Characteristics of different property rightsType of property Ownership Management Access EnforcementPrivate Individual Individual Closed Society/LawPublic

Open access All members No one All members No oneClosed access Group members Group members Group members Group members

Government Government Government All Government

Figure 1. Bundle of property rights

The Bundle of Rights in Land



IntroductionStories of property rights conflicts are

regularly on the front page of localnewspaperslandowners criticizing thegovernment for excessive regulations;neighbors complaining about environ-mental or health problems created byadjoining land uses; environmentalistand others berating both governmentand industry for losses of prime agricul-tural land, wilderness areas, wildlifehabitat, and scenic rivers. In the past,parties have gone to court, seeking alegal ruling that some private property

right or important public interest wasbeing threatened. The resulting rulingsfrequently satisfied neither the dis-putants nor the public in general.

In the western United States, theseconflicts often focus on publicly heldlands. Federal lands represent more thanforty percent of land ownership inAlaska, Arizona, California, Oregon,Idaho, Nevada, Utah, and Wyoming.Mining, forestry, grazing, recreation, andenvironmental interests often clashregarding how well publicly-heldresources (e.g., waters, lands, wildlife)are faring, who should participate in themanagement decisions, and what (if any) private or collective property rightsexist in these resources. Some politi-cians and social commentators suggestthat these resources might be bettermanaged if legal title was transferredinto private hands (privatization).Others have challenged these con-tentions.

It is easy to dismiss these very publicand sometimes rancorous disputes.These disputes are often clothed inwords and phrases such as private prop-erty rights, takings, public health

and safety, sustainability, publictrust and protection of future genera-tions. These terms are often simply dis-missed as interest groups manipulatinglanguage in an attempt to capture pub-lic opinion for their own purposes. Todo so is a mistake, however, because itseems clear that principles beyond self-interest motivate many of the dis-putants. Indeed the expenditures andpersonal risks made by Mr. Hedge andothers participating in the sagebrushrebellion in the West seem to only

make sense if we accept the premisethat they are motivated by principlesother than or in addition to self-inter-est, narrowly defined. The same can besaid about many agency, environmental,and industry representatives. We willexplore this point in even greater detailin subsequent papers.

It is probably more accurate to saythat many of these disputes turn on fun-damental confusion regarding threethings: 1) what principles should moti-vate government policy regarding natu-ral resources; 2) what property rightsexist in disputed resources; and 3) howeffective are different private and publicproperty management systems inachieving these ends.

First, even professionals disagree onthe content and meaning of specifictypes of property rights. For example,some economists refer to resources, notsubject to any ownership or control, ascommon property; others call thesame things open access resources anduse the term common propertyresource to refer to property that isjointly owned and/or managed by morethan one person or organization.

Second, interest group members donot necessarily agree among themselveson the principles or solutions thatshould be applied in particular disputes.Books and articles discussing publiclands and the sagebrush rebellion pointout that some permittees and policymakers favored privatizing publicly-heldlands, claiming such a move wouldmaximize public welfare. Others favoredprivatization, not because of its socialwelfare impact but rather because itwould formally recognize what they sawas rights already held by the user (arights-based justification). In the end,Secretary Watts rejected privatizationand adopted a good neighbor policyunder which title was retained by thefederal government but greater manage-ment control was transferred to permit-tees. Commentators suggest this policywas justified using both efficiency andrights-based principles.

Third, as we indicated above, dis-putants often make broad generaliza-tionsboth favorable and unfavor-ableregarding the effectiveness of

public and private management of natu-ral resources. A better understanding of the effectiveness of particular propertyand management regimes might go along way in resolving some of these dis-putes.

The objective of this series of papersis to facilitate public dialogue by identi-fying and clarifying the underlyingterms, principles, and positions readersmay encounter in the current naturalresource and property debate.Whenever possible, readers will be pre-sented with research exploring the effec-tiveness of particular property and man-agement regimes in dealing with specificresources. Though some claims may beshown to be unsupported by currentdata or legal reasoning, our primary pur-pose is not to act as judges.

This series is organized in the follow-ing fashion. In this, the first paper, wewill briefly describe some the principlesand terms found in the current propertydebate. In the remaining papers the

writers will illustrate how these princi-ples and terms can be used to under-stand and critically examine public poli-cy debates in such areas as: Property rights and land use planning Property rights and environmental

law Property rights and public lands Property rights and aboriginal lands

There are some limitations to ourapproach. We believe establishing acommon vocabulary is crucial to facili-tate dialogue. Nevertheless, as we indi-cated above, there is no common agree-

ment among professionals. Readersshould be aware of this fact whenreviewing the bibliography. We mustalso reiterate that we will draw no con-clusions regarding which propertyregime or management system is best.Our primary purpose is to facilitateunderstanding, not act as judges.Moreover, many of our statements willbe generalizations. In a series of shortpapers it is impossible to fully summarizethe rich and varied backgrounds andprinciples underlying each interestgroups position. We hope the bibliogra-phy attached to each paper will allowreaders to delve more deeply into theconflicting views.

Recognizing these problems, we askreaders to suspend judgment until eachargument is presented. In this way read-ers can better understand what moti-vates those with whom they might agreeor disagree. Sometimes a conclusionthat an opponents argument does notmake sense may simply mean we areusing a different measure of sense thanthey. We also ask readers to think

Alan Schroeder, Associate Professor Department of Agricultural Economics, The University of Wyoming

Property and PropertyRights



about other possible principles, argu-ments, and solutions we may havemissed in our brief summaries. In doingso, readers may find mutually acceptablesolutions to similar problems in theircommunity.

Illustrating the language of propertyand property rights conflicts

In a famous early American case,Pierson v. Post, 3 Gaine 175 (N.Y.1805), the plaintiff, Post, claimed:[B]eing in possession of certain dogsand hounds under his command, did,upon a certain wild, and uninhabited,unpossessed and wasteland, called thebeach, find and start one of those nox-ious beings called a fox, and whilstthere hunting, chasing and pursuing thesame with his dogs and hounds, andwhen in view thereof, Pierson, wellknowing the fox was so hunted and pur-sued, did in the sight of Post, to preventhis catching the same, kill and carry itoff. Post sued Pierson, claiming a prop-

erty right in the fox. How should thecourt have ruled?

Definitions of property andproperty rights

Blacks Law Dictionary defines prop-erty as: That which is peculiar or prop-er to one person; that which belongsexclusively to one. In a strict legalsense, an aggregate of rights which areguaranteed and protected by govern-ment.

Similarly, Websters Ninth NewCollegiate Dictionary provides us with afew definitions: property...2a: some-thing owned or possessed, specif.: apiece of real estate; b: the exclusiveright to possess, enjoy, and dispose of athing: OWNERSHIP; c: something towhich a person has a legal title; d: one(as a performer) under contract whosework is esp. valuable... and

property righta legal right orinterest in or against specific property.

The terms property and propertyrights under these definitions refer notto a thingthe fox in the aboveexamplebut rather to the real rela-tionship among people regarding thething. Thus the issue in Post is DidPost have a right enforceable by a courtto take the fox and did Pierson have anequivalent duty to not interfere withPosts hunting?

What does it mean when we say a per-son has property rights?

Legal and economic commentatorsfrequently indicate that property con-sists not of a singIe right but ratherasthe definitions above suggestan aggre-gation or bundle of rights.

Unfortunately, the same commentatorsoften mean different things when theyrefer to this bundle of rights.

