This article advances the proposition that the creation of property rights, whether by contractupon-negotiation or edict, is far more significant than what has been described as "Coasian bargaining" in effecting sustainable development. By "creation" we intend the neo-institutional economist's sense of establishing a degree of exclusive property rights for common property or devising new contractual arrangements in which private property rights are entrenched. This is sometimes mistakenly confused with the assignment of property rights. "Sustainable development" is understood as the transformation of negative into positive externalities or a state of the tragedy of the commons into a vibrant resource nourishing industry. Two real-world cases involving government planning are used to illustrate this proposition.
KeywordsCoasian bargaining, creation of property rights, open access resource, planning by contract, planning by edict Well-defined property rights and rule of law are all that is necessary to protect the environment from "tragedy of the commons" outcomes … government regulation to achieve environmental objectives typically does worse than private property rights and free markets. To begin with, regulators typically will not have access to the information generated by and available to
Coase's (1960) famous story of land use conflicts between two farms, as generalized in the Coase Theorem, injects into neo-institutional economics a potential to overcome the a-spatial limitations of neoclassical economics and contribute to theorization in planning as a science for delineating places for specific purposes, or zoning. In the light of the historical evolution in spatial division of labour and a review of the literature on the definitions and meaning of zoning, this exploratory interdisciplinary inquiry informed by neo-institutional economics, history of surveying and planning, attempts to use the corollary of the Coase Theorem, which highlights the significance of property boundaries, to explore several boundary scenarios in planned zoning that are of policy significance. They are conflicts of Progress in Planning 2 zoning, borderline non-zoning, incomplete zoning, forgotten zones, zoning for non-planning, rights-conferring zoning and codevelopment zoning. The transaction cost implications of these scenarios are spelled out. Examples from Europe, China, Australia and Americas are cited and elaborated where suitable to illustrate specific arguments.
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