Politics and Property in Natural Resources

Abstract

Modern discussions of natural resources focus on increasing public control over extractive industries proposing measures that range from increasing the public's share of the gain via royalties and taxes to regulating extractive activities to prevent environmental problems to outright expropriation of private investments. This article argues that such efforts are counterproductive because the fundamental economic problem of natural resources is producing the knowledge necessary to locate and extract resource deposits. The public benefit comes from enabling the use of the resources and the increased economic activity their discovery produces rather than from royalties or expropriation. The key question in designing natural resource laws is thus their effects on the incentive to discover and manage resources. Private property rights in natural resources are the best way to provide such incentives. Fortunately, the combination of property rights and tort law principles (trespass and nuisance) enables property rights to solve environmental problems related to natural resource extraction as well.

Bottled water and groundwater in Ontario: Can free market environmentalism resolve the emerging conflicts?

“…This often means that special interest groups have an incentive to engage in rent-seeking behaviour and to lobby politicians, which can lead to distributional inequalities in the political economy (Yandle 1999). As Morriss (2009) points out, the natural environment is assumed by many to be a public good, but under the lens of public choice theory, the definition of a public good is misconstrued in the sense that goods which can be provided privately (such as natural resources) are treated as public. Free market environmentalism strives to resolve this ambiguity by propos ing an alternative system based upon private property rights and principles found originally in English common law.…”

“…Perhaps more concerning is that there is an imbalance between the reliance on groundwater regulation and the reliance on the incentives created by private property rights. As Morriss (2009) points out, the legal institutions chosen for natural resource governance must be capable of providing incentives for knowledge production. The deficit in the understanding of groundwater extraction and its hydrological and ecological impacts may serve as evidence that the water-takings permit system and the low price of groundwater do not incentivize users to account for or fully appreciate the true social value their resources or the true costs of extraction.…”

“…The deficit in the understanding of groundwater extraction and its hydrological and ecological impacts may serve as evidence that the water-takings permit system and the low price of groundwater do not incentivize users to account for or fully appreciate the true social value their resources or the true costs of extraction. Furthermore, Morriss (2009) maintains that when natural resource allocation is governed by the principles of common law and private property rights, the opportunity for rent-seeking behaviour and lobbying from special interest groups is diminished. Although this could be an added benefit of a the free market environmentalis t approach, our research did not find these rent-seeking behaviours to be in evidence in Ontario's water policy.…”

“…Due to the nature of groundwater resources, delineation of full private ownership may be unfeasible, as Anderson and Leal (1995) suggest. Since water is a fugitive resource, with the consequence that large-scale extraction in on area may affect groundwater reserves elsewhere, an effort to delineate enforceable and transferable private property rights over individual groundwater aquifers may be prove difficult (Morriss 2009). Alternatively, allocating property rights to over a collection of groundwater aquifers based on their geographical, ecological, and hydrological properties within a watershed to a single owner might create incentives for effective resource use which are similar to those normally created by private property rights.…”

Applying and assessing free market environmentalism to the Democratic Republic of Congo’s coltan resources: Challenges and possibilities

“…Improved property rights have been proposed as one solution to the "resource curse." Moriss (2009) argues that rent seeking is most likely to occur where governments have the most control over the resources, as occurred in the DRC between 1965 and 1997 during the Mobutu regime. The government's capacity to implement and enforce property rights is now further hindered because the government must contend with groups that illegally benefit from state-owned coltan reserves, as well as deal with corruption within its own structure.…”