The property estate: the bundle ofrights as a special concept

The term bundle of rights is some-times used in a special or physical sense,particularly when referring to real prop-erty. For example, different persons mayhave legal title to the mineral, air,water, and/or surface rights associatedwith land at a particular location. Thatis, a property owner may have a rightto build on or cultivate the land (thesurface estate) but not to remove itsrock, oil and gas, or coal without firstobtaining permission from the mineralestate owner.

This same special concept can beemployed in other contexts. For exam-ple, the court in Post held that Postwould have a property right in the foxif he had physical custody of it.Similarly, some states have held that a

property right attaches to oil and gas,water, and other movable (sometimescalled fugitive) resources when theyare in possession of a particular party.

The ownership interestRecently some commentators have

sought to separate the ownership inter-est into its component parts. For exam-ple, McCay divides ownership interestinto two parts: Title: Who has legal title to the prop-

erty. Management: Who determines how

the property may be used.

McCay is not entirely clear as towhat particular rights are contained ineach of these two categories. For exam-ple, we might further subdivide thetitle interest (our label) into the rightsto exclude others, use or receive benefitsfrom its use, and/or transfer legal title toanother.

ReferencesMcCay, Bonnie. 1996. Forms of proper-

ty rights and the impact of changingownership. Increasing Understanding oPublic Problems and Policies,Proceedings, Farm Foundation

National Public Policy EducationConference, Providence, RI, p. 127.

Property rights are essential to theexchange process because they definethe opportunities available to peoplewithin an economic system. People mustclearly understand what they are buyingor selling, what the product or service is,and the flow of rights and opportunitiesthat go with a tangible exchange.

Property is not the tangible thingbeing bought or sold. What is exchangedis the right to use a stream of benefitsfrom that property or object in someway, and there are always limits to thoserights. You have the right, for example,to slice up a tomato and put it in a sand-wich but not to throw the tomato atsomebody with whom you happen to

disagree. Similarly, the owner of a pieceof real estate may own the right to dosome things on and with that land, butnot to do other things.

While the notion of property rights isessential to transactions in any kind of amarket context, those rights are separateand defined, and they may differ fromone transaction to another.

Rights as social agreementA right exists only if you and others

in society, collectively and reinforced by

the state, accept, acknowledge, andagree to its existence. University of Wisconsin agricultural economist DanBromley has said, Rights are not rela-tionships between me and an object, butbetween me and others with respect tothat object.

Rights to property, then, exist only ina publicly sanctioned context withinthe social system in which there is gen-eral acceptance of the right being exer-cised. Once social acceptance is accom-plished, the state reinforces and ensuresthe relationship between ownership andexercise of the associated rights.Without enforcement, rights have verylittle substance and essentially cannot

be exercised.Rights are limited by what you andothers will agree is acceptable. My rightto do something is a function of whatyoure going to let me get away with,both in a formal sense and in a less for-mal sense.

Property rights are transferableIn order for a market to function,

rights to the flow of benefits associatedwith a tangible object must be transfer-able from one person to another. They

Why Property Rights? Larry Libby, C. William Swank Professor of Rural-Urban Policy The Ohio State University



may be transferred collectively or sepa-rately. Mineral rights may not includesurface rights. Your rights to use wateradjacent to your land are limited by theimpact your actions may have on otherpeople who are also dependent on thatwater.

Rights differ according to circumstanceThe property rights movement most

familiar to people in the United Statestoday relates to real property (land) andto the flow of services that comes fromland ownership.

A landowner has certain exclusiverights that others cannot exercise.These rights are not absolute, however.Members of the general public mayhave interests that impose limits on aproperty owners rights. The interest of non-owners is reflected in the institu-tions and policies that evolve aroundthe flow of services, the flow of goods,and the flow of opportunities from apiece of land that are not necessarily

limited to the person who holds theland title.When a property owners income

from a piece of land is compromised bypublic actions of some kind, for exam-ple, by a new law, does the owner havea right to compensation because thegovernment has taken away a land useopportunity? Or is the governmentreclaiming rights that were granted tothe owner when demand for land servic-es were different?

Range policy in the western UnitedStates is a good example of these ques-tions. Rights in range land were grantedat a time when it was clearly in the pub-lic interest for private individuals toinvest in and operate those resources forthe income generated by raising beef orwool. More recently, there is interest inresource services other than the com-modity values associated with cattle orsheep. Government is saying, Weregoing to take back from you the rightthat we gave you years ago.

Debates over the public interestfrequently call for a reallocation, or arethinking of the distribution of rightsin real property. Whether a change of

property rights is a cost or a benefit real-ly depends on ones point of view andthe existing allocation of propertyrights.

Two basic lines of argument exist onthis question. First is the natural rightstheory, which asserts that ownershiparises from the natural order of thingsand is not subject to the whims of gov-ernment. That is, land becomes proper-ty through the effort of an individual tomake that land generate income and

produce something of monetary value.According to this argument, the ownerhas an inherent right to that landbecause of the efforts that turned thebasic resource into a flow of services,with value associated to them. This is aprominent theory of property rights inmany current discussions.

The second argument regards owner-ship and property as a social conven-tion, something created by people toaccomplish community purposes.According to this view, property owner-ship is a function of human institutionsthat establish sets of land services forsociety. No set of rights is natural or per-manent. All are relative to prevailingviews about natural resources and landservices that come from those resources.

Common propertyRights to property are complicated in

some cases by the character of theprocess that creates those rights. WhatGarret Hardin has famously called the

tragedy of the commons, reallydescribes open access to a set of resources. There is an important distinc-tion between common propertyresources and open access resources.Hardin overlooks the reality that bothformal and informal rules govern the useof property that is held in common by agroup of like-minded individuals. Theserules encourage stewardship of the landor resource and discourage exploitation.

The lobster fishery along the coast of Maine is one example of common prop-erty. A set of formal rules exists aboutthe size of lobsters that can be taken,but the real governance of that lobsterfishery is the informal way that lobsterfishers themselves keep track of eachother.

It would be impossible for me, assomeone from away, to come toWinter Harbor, Maine, put out a stringof lobster traps, and expect to get any-thing out of it. I could get the license,but the other lobster fishers in thattown would not take kindly to an inter-loper; eventually my traps would disap-pear. My ability to make an incomewould be compromised because I am not

part of the community that is attempt-ing to gain a living from those resources.Within the coastal lobster fishery,

people know that their fishing isrestricted to a certain part of the coast-line. No one goes from one harbor tothe next. The boat numbers are known,as are the color of the traps. There is astrong, informal system governing thatfishery, which has sustained it for a longtime, and there is a clear incentive forstewardship. Everyone in the communi-

ty with a license to fish gains, eventhough their rights are interspersed.

Open accessGarrett Hardin, in fact, described

open access resources. When rights to aresource are thrown wide open withoutformal or informal restrictions, it is diffi-cult to separate one user from another,to avoid overuse, or to encourage stew-ardship. Unrestricted access may causeloss of quality.Publicly owned

Publicly owned resources are anothercategory. Government can acquire prop-erty rights, or opportunities, from indi-viduals either through market transac-tion, eminent domain, or some otherway. The government then manages theresource for the public at large anddecides the mix of services to be gener-ated.

