Who Owns the Environment? Part I

In Umberto Eco’s medieval mystery, The Name of the Rose, there is a famous scene in which Franciscans, Dominicans and other high Church officials engage in “a fraternal debate regarding the poverty of Jesus” (Eco 1983). In the film of the same name, the question is posed as “Did Christ or did He not own the clothes that He wore?” (Arnaud 1986).

In other words should the clergy, following the example of Jesus and his Apostles and seeking a perfect life, renounce ownership in all things? Yet, it was argued, on one side at least, even they possessed some goods by natural right even though “things were common to all men.” One of Eco’s characters maintains, incorrectly, that it was only after Original Sin “that our progenitors began to divide up ownership of things, and thus began worldly dominion as we now know it.” Jesus and the Apostles thus “did not hold these things in possession but in use, their absolute poverty remaining intact” (Eco 1983).

Without dwelling on some of the theological errors, this fictional exchange does highlight the tension, theologically speaking, between the Church’s view that the goods of the earth were destined for the whole human race while, at the same time, they are divided up to secure humanity’s lives, freedom, and dignity thus mitigating poverty and violence. Ultimately, the common good requires reconciling “respect for the universal destination of goods and respect for the right to private property” consistent with fraternal charity (Catechism of the Catholic Church 1994).

Without private property, who needs the Seventh Commandment?

This fictional episode depicting Scholastic philosophers thinking and debating over the right of private property, treated seriously in Eco’s book but almost satirically in Jean-Jacques Arnaud’s film, illustrates the timeless nature of the argument. Focus the topic more narrowly on “environment,” and we find ourselves confronting many of the same questions raised since ancient times. Who owns the environment? Can we, should we recognize property rights in it or to it? And what benefit can be derived from doing so, not just for the individual who holds the right, but for the environment, the ecosystem or the commons?

The theoretical or philosophic challenges of harmonizing the universal destination of all goods with private property have preoccupied philosophers for millennia. Indeed, this writer is satisfied that, notwithstanding centuries of socialist thought and attempted practice, up to and including the present day, the philosophic argument is settled in terms of private property and the concomitant responsibilities of the property owner.

The environmental or ecological issue represents a more perplexing problem because of the genuine challenges of protecting, while benefiting from, the earth’s resources and beauty. The project of designing or defining property rights regime, relative to the commons, with a view to enhancing both, is, in historic terms, of recent vintage. The early work of John Baden and the publication of Terry L. Anderson’s and Donald Leal’s seminal Free Market Environmentalism in 1991, along with the establishment of the Political Economy Research Center, the original name for the Property and Environment Research Center or PERC, found the entire enterprise, i.e., “free market environmentalism,” still “in its infancy compared to centralized approaches to environmental problems” (Anderson & Leal 1991).

The difficulties of defining property rights in resources, say, like air and water have been succinctly summarized by Henry N. Butler, my colleague at George Mason School of Law, and Christopher R. Drahozal:

Because of the common ownership of these resources, no one has
adequate legal rights to protect against them. For example, pollution
occurs because manufacturers are able to avoid paying the cost of
the damage to the air because no one owns the air. Such externalities
would not occur, or at least people would have to pay for them (that is,
internalize them), if the three attributes of an efficient property rights
system were satisfied [universality, exclusivity, transferability] (Butler
& Drahozal 2006).

Absent well-defined property rights, regulation, or some communal or tribal management arrangement, “each person with access to the resource has an incentive to exploit it and neglect the effects of his or her actions on the resource’s productivity.”

Conversely, without a property interest a person has no incentive to improve the economic productivity or yield of his or her land. The same could be said for sustainably managing a natural resource. It is unlikely to happen if there is no property interest in that resource.

The U.S. Endowment for Forestry and Communities, based in Greenville, South Carolina, is focusing its efforts on sustainable working forests as a means to stabilize African American rural land ownership. Ownership in these communities, mostly in the South, “is complicated by several factors including heirs’ property.” This occurs “when there is intergenerational land transfer without wills or estate planning.” This makes the land vulnerable to loss by either voluntary or involuntary sale. Thus, the U.S. Endowment, among other things, is investigating whether or not sustainably managed forestland would help African Americans reduce land loss by providing short-term income to help pay taxes and the legal and technical costs to clear heirs’ property titles. This, in the long run, will offer a source of ongoing income (U.S. Endowment for Forestry and Communities). Full disclosure: the U.S. Endowment is a client of this writer’s consulting firm.

The U.S. Endowment’s interest in securing African Americans’ title to their forests sounds like a story from Hernando de Soto’s classic book, The Mystery of Capital, in which he attributed the inability of poor people in the developing world to generate capital for their economic betterment because they hold what resources they have “in defective forms: houses built on land whose ownership rights are not adequately recorded, unincorporated businesses with undefined liability, industries located where financiers and investors cannot see them” (De Soto 2000).

“Because the rights to these possessions are not adequately documented, these assets cannot readily be turned into capital, cannot be traded outside of narrow local circles where people know and trust each other, cannot be used as collateral for a loan, and cannot be used as a share against an investment,” maintains De Soto. He cites Egypt where “the wealth that the poor have accumulated is worth fifty-five times as much as the sum of all direct foreign investment ever recorded there, including the Suez Canal and the Aswan Dam.”

Of course, we should avoid an exclusively economic explanation for human degradation of the environment and natural resources. Lack of knowledge and ignorance, cultural and religious traditions, differences in aesthetic perspectives, and a host of other influences can shape humanity’s stance with respect to the world around it.