Public trustThe public trust is a particularly

interesting doctrine in law that assertsthe right of government to protect theunorganized public from actions takenby individuals in the private sector, orfrom the arbitrary actions of other gov-ernments. In other words, according tothe doctrine of public trust, it is theresponsibility of government to protectthe quality of the Great Lakes, the qual-ity of the oceans, and the quality of other water resources because thoseresources are fundamental to the publicgood. The same can be said for air quali-ty and public health.

The resources are used by individu-als, but ultimately there are safeguardsthat allow government to step in andmonitor the way they are used, to pro-tect the public trust. In California,actions on development were restrictednear Mono Lake to protect the qualityof the land and water making up thatresource. Acting in the public trust,government stepped in to protect thebasic environmental and scenic qualityof the lake and adjacent lands.

Perhaps the public trust doctrinecould be applied to protection of thebasic productivity of farmland, requiringthat it be preserved not only for thenext generation, the next ten, twenty,or even thirty years, but for all futuregenerations. Perhaps there is some over-riding, compelling obligation of govern-ment to shepherd that resource. Thepublic trust is an important concept toexplore in resource policy.

Current status No set of property rights is perma-

nent. The distribution of rights reflects



the interest of non-owners as developedthrough public policies of various kinds,and these policies change with time.Certainly, no set of property rights isabsolute. It is fair to say, however, thatthe current distribution of opportunityand rights is sanctioned and protectedby the government.

Property rights protection statutes arebeing discussed around the country,with citizens calling for a statutoryapproach that would require any depri-vation in value be compensated. OnlyFlorida and Texas have mandatory com-pensation when private rights are com-promised by public action. Of the oth-ers, eighteen or so require that govern-ments weigh the property rights conse-quences before enacting new laws.Under the U.S. and state constitutions,owners cannot be deprived of propertywithout due process and just compensa-tion. The existing structure has somesanctions and is protected in law.

ReferencesBecker, John C. 1996. Exercising prop-

erty rights: For individual or commu-nity benefit? Farm Economics, PennState Cooperative Extension.

Bromley, Daniel W. 1993. Regulatorytakings: Coherent concept or logicalcontradiction? Vermont Law Review17(3)647-682.

Cordes, Mark W. 1997. Leapfroggingthe constitution: The rise of statetakings legislation. Ecology LawQuarterly 24:187-242.

Dragun, Andrew K. 1983. Externalities,property rights, and power. Journal of Economic Issues. 17(3)667-680.

Schmid, A.A. 1987. Property in asocial context. Chapter 2 in Property,Power, and Public Choice, New York:Praeger.

For purposes of this discussion, prop-erty rights are all of the laws, rules, cus-toms, conventions, and presumptionsthat influence the social and economicbehavior of individuals or groups as theyact in society. No distinction is madebetween property rights and institutions;they are synonymous and the words areinterchangeable. The emphasis is onexchange.

The market is not an exchange of goods but rather an exchange of claims.The futures market makes that clear.One wishes to possess only the claims towheat or pork belliesthe property

rightsnot the boxcars of commodities.If all exchange is with respect to prop-erty claims, where does the propertycome from? Its mine, I can do what Iwant with it! is a common cry of chil-dren at play. Its also the cry of thelandowner whose farm has been in thefamily for generations and who nowwants to establish an intensive hog oper-ation without community interference.But what makes it mine?

Origins of propertyAccording to John Locke, property

comes from the incorporation of laborinto something that creates value. Forexample, argues Locke, the value incor-porated into nuts by the effort put forthto gather them from the forest floormakes those nuts the property of thegatherer. However, by the same logic, theperson who snatches the bundle of nutsfrom the gatherer and flees the scenebecomes the proper owner of the nuts.The thief incorporates superior guile andswiftness into the value of the nuts.

We are also quick to assert that prop-erty is established by law, but accordingto J.F.A. Taylor, the law and police only

preserve property, they cannot establishit. For example, the property right withrespect to custody of the children wasawarded to their mother in the rancorousdivorce of a friend. My friend resolvednot to pursue his grievances with his ex-wife through his daughters and told mehe would say nothing about their motherthat he could not justify to them whenthey were 25 years old. The ex-wife didnot similarly restrain herself, however,and her relationship with the daughters

deteriorated as they defended their fatheragainst her deprecations.

Things became so acrimoniousbetween the mother and daughters thatby mutual agreement of all family mem-bers the girls went to live with theirfather. The courts still held that themother was custodial parent while thegirls lived with their father.

By their mutual agreement the familycreated a new set of rights, contrary tothe courts ruling. Of course, had themother not agreed, the courts wouldhave preserved her custodial care and thegirls making their home with her.

In addition to clarifying the relation-ship of rights to the law, the exampleabove also illustrates the point thatTaylor makes about the origins of proper-ty. Its mine! not because I assert it, butbecause you agree. My right of propertyin a thing depends not upon my claim toit, but precisely upon your readiness toadmit my claim as privileged, saysTaylor.

This is the paradox: your propertyrights in anything depend, not on yourclaims, but on others acknowledgementand forbearance, which may or may notbe codified in law. This radical sense thatall property in a degree is public is thefundamental basis, says Taylor, of allpeaceable intercourse between people.There is no property without community.This is a concept not fully understood bysome in the property rights movementaround the country.

Formal and informal property rightsAs indicated earlier, some property

rights are formal, and codified in law,administrative rules, and practices, whileothers are customary and informal, most-ly unconscious and embedded in culture

or habit. According to John R.Commons, If we endeavor to find a uni-versal circumstance, common to allbehavior known as institutional, we maydefine an institution as collective actionin control, liberation, and expansion of individual action. In another reference,Commons states that institutions, orrights, order the relationships betweenpeople.

One of the most graphic institutions,or property rights, is the line down the

Why Property RightsMatter!

by George McDowell, Department of Agricultural and Applied Economics Virginia Institute of Technology



middle of the road. Its physical presencehelps you know your place vis-a-vis theother users of the road. To get somesense of the effectiveness of the physicalaspects of this institution, one need onlydrive a newly paved road without anylines on a dark, rainy night. Examinedfurther, the line represents a set of legalarrangements that can result in a ticketfrom the police if you pass another carwhen the line is solid.

The effective functioning of the lineas an institution depends on more thanits physical attributes and the formallegal rules related to use of the road. Italso depends on public understanding,to such a degree that the rules havebecome a part of our culture. Step off the curb and look to the left for oncom-ing traffic in London. The red, double-decker bus coming from the right willremind you that there is something elseat work in addition to law.

Interdependence of people

So long as everyone is in agreement,keeping either to the left or to the rightof the center line in the road is equallyconvenient in predicting where theother guy will be. The tougher propertyrights issues are when there is disagree-ment about what is convenientwhoowns the land where the road might go;how it can be acquired for that purpose;and whether there is need to protectswamps in its path.

Property rights are needed becausepeople are interdependent. Propertyrights sort out the conflicts that comefrom that interdependence and providepredictability about outcomespart of the stability function of rights in a soci-ety. The conflicts, or interdependencies,between people are influenced, or evenpartly determined by, peoples relation-ships to things.

Attributes of thingsThe physical characteristics, or

attributes, of things make a real differ-ence in relationships among people andin the property rights that may be usefulin ordering those relationships.Different attributes create different types

of interdependencies, which lead to dif-ferent choices of property rights.