Yet there are successes to be credited to something like a market-based or property-rights approach demonstrating the fundamental axiom of free market environmentalism that incentives matter. While Kenya’s President Daniel arap Moi was setting fire to $3 million worth of elephant tusks in July of 1989, Botswana, Namibia, and Zimbabwe allowed for limited trade in elephant ivory, part of a program called “conservation through utilization.” The Kenyan elephant population fell from 65,000 to 19,000. During the same decade Zimbabwe’s grew from 30,000 to 43,000 (Weiss, McCaffrey, Magraw & Tarlock 2007).

Conservation through utilization also allowed for safari hunting and tourism on private, state and communal lands along with the sale of ivory and hides. Botswana, Malawi, Namibia, and South Africa, using the Zimbabwean system saw their populations increasing at a rate of 5 percent annually. The secret, of course, is that giving local people an incentive to protect, rather than fear, the elephant makes them guardians, rather than destroyers, of the animals. They have a reason to protect habitat and repulse poachers.

Price, supply, and demand can work against such programs to the point where you see the development of the functional equivalent of drug cartels in the poaching world. In other words, payments for safari hunting, etc., may not be able to compete with astronomical prices driven, say, by Asian or Chinese demand for rhinoceros tusks. It is necessary to attend to the circumstances of each case. The contingency of markets and the lack of adequate governance structures in developing countries, indeed, life itself, call for humility in these matters.

The development of Individual Fishing Quotas (IFQs), or “catch shares,” a kind of property right in marine fisheries, a long-standing quest by PERC’s Donald Leal, aims to define property rights in a threatened resource. A study by researchers at the University of California, Santa Barbara, and the University of Hawaii, published in the September 15, 2008 issue of Science, demonstrated that catch shares, which are common in New Zealand, Australia, Iceland, and now the U.S. and Canada, can actually reverse fisheries collapse. While nearly a third of open-access fisheries have collapsed, the number is only half that for fisheries managed under catch share programs. Furthermore, the authors show that catch shares not only reverse the overall downward trajectory of fisheries worldwide but strengthens fisheries over time. (University of California, Santa Barbara 2008).

Catch shares guarantee each shareholder a fixed portion of a fishery’s total allowable catch which is set by scientists. These shares can be bought and sold, becoming more valuable when the fish population increases. Thus, every shareholder has an incentive in maintaining the long-term sustainability of the fishery.

“Under open access, you have a free-for-all race-to-fish, which ultimately leads to collapse,” said Christopher Costello, lead author and an economist at the Bren School of Environmental Science and Management at the University of California, Santa Barbara. “But when you allocate shares of the catch, then there is an incentive to protect the stock-which reduces collapse. We saw this across the globe. It’s human nature.” David Festa of the Environmental Defense Fund and another leader in this movement to implement catch shares, sees these schemes ensuring that fishery managers are “managing abundance, rather than a slide to scarcity” (Eilperin 2008)

Again, humility, or reasonably restrained expectations, is called for. Moreover, not every tool or solution is suited to the problem at hand. The late Elinor Ostrom, the first woman to win the Nobel Prize for economics and the godmother of “commons studies,” has observed: “What one can observe in the world, however, is that neither the state nor the market is uniformly successful in enabling individuals to sustain long-term productive use of natural resource systems. Further, communities of individuals have relied on institutions resembling neither the state nor the market to govern some resource systems with reasonable degrees of success over long periods of time” (Ostrom 1990, 2008).

“We do not yet have the necessary intellectual tools or models to understand the array of problems that are associated with governing and managing natural resource systems and the reasons why some institutions seem to work in some settings and not others,” argues Ostrom. “It is difficult to know exactly what analysts mean when they refer to the necessity of developing private rights to common-pool resources (CPRs).” Dividing land into parcels and assigning rights to them seems to be what some analysts mean. “In regard to nonstationary sources, such as water and fisheries, it is unclear what the establishment of private rights means.”

“But even when particular rights are unitized, quantified, and salable, the resource system is still likely to be owned in common rather than individually,” says Ostrom. This becomes painfully obvious when one contemplates how fragile and susceptible to political interference are IFQs. Numerous lawmakers in the U.S. have opposed catch-share programs, fearing that they force consolidation and job losses.

Ostrom challenges the assumptions of many property-rights theorists that only one of two “undesirable outcomes is likely under communal [non-governmental] ownership: “(1) the commons will be destroyed because no one can be excluded, or (2) the costs of negotiating a set of allocation rules will be excessive, even if exclusion is achieved.”
“On the contrary,” responds Ostrom, “what one observes in these cases is the ongoing, side-by-side existence of private property and communal property in settings in which the individuals involved have exercised considerable control over institutional arrangements and property rights.”

In philosophic terms I understand Elinor Ostrom as counseling recourse not just to Locke but also to Burke and, especially in the American context, Alexis de Tocqueville who, in Democracy in America (1835), recognized the genius of Americans for the formation of what we now call social capital through the instrumentality of voluntary associations.

“Americans of all ages, all conditions, all minds constantly unite.
Not only do they have commercial and industrial associations in
which all take part, but they also have a thousand other kinds:
religious, moral, grave, futile, very general and very particular,
immense and very small; Americans use associations to give
fệtes, to found seminaries, to build inns, to raise churches, to
distribute books, to send missionaries to the antipodes; in this
manner they create hospitals, prisons, schools. Finally, if it is a
question of bringing to light a truth or developing a sentiment with
the support of a great example, they associate. Everywhere that, at
the head of a new undertaking, you see the government in France,
and a great lord in England, count on it you will perceive an associ-
ation in the United States” (Mansfield & Winthrop 2000).

The capacity of Americans to create mediating structures which bridge the gap between isolated, atomistic individualism and the Leviathan of the modern bureaucratic state is very relevant to the ecological question and the protection of space for human flourishing. I will be continuing this discussion in a subsequent post. But this is probably enough for now.