ChoiceFrequently, alternative rights, or

institutions, will achieve similar out-comes. Speed limit signs, children atplay signs, and speed control bumps areall intended to order the relationshipsbetween children at play and drivers of cars through the neighborhood. Eachhas advantages and disadvantages inachieving the desired relationshippre-

vention of accidents involving childrenwhile keeping the road useable for trans-portation. Groups will argue over thechoice of the institution even when allagree that some degree of speed limit inthe neighborhood is essential.

Open market economies are not freeProperty rights in practice

Debate about property rights fre-quently refers to specific legal or admin-istrative rights that are codified in law.Rights that are culturally or informally

enforced, however, are a neglected areaworthy of consideration, particularly therights implicit in market transactionsthat make it possible for the market tofunction. Some of these rights are for-mal, but many are informal and embed-ded in culture.

James Fallows says, in his bookMoreLike Us, In the long run, a societys

strength depends on the way that ordi-nary people voluntarily behave.Ordinary people matter because thereare so many of them. Voluntary behav-ior matters because its too hard tosupervise them all of the time. This vol-untary behavior is what I mean by cul-ture.

Our own rhetoric about our econom-ic system is one reason it is difficult tosee the voluntary behavior, or culturallybased property rights, that helps makeour economy function. Consider the fol-

lowing quote from an article on Albaniain the Wall Street Journal of March 4,1998:

While pyramid schemes are com-mon in post-communist countries, theygrew to more than $1 billion inAlbania, swallowing a small economy,which lacked the basic regulatory insti-tutions common in the free market.

The sentence is contradictory. Therhetoric is wrong. The trouble inAlbania is that there are free markets,and free markets do not describe whatwe have or want in the United States.That internally inconsistent statementin the most prominent economic news-paper in the U.S. suggests that manymisunderstand the real basis of a marketeconomy.

The changes in Eastern Europe andthe former Soviet Union offer a per-spective on our own economic system.Economists and non-economists alikegive evidence of misunderstanding ourown market system and its underlyingbasis in persistently calling it a free mar-ket system rather than an open marketeconomy.

Informal property rights including ageneral lawfulness and trustworthinessare necessary to the successful function-ing of our economy. Broken knees are asubstitute to secure contracts wheremafia or black market organizationsoperate in the absence of trust and/or awillingness to follow commercial law.The same system operates in our societyin the underground economy, wherenormal property rights dont function.

In Taylors terms, this is anotherexample of an absence of covenant, orcommunity. There are no propertyrights to permit any transactions beyondcash exchange under the rule of caveatemptor (let the buyer beware), whichapplies to both the buyer and the seller.Currency and commodities alone do notconstitute a market.

A market exchanges claims, and theexistence of claims is contingent uponsome sense of community, somethingmore than physical possession of thegood. Community requires a degree of civility, trustworthiness, and goodwill.

New rightsAs a society grows and develops, new

rights emerge to control and manageadvances in technology. New technolo-gy means new things, new interdepen-dencies between people, and thus newrights.

Without new technology, however,the only way to achieve development isto create new rights that bring moreproductivity, or more satisfaction frombetter use of existing resources. It is like-

As an illustration of how the attributes of things matter in relationships, consider the following communication betweenCanadian authorities and the commander of a U.S. Navy ship off the coast of

Newfoundland in October, 1995:

Americans: Please divert your course 15degrees to the North to avoid a collision.Canadians: Recommend you divert your course 15 degrees to the South to avoid acollision.

Americans: This is the Captain of a U.S.Navy ship. I say again, divert your course.Canadians: No. I say again, you divert your course.

Americans: This is the aircraft carrier U.S.S. Lincoln, the second-largest ship inthe United States Atlantic Fleet. We areaccompanied by three destroyers, threecruisers, and numerous support vessels. Idemand that you change your course 15degrees North, Thats one-five degreesNorth, or counter measures will be under-taken to ensure the safety of this ship.Canadians: This is a lighthouse. Your call.

No matter the relative authority of the individuals in command, the physical attributes of their charges determine the outcome of the conflict in the relationship.

Lighthouses dont divert their course.



ly that new covenants about the use of other resources will come in informalagreements that expand peoples radiusof trust and control over their destiny.

Summary

The lay community tends to viewproperty rights as rights in land. Inrecent years, the general public hasacknowledged the notion of intellectualproperty rights to cover the results of creative effortsfrom computer pro-grams to popular songsbut such viewsof property rights are much too limiting.

Here weve considered propertyrights to be all the laws, rules, customs,conventions, and presumptions thatinfluence the social and economicbehavior of individuals or groups as theyrelate or act in society. John R.

Commonss notion is that propertyrights are collective action in control,liberation, and expansion of individualaction. Property rights are necessarybecause we get into each others hair.

No free lunch, is a fundamentalprecept of economists. Much moreinteresting, however, is who prepareslunch, serves lunch, sets the menu, andpays for the lunch. Thats the domain of property rights.

References and other reading:Commons, John R. 1931. Institutional

economics. American Economic Review21:648-657.

Fallows, James. 1989. More Like Us.Houghton Mifflin Company, Boston.

Frank, Robert. 1998. Albanias pyramidschemes look sick. The Wall Street

Journal March 4, p. A-14.Lancaster, Kelvin J. 1966. A new

approach to consumer theory. Journalof Political Economy74:853-58.Litwack, John M. 1991. Legality and

market reform in Soviet-typeeconomies. Journal of EconomicPerspectives5(4):77-89.

Ostrom, Elinor. 1990. Governing theCommons: The Evolution of Institutions

for Collective Action. CambridgeUniversity Press, Cambridge and NewYork.

Schmid, A. Allen. 1987. Property,Power, and Public Choice(2nd edi-tion). Praeger, New York.

Shabman, Leonard. 1995.Demosclerosis: Assessing the argu-ment. American Journal of AgriculturalEconomics. 77(December):1135-1140.

Shabman, Leonard and David White.1995. Understanding Federal Taking Legislation.Staff paper, Department of Agricultural and Applied Economics,Virginia Tech.

Stone, Christopher D. 1972. Shouldtrees have standingToward legalrights for natural objects. SouthernCalifornia Law Review45:450.

Taylor, John F.A. 1966. The ethicalfoundations of the market. Chapter 5in The Masks of Society.Appleton-Century-Crofts, New York

In a recent speech, the president of the American Farm Bureau complainedthat rats and bats, bugs and weeds areclaiming title to our lands. He arguedthat restrictions imposed by laws suchas the Endangered Species Act amount-ed to a taking of the property rights of farmers and ranchers. He apparentlybelieves that property rights areabsolute and self-defining: if farmerscant do what they want on their prop-erty, then their rights must have beeninfringed.

Most constitutional provisions, how-ever, are not absolute. The secondamendment, for example, clearly statesthat we have a right to bear arms, butno one questions the governmentsright to prevent your neighbors from

arming themselves with nerve gas ornuclear weapons. Thus, arms is not aself-defining concept and is certainlynot absolute.

At some point, lines must be drawnand terms defined. We must go outsidethe words themselves to determinetheir meaning. History is one place wecan get that context.

History shows that property rightshave evolved over time. Our recogni-tion of property rights has not been lin-

ear, but schizophrenic and dynamic innature.

On one hand, we firmly believe thatpeople should be able to do what theywant with the property they own. Thedesire to maintain strong propertyrights protection is based not only onutilitarian grounds (that is, we need toprotect property to give people incen-tive to produce), but also on fairnessgrounds (if you worked hard to get theproperty, you should be able to use it).

On the other hand, we hold anequally strong conviction that there is apublic interest in how property is used,and at some point, the publics interestoutweighs the individuals rights.

The Federalist perspective

Both of those perspectives are wellrepresented in history, beginning withthe framers of the Constitution. Onone side was classical liberalism,embodied in Federalist thinkers such as

James Madison, who believed that indi-vidual property rights were of crucialimportance and deserved stringent pro-tection. Government, Madison said,is instituted no less for the protectionof property than of individuals.

Federalists understood that other

Property Rights inHistorical Perspective by Jerry L. Anderson, Associate Dean and Professor of Law Drake University Law School

Al Schmids book , Property, Power and Public Choice,lists a set of attributes that he argues creates different types of rela-tionships between people.

Incompatible use: Like applesif you eat it, I cant.

Exclusion costs: Children can makemoney selling apples or lemonade,but they probably wont do as wellselling views of their snow sculptures.

Economies of scale: I like hamburg-ers and fries, but I also like hummus.I have to make hummus at home,because it isnt generally available inthe grocery store. Because of othersshared tastes and fast food scaleeconomies, the unit cost of hamburg-ers and fries is low. For exactly theopposite reasons, the per unit cost of

hummus is high. Joint impact: People prefer to livenext to a conservation area instead of a landfill.

Transaction costs: Its what smallclaims court is about.

Surpluses and peak loads: Retiredpeople, without kids at home, takevacations when schools are in ses-sion, demand is low, and therefore, soare prices. Prices vary by season.Pricing is a property right.



rights were of no use unless property wassafe. Arthur Lee, of Virginia, said thatthe right of property is the guardian of every other right, and to deprive peopleof it is in fact to deprive them of theirliberty. For example, the right of freespeech would be worthless if the gov-ernment could threaten your property inretaliation.

The Republican perspective

Colonial republicans, such asThomas Jefferson and BenjaminFranklin, placed more emphasis on thelimitations of individual property rights.Of course, they believed strongly inpropertyJefferson maintained that thekey to democracy was a nation populat-ed by small landowners secure in theirpossessions.

They also believed that propertyitself is a creature of society, and istherefore subject to limitations imposedfor the public good. Jefferson, for exam-ple, had been to France and had seen

rich landowners fields lying idle whilepoor people starved. In a letter toMadison, Jefferson declared that in thatcase, private property rights had beentaken too far: Property is the commonstock of all men to live on and use, heconcluded.

Franklin had a similar opinion:Private property is a creature of societyand is subject to the calls of that societywhere its necessity shall require it.They recognized that property exists inthe first place only because we agree as asociety to respect a persons claims.Therefore, to protect the broader com-munity, society has the right to limit theuse of property.

Dynamic debateThese fundamentally different ways

of viewing property have been imbed-ded in the U.S. Constitution from itsinception and are nicely described byProfessor Philbrick: One was looking toindividualism to save society. The otherwas looking to society to save the indi-vidual.

The same sort of debate, betweenindividualism and society, goes on todayover topics like welfare, social security,gun control, and affirmative action.Viewpoints stressing individual rightscan be traced back to the Federalists,while those stressing societys interestsare rooted in the colonial Republicans.

Property rights should really beunderstood as a balance between thesecompeting interests. Several SupremeCourt decisions illustrate how our legaldecisions have favored one side or theother at various times in history.

Legal historyMugler vs. Kansas, 123 U.S. 623, 8

S.Ct. 273 (1887) In the 1880s Kansaspassed a prohibition law against themanufacture or sale of alcoholic bever-ages. This was not good for Mugler, whoowned a brewery. He sued the state,claiming the law had destroyed thevalue of his property, and was thereforea taking of property in violation of the

constitution.The Supreme Court rejected thatclaim. Justice Harlan wrote that societymust be able to control the use of prop-erty for the general good and that prop-erty is held under an implied obligationthat its use not be injurious to the com-munity. At this time, the Republicanphilosophythat property is a creatureof society and therefore its use can belimitedwas more persuasive to theCourt.

Pennsylvania Coal vs. Mahon, 260U.S. 393, 43 S.Ct. 158 (1922) Thislandmark case adopted instead theFederalist philosophy, articulated in themajority opinion by Justice OliverWendell Holmes. The case involved theKohler Act, by which Pennsylvania pre-vented coal companies from miningcoal in such a way as to cause the subsi-dence of the surface. That seems like areasonable thing to want to prevent,and Holmes did not deny it, but hebelieved that the law deprived the coalcompanies of their property interest inthe coal that must now be left unmined.

The coal companies had purchasedthe mineral interests from the surface

owners. Now the government had comealong and basically transferred the inter-est back, without compensation. That itmight be a good law is irrelevant,Holmes said: if society wants this done,it must pay the individual whose proper-ty is taken. This view is reminiscent of the Federalist position, stressing individ-ual rights over societys interests.

Justice Brandeis wrote a powerful dis-sent that echoed the Republican view-point. Brandeis argued that society mustbe able to limit property uses that areharmful, without having to pay theowner. As Jefferson and Franklin mighthave said, he noted that property is heldalways subject to an implied limitationthat its use not be injurious to the pub-lic.

Penn Central Transportation Co. vs New York City, 438 U.S. 104, 988 S.Ct.2646 (1978) Fifty years later, this caseinvolved a modern example of propertylimitation: New York Citys landmarkpreservation law. Penn Central claimedthe law basically prohibited them frombuilding an office tower on top of the

Grand Central Station, which they saidresulted in a taking of their property.

Justice Brennan wrote the majorityopinion, and once again the Republicanposition won out. Brennan relied onMugler and held that the publics inter-est in preserving landmarks outweighedthe harm to the landowner. JusticeRehnquist, in dissent, followed theFederalist philosophy and found thateven though this might be a very goodlaw, the restriction on private propertywas too great and required compensa-tion to the landowner be sustained.

Keystone Bituminous Coal Assoc vs DeBenedictus, 480 U.S. 470, 107 S.Ct.1232, (1987) This case is fascinatingbecause the facts appear to be virtuallyidentical to those in Pennsylvania Coalsome 60 years before. Again, it involveda Pennsylvania law prohibiting coalmining that could cause subsidence. Itprovides a good illustration of the ebband flow of viewpoints, because theCourt decided the opposite way.

The majority opinion relied on theRepublican philosophy of the publicgood. Justice Stevens emphasized thepublic interest in preventing the harmof subsidence, holding that it out-weighed the private property interest inthe coal. Justice Rehnquist again dis-sented, stressing the Federalist view thatproperty rights cannot be trampled evenfor public good.

Lucas vs South Carolina CoastalCommission, 505 U.S. 1003, 112 S.Ct.2886 (1992) Just six years later,Rehnquists Federalist position prevaileddue to some major changes in theCourts composition. The Lucas caseinvolved some restrictions on somebeachfront lots on the South Carolinacoast. Lucas claimed that the restric-tions imposed by the state to preventerosion and for other environmentalreasons totally destroyed his propertyinterest. Justice Scalia, writing themajority opinion, said that if propertyinterests are destroyed, they must bepaid for, no matter how beneficial therestrictions. Justices Brennan andStevens, whose Republican view wasascendant in Keystone and Penn

Central, now wrote in dissent that theprevention of harmful property usesshould not require compensation.

A healthy balanceThe two philosophies have seesawed

back and forth in our jurisprudence:Republican view in 1887, Federalist in1922, back to Republican in the 1970sand 80s. Now the Federalist position isonce again dominant.

We must conclude that both views



are legitimate parts of our constitutionalculture. Neither one is absolutethereis a balance between them that makes itdifficult to predict the outcome of a par-ticular case. The balance is probably ahealthy one, as neither the individualnor society should be allowed to gounchecked, and both philosophies are soclearly a part of our culture.

Evolving rights

History also teaches us that propertyrights are constantly evolving to fit thechanging conditions of society. Therehas never been an absolute right to doanything with property. Restrictionsresult from evolving societal needs.

After the great fire of the 1600s inLondon, stringent restrictions wereplaced on the type and location of newbuildings. When the fear of highway-men reached a peak, the English gov-ernment outlawed bushes and trees nearthe roads where the robbers could hide.The public need for safety justified pri-

vate property limitations.In America, property rights wererightfully emphasized by an overwhelm-ingly agrarian society in which eightypercent of the people derived their liv-ing from the land. Government restric-tions on property were naturally suspect,given the desire of Americans to be freeof the feudal tendencies and the oppres-sion of the English crown.

But as the nature of the economychanged, property rights changed withit. Jobs and benefits, or stock ownership,became just as important as land. Thelaw changed to give employees someprotection and to recognize intangibleproperty as well as real property.

As the information age has evolved,we have seen additional changes inproperty. Trademarks and copyrightsmay be far more valuable than land.The framers of the Constitution couldnot have foreseen property rights inInternet web sites, body parts, and fertil-ized human eggs, and yet we must adapttheir ideas to fit these new realities.

History teaches that what we meanby property and property rights hasnever been set in stone. Instead, our

recognition of these interests is con-stantly evolvingwhat may have beenallowed yesterday may be unacceptableto society today. Particularly in theenvironmental area, the absolutist viewof property rights seems misplacedwhat we see as the proper use of land(and therefore the right of the proper-ty owner) is bound to reflect the con-stantly changing needs of our society.

ReferencesEly, James W. Jr. 1992. That due satis-

faction may be made: The FifthAmendment and the origins of thecompensation principle. The

American Journal of Legal History,36(1).

McElfish, James M. Jr. 1994. PropertyRights, Property Roots:Rediscovering the basis for legal pro-

tection of the environment.Environmental Law Reporter24(10231).

McElfish, James M. Jr., Philip Warburg,and John Pendergrass. 1996.Property: Past, present, future. TheEnvironmental Forum, EnvironmentalLaw Institute.

Pennsylvania Coal Co. v. Mahon et al.,1922

Common Property andNatural ResourceManagement

Robert Gorman, Associate Professor, Cooperative Extension Service University of Alaska Fairbanks

IntroductionIn the United States, property typi-

cally belongs in one of two classes: pri-vate or public (state). Another form,common property, has elements of bothprivate and public property. Commonproperty is found worldwide in naturalresource management, most notably infisheries management. In contemporaryeconomics literature, the term commonproperty is often confused with openaccess property. Open access propertylacks any defined ownership so that theresource is open to harvest or use byanyone wishing to exploit it.

This paper attempts to define com-mon property within the American per-spective of property and to look at howother cultures manage common proper-ty resources. Examples will be presentedof the effects of shifting resource man-agement from common property toeither private or public property. Whilemuch of the literature on commonproperty focuses on fisheries, there areexamples of common property manage-ment regimes for grazing, communalforests, irrigation, and groundwater,among other resources. Finally, the

authors discuss the use of common prop-erty as a means to manage land and nat-ural resources to achieve optimal utiliza-tion in American society.

Although property rights issues areoften considered the domain of econo-mists and lawyers, this paper demon-strates that anthropologists, sociologists,and other social scientists have providedmuch research into property rights ingeneral, and common property in par-ticular. Furthermore, treating property

rights as strictly a matter of economicsand law often results in exploitation of natural resources. It can also erode ordestroy local cultures that have effec-tively managed these natural resourcesthrough common property managementregimes.

Property rights terminologyThe American Heritage Dictionary

of the English Language (Morris, 1981)defines terminology as, The vocabularyof technical terms and usage appropriateto a particular trade, science or art;nomenclature. Terminology is the

essence of communication within andbetween disciplines. When incorrectterminology is used, concepts, theories,issues, and solutions will be distortedand misunderstood. The commons andcommon property have been subject toa variety of academic studies by biolo-gists, economists, sociologists, anthro-pologists, geographers, lawyers, and his-torians, each with their own terminolo-gy. The commons and common propertyare frequently misunderstood conceptsin natural resources and economics lit-erature. The precise definition of com-mon property varies among scholars.However, most definitions of commonproperty rights include these elements:1) A well-defined group of co-owners,who 2) develop and adhere to a well-defined management regime thatincludes 3) proscribed access by ownersand exclusion of non-owners, and 4)rights and duties of owners with regardsto rates of use of the common propertyresource (Bromley 1991; McCay 1996;Swaney 1990; Feeny et al. 1990).

Common property is frequently con-



fused with open access property, inwhich the resource is available to any-one who can access and use it. Swaney(1990) and others suggest that the Latinterm res nulliusbe used to describe openaccess or non-property and that res com-munes be used to describe commonproperty. The confusion between thecommons and open access has led tonotable misunderstandings within con-temporary natural resource users. Forexample, in The Tragedy of theCommons, Hardin (1968) confuses openaccess for common property using anexample of an overgrazed meadow. Thissingle citation has been used by a num-ber of policymakers in determining nat-ural resource management schemes. Anatural resource management schemereflective of Hardins findings will likelylead to privatization or a strong govern-ment role (McCay, 1997).

Increased government involvementin property use will likely place limits inthe way property rights may be used.

Any reduction in property rights iscalled attenuation (Quiggin, 1988).Attenuation of common property is alikely consequence of acceptingHardins tragedy of the commons as fact.Limited work has been done in theUnited States to manage naturalresources within a common propertyregime, despite numerous examples of successful natural resource managementas common property. Historically, failureto recognize common property has ledto exploitation of resources as describedby Brox (1990) in the northern Norwayfishery and Matthews (1995) in the col-lapse of the Grand Banks fishery off

Newfoundland. Another example is thedisregard of Native American commonproperty rights throughout the course of the settlement of the United States(Swaney, 1990).

Property is, in fact, the right to astream of benefits. It includes the rightto exclude others. Property is a reflec-tion of the culture where it is recog-nized. Property rights in western culturehave evolved to assist in the harvest of limited resources, usually for economicpurposes. However, cultures less driven

by economics may define property pri-marily to support resource sustainabilityand community survival (Quiggin, 1988and Matthews, 1995).

Generally, four categories of propertyrights are recognized: open access, com-mon property, private property, andstate (public) property (Ostrom, 1985;Bromley, 1991; Feeney et al., 1990).Open access and common property havebeen described above. Under state prop-erty rights, the government is vested

with sole rights to the resource, includ-ing resource access and the rate of use, if applicable. Private property vests theindividual with rights to exclude othersfrom the benefits stream and to use it ata rate and in a manner determined bythe individual. Private property is a cor-nerstone of contemporary economic andlegal systems in the United States andmost western societies. It is the propertyrights regime that best fits economicanalysis. Private property has a specific,defined rights structure consisting of universality, exclusivity, transferabilityand enforceability (Swaney, 1990).Private property ownership is most oftenassociated with readily degradedresources like agricultural lands, grazingand forest lands.

Common property ownership is mostfrequently associated with transientresources like fish, wildlife, groundwater,and irrigation water (Ostrom, 1990).The common property managementregime used in the Swiss Alps exists

within a land ownership system whereprivate and common property exists sideby side. Factors that favor commonproperty management regime include:1) a low value of production per unit of land, 2) low dependability/frequency of use and yield from the resource, 3) a lowpotential for improvement or intensifi-cation of the common propertyresource, 4) a large area of land neededfor effective use of the resource, and 5)large groups of owners needed for capitalinvestment activities (Ostrom, 1990).

Property management systems

Property is more than an object and,in fact, considering property as anobject has led to confusion. Bromley(1991) describes property as a benefitthat society agrees to protect. Propertyrights are claims to a benefit stream(access and use of a natural resource).McCay (1996) separates property rightsfrom property management regimes. It isa useful concept, especially when study-ing or designing common property sys-tems. The different types of propertyhave been described above. However,McCay describes four management

regimes that are separate institutionsfrom property rights. The managementregimes include: laissez-faire (frequentlyassociated with open access), marketregulation (most commonly related to

private property rights), user governance(where local-level decision-makingmanages a common pool resource), andstate governance (property over whichthe state governs, irregardless of owner-ship). Separating property rights andproperty management regimes is usefulwhen dealing with common property.Common property management regimeswill be discussed later.

An important distinction betweencommon property and private propertyis how ownership changes. Private prop-erty rights may be readily and voluntari-ly exchanged between owners. Forexample, under private property regimesthe individual owner may sell portionsof the private property, such as mineralrights. However, if that same privateland was in Nebraska or Oklahoma andhad groundwater irrigation wells (recog-nized by state governments as commonproperty), the water rights could not besold without also selling the land (Emeland Brooks, 1988). Common property

rights are generally tied to the commu-nity of common property owners; unlikeprivate property, access and use cannotbe exchanged separately.

Methods of property exchange haveimportant consequences. One type of property exchange occurs voluntarilybetween individuals within a propertyrights structure as described above. Thisexchange of property rights is typical of a private property market. The secondtype of property exchange occurs whenthere is a change in the structure of property rights, such as when commonproperty becomes private property(Quiggin, 1988). Changes in propertyrights structure usually result from gov-ernment action, such as when theUnited States extended the economicexclusion zone from 12 miles to 200miles from coastal areas, thereby creat-ing common property rights from previ-ous open access resources. Privatizationof state property in Russia, easternEuropean countries, China, and Mexicoare further examples of changing prop-erty rights structure. These changes inproperty structure demonstrate thatproperty rights are not static and that

the consequences of changing propertyrights are significant. Consider, forexample, the privatizing of open access,commons, and state property. The bene-

Table 1. Property management systems defined by type of property ownershipManagement system OwnerLaissez-faire Open accessMarket regulation Private propertyUser governance Closed access common poolState governance State governance for all owners



fit to the individual gaining the privateproperty rights from previous openaccess, commons, or state property canlead to less than optimal resource use orresource exploitation.

The role of economic developmentthrough the privatization of state prop-erty was a central feature in the UnitedStates Homestead Laws (Anderson andHill, 1990). Of course, the public prop-erty disposed through homesteading hadoriginally been common property of var-ious Native Americans until economicexploitation for furs and other resourcesshifted these unrecognized commonproperty resources into de factoopenaccess and then public property.Government take-over of open accessand common property may be viewed asnecessary for some resource manage-ment, such as mineral extraction andthe expansion of a coastal 200-mile eco-nomic exclusion zone for fisheries man-agement. However, government take-over of private property rights is univer-

sally considered an economic and legaltravesty. It is notable that existing rightsof displaced indigenous and local com-mon property owners seldom receiveconsideration and the injustices theysuffer are rarely recognized when proper-ty rights structures change in favor of economic ventures (Berkes, 1985, andSwaney, 1990).

Common property concepts andterminology

An understanding of common prop-erty concepts and terminology is neces-sary in order to protect existing sustain-able common property resources, or tostructure common property regimes fornatural resource management. Rightsrefer to actions authorized by law orconvention, while rules are prescriptionsthat authorize action. Common proper-ty carries two clearly recognized rights:access or exclusion, and withdrawal orharvest. These rights clearly distinguishcommon property from open accessproperty. Every right has a rule authoriz-ing particular actions in the use of thatright (Schlager and Ostrom 1992).Rules should be clear, with little room

for interpretation. For example, Emiland Brooks (1988) describe groundwaterrules in the American High Plains,including the proviso that groundwaterwells must be spaced 1,230 feet apart.Common property rules are often thisspecific in order to avoid misinterpreta-tion.

Ostrom (1990) describes three typesof rules used in common property insti-tutions: operational rules (concernedwith appropriating, monitoring, and

day-to-day enforcing use of commonproperty); collective rules (involvingmanagement, policymaking, and adjudi-cation of common property resources);and constitutional rules (concernedwith formulation, adjudication, andmodification of the fundamental com-mon property process). Under commonproperty ownership, all changes to com-mon property rules are carried out informal and informal forums open to allthe common property owners of theresource in question.

The fact that rules are not written orare not recognized by a governmentalbody makes no difference, as long as thecommon property users adhere to therules. Economic development of naturalresources held as common propertyoften begins with non-owners disregard-ing or discounting the rights of commonproperty owners and failing to followcommon property rules. The recentdemise of Newfoundlands near shorefishery (Matthews, 1995) and the settle-

ment of the western United States areexamples of economic expansion at theexpense of unrecognized common prop-erty rights and rules. Again the result isunsustainable resource use and commu-nity deterioration (Swaney, 1990; Feenyet al, 1990; Matthews, 1995; McCay,1996).

Property rights may be facts of lawand enforced by government. These arede jure rights. These de jure rights appealto economists and others who wish tohave a definable, predictable view of resource access and use. However, thesede jure rights often discredit local knowl-edge and local common property man-agement regimes.

In other situations, natural resourceusers may develop and enforce informalrights among themselves without anygovernment recognition, in which casethe rights are de facto. De facto rights areimportant because they have worked inmany areas and they are likely to pro-vide rules that best fit the local environ-ment and economy. Recognizing thevalue of de factorights will increase poli-cymakers awareness of the value of localknowledge in natural resource manage-

ment. Finally, de factorights and rulesare self-enforced, so they are cheaper toadminister (Schlanger and Ostrom,1992). There are a number of examplesof de factorights that have become de

jure rights over time, as government hasaccepted the conventional knowledge of common property management regimes(Ostrom, 1990).

Government involvement with com-mon property management regimes maythreaten these management regimes.

One example of government interfer-ence is the change in structure of prop-erty from common property to stateproperty under the guise of environmen-tal protection. Feeney et al. (1990)describe the government of Nepalsattempt to halt deforestation of itsrecently nationalized forests by convert-ing de factocommon property forestsinto state property. Lacking resources toenforce government access and userestrictions, the forests became openaccess and deforestation accelerated.

Ultimately, the government re-estab-lished the common property rights toforests (thereby creating de jurecommonproperty rights). The failure of resourceprotection when governments expropri-ate common property managed resourceshas been observed numerous times(Ostrom 1990).

Buck (1989) and Lambert (1995) dis-cuss the evolution of western ranchersgrazing livestock on public lands. Theranchers arrived soon after the govern-

ment created de factoopen access to pre-viously common property of NativeAmericans. Development of the westernlivestock industry resulted in conflictswithin grazing users for the limited graz-ing lands. Eventually some of the range-land was de juredesignated public (state)lands. Ranchers utilized the land under acommon property management regimefor a number of years although the landwas under public property ownership.

Recent conflicts with non-ranchershave centered on two critical issues of public property: access and use.Government managers and personsexcluded by the livestock owners havefocused on the issues of their right toaccess public rangeland and the use of public resources such as water and plantsby livestock. The conflict has centeredon use and access of public propertymanaged as a de factocommon propertymanagement regime. The ironic resultof this conflict has been to strengthenthe livestock owners de factocommonproperty management regimes: theywere allocated grazing rights to publiclands.

The success or failure of any property

rights structure to protect resources ismore a feature of the ability to regulateaccess and use of the property thanwhether the property is private, com-mons or state property (Feeny et al.,1990). Ostrom (1990) proposes eightprinciples found in studying commonproperty management regimes that havelasted for centuries. These principlesinclude:1) Clearly defined boundaries of access

and use



2) Relevance of rules to local resourceconditions

3) Collective choice arrangement fordecision-making

4) Effective monitoring of access anduses of the common propertyresource

5) Graduated sanctions for violators of rules

6) Conflict resolution mechanisms7) Minimal recognition of rights to

organize by external authorities8) Nested management of larger com-

mon property systems (each layer of management fits within the highermanagement layer)These principles expand the previ-

ously mentioned attributes of commonproperty management, including self-government at the local level of a com-monly used resource in a way to excludeoutsiders, and involves the recognition,monitoring and enforcing of rules to usethe common resource.

Common property and naturalresource management

Sustainability is an inherent featureof common property. Hardins Tragedy of the Commonsgreatly contributed to theconfusion between open access andcommon property. More importantly, itdiscredited the sustainability and valueof local knowledge intrinsic to commonproperty management regimes.Common property resources have sever-al elements that foster sustainability,including the ecology of the resource,the technology used to extract theresource, and community values. Theresource may only be available withinthe community for a limited period.The ecology of the resource will aid inits sustainable extraction. For example,the transient nature of fish enablenearshore fishermen to access theresource for a limited time with theirlimited nearshore fishing resources.

Common property management rulesreflect community values and usuallyconcentrate on how, when, and wherecommon property resource use mayoccur (Wilson, 1996; Schlager andOstrom, 1992; Matthews, 1995; Berkes,

1985). In contrast, centralized govern-ment sets limits to resource extractionbased on arbitrary, although biologicallybased, quotas. Because fish are by naturetransient and the access to most fishstocks is seasonal, fisheries lend them-selves well to common property man-agement regimes from the standpoint of ecological sustainability.

Technology and common property

Technology is an important featureof common property regimes. As long asall the owners have the same technology,access and use of the property isequitable. However, if individualcommon property owners use more effi-cient technology to access and harvestthe resource, the regime will deteriorateunless the rules change. The unequaladaptation of more efficient technologyby a limited group of common propertyowners is called vertical growth by Brox(1990). He describes a common propertygroundwater resource in India. Increasedpopulation using a traditionally dug wellto access groundwater had no adverseimpact on the existing water usersaccess to the groundwater. However,when government assisted some of thelandowners with deep well water with-drawal technology as part of an agricul-tural development project, groundwaterlevels dropped to the point that ownerslacking the new technology lost accessto the water. Matthews (1995) likewise

notes that technological improvements(larger fishing boats with greater tripcapability and more sophisticated fish-finding and catch gear) were a majorfactor in the collapse of the

Newfoundland coast fishery.Matthews and others note the

impact that changing economic andpolitical conditions have on commonproperty regimes. When common prop-erty owners adopt different economicvalues, the common property regimenmust either adapt or privatization willlikely occur. Studies of the medievalcommons note that the commonsworked well (Feeny et al. 1990).However, the shift from subsistence toproduction agriculture led to the privati-zation of the medieval commons(Quiggin, 1988).

Whether a common property regimewill survive changes in technology, eco-nomics, and ecology is largely a featureof the strength of the values of the com-mon property owners. The fact that somany common property managementregimes exist, whether de jureor de facto,is proof of the potential of commonproperty management regimes in sus-

tainable natural resource management(Ostrom, 1990). In 1995, the state of Maine recognized the de factocommonproperty regime of the nearshore lobsterfishing to develop de jure lobster fish-eries that include democratic involve-ment and grassroots oversight (Wilson,1996). Local communities and groupswith some claim to a valuable resourcewill be motivated to effectively developand manage the resource if allowed(McCay, 1996, and Feeny et al., 1990).

The development of such a commonproperty management regime requiresgrassroots involvement and self-gover-nance. Such community managementregimes should include the features of common property listed previously. Therules of access and use of communallymanaged claims must be clear and basedon local knowledge.

Shared values and a common interestin local natural resources will foster vol-untary compliance of common propertymanagement rules (Swaney, 1990).Shared norms reduce the direct cost of monitoring and enforcing commonproperty rules. The role of communityvalues in monitoring and preventingtheft of common property resources isinfluenced by the number of owners, thecost of monitoring, the benefit fromstealing, the punishment if caught steal-ing, and the reward for monitors whouncover stealing (Ostrom, 1990).

Conflicts are unavoidable, but con-flicts within common property owners

should be dealt with quickly, fairly, andopenly (Quiggins, 1988). Sharing infor-mation and open communication with-in the group of common property userswill reduce conflicts and uncertaintiesand increase common interests (Swaney,1990). Ostroms (1990) studies of long-time common property resources report-ed that extensive norms evolved thatdefined proper behavior and enabledindividual common property users withmany interdependencies to avoid con-flict. More importantly, however, washomogeneity among all common prop-erty users with regard to assets, skills,knowledge, ethnicity, and any otherdivisive feature within the group.Within a local area, the use of commonproperty management regimes can be aneffective tool to manage naturalresources.

Common property regimes havebeen used effectively in both the UnitedStates and other countries. This man-agement regime is not a panacea fornatural resource conflicts. It will onlywork to the extent that the local com-munity and the holders of propertyclaims agree to participate. However,

the success of the system in fishing man-agement, grazing, and groundwatermanagement warrants its considerationin a wide variety of natural resource andenvironmental quality situations.Conflicts regarding environmental qual-ity, watershed management, and forestmanagement may benefit from utiliza-tion of common property managementregimes.



ConclusionsCommon property resources exist in

an uncertain and complex environment.Unlike open access resources, commonproperty resources have a defined usergroup with limited access. They alsohave locally constituted usage rules thatare monitored and enforced within theframework of community norms.Common property resources are by

nature a sustainable, self-governinginstitution that reflects community val-ues. Rules for monitoring and enforcingaccess and use of common propertyresources are developed over a long peri-od of time. These rules are developed informal and informal forums open to allcommon property resource owners. Inthe United States, existing commonproperty resources include fisheries, irri-gation and groundwater systems, andwestern grazing lands.

Although successful, long-term com-mon property resources generally existwithin homogenous communities, com-mon property management regimescould be crafted to fit the diversity of users found in local natural resourcemanagement in this country. TheTragedy of the Commons has fueled anunfounded fear that local users willexploit and destroy common propertyresources. As a result, decision-makershave either privatized common propertyresources or made them public propertywith a strong government role.Privatizing common property resourcesdoes not guarantee sustainable use andit will exclude former common property

users. Centralized government manage-ment of public prop

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