1. Introduction
The past two decades have been marked by the emergency of environmental issues as field of immediate concern. We can distinguish two threats to environment including: high levels of industrialization and emissions and depletion of natural capital such as forest degradation and soil erosion. Scholars such as Aristotle (1941), have long realized that the nature, extend and allocation of property rights can considerably influence the rate of depletion and degradation of natural resources. The nature of property ownership, can have a negative effect on the conservation of resources and the economic efficiency with which resources are used, protected and developed (Tisdell, 1991,). “That which is common to the greatest number has the least care bestowed on it” Aristotle (1941).This means that some property regimes need to be compulsory to conserve resources. Despite Aristotle’s warning, various environmental assets have never been owned by individuals, due to political, economical, technological, and cultural motives.
This paper examines the relationship between common property rights and environmental degradation such as deforestation and land degradation. The paper advocates that the environmental degradation in many countries is directly attributed to the deficiency in the allocation of access to or lack of exclusion of non right holders from common property resources (Colin Hunt 1995). The paper will focus firstly on Types of Property Rights Regimes, secondly Property rights and environmental degradation and finally Conclusions and recommendations.
2. Definition of key concepts
Property right is a form of power and authority over a resource for decision making (Denman 1978). Property rights are sets of rights for the management of assets including environmental assets known as natural resources (Dasgupta 1982). There are two key factors that contribute to the unsustainability natural capital use. The first is the lack of assigned rights over the use of resources. The second factor is the lack of enforcement of rights, both of government-created rights, for example, on lands leased by government from traditional owners, and of traditional rights, for example concerning local fish resources (Tisdell 1991 & Colin Hunt 1995).
However according to Roman Law, it was a breach of law for any individual to own an environmental good such as air, water and sea because they are common to the mankind for that reason the lack of property over these goods resulted in abuse and sometimes destruction of them.
“We have been ‘locked into a system of “fouling our own nest” said (Hardin 1968). He argued that the degradation of the environment is a result of incomplete and asymmetric information as combined with unassigned property rights (Hanna, Folke and M�ler, 1996). To resolve the problem of degradation of the environment we need property rights in environmental resources, and control access to environmental resources through government regulations (Hardin 1968).
It is important to note that property does not mean relationship between people and possessions but a relationship between people with regard to assets. There is also a distinction between property ownership and property rights. For example a tenant has the right to exploit property owned by others and getting rent. Whereas property land in land or water for example are limited on use of property by laws and regulations. (Watson 2006)
3. Literature review
According to Aristotle (1941) “that which is common to the greatest number has the least care bestowed on it” his argument was that for efficient use and better conservation of the natural assets, individuals or private entities should be assigned the rights over a natural asset.
In addition three other schools of thought emerged from the literature of property rights. According to (Demsetz 1967, Cheung 1970, Johnson 1972, Smith 1981), the problem of over exploitation of resource and its degradation is a result of common property regimes and it can merely be solved by assigning enforceable property rights to individuals or private entities.
On the other hand, Hardins (1968) argued that the problem of over exploitation and degradation of resources can be reduced by allocating full authority to an external agency to control and manage the resource or the state should enforce its power. Furthermore, (Jodha 1986, Wade 1987, Berkes and Chopra 1989) advocate that the decentralization of collective management of common property rights would be more appropriate strategy to avoid the tragedy of the commons.
In contrast some anthropologists and sociologists argued that common property does not imply open access, because in common property regime outsiders can be excluded from using the resource thus its does not entail environmental degradation. However, pure private property rights combined with significant externalities may degrade the quality of the environment (Ostrom 1990).
4. Types of Property Rights Regimes
his section provides any overview of the various types of property rights and its characteristics. According to literature, there are various forms of property rights, but in this paper, am going to mention four general property rights regimes including: private property, common property, public or state property and non-property or open access. Private property efers to property owned by individual holding the rights to use dispose and exclude others from the resource. Common property denotes a collective ownership of a resource, in which the owners can only exclude outsiders. Public or state property is a special kind of common property but as opposed to the later the resource is owned by all citizens. This property is controlled by elected officials who determine the terms of use and exclusion. Non-property or open access refers to s situation where resources do not have owners, everyone is free to use it and no one has the right to exclude others (Cole 2000).
It is important to notice that the academic typology differs significantly from the way people distinguish property regimes. For example, common property or partnership and corporate property are usually referred to as private as long as it is not owned by the state (Denman 1978). The major terminological dilemma in academic literature is the conflict of common property and non-property or open access (Hardin 1968, North and Thomas 1973). However, the distinction according to economic literature is that common property constitute the private property for the group of partners and all those who are not co owners are excluded from using the resource as well as in the decision making process over the resource whereas where no property or open access is a property regime whereby everyone can access and use the resource since there is no exclusion (Hardin 1968, North and Thomas 1973).
4.1 Characteristics of Efficient property rights
The characteristics of an efficient property rights are: Exclusivity � all costs and benefits that result from the use of the resource accrue to the proprietor. Transferability � the owner can transfer or exchange or donate the resource. Enforceability � Property rights holder can claim, sue anyone who violate his decision over the property; Flexibility � is the extend to which the property owner can change purpose and the mode of resource use without losing the right; Divisibility � the capability to create cooperative ownership, to divide the asset with regard to space, to create temporal succession of rights; Duration � permanence, length and arrangements for renewal (Guerin 2003)
4.2 Specification of property rights
There are many types of forms of rights linked to any particular property. The most fundamental are: the right to use or withdraw resources, the right to own (control and exclude) and the right to dispose the resource. The rights mentioned above can be divided and combined in many ways for different purposes. Therefore, the extent to which rights are owned and specified can affect the incentives on the property rights holders for a long management of a particular resource as well as the valuation of the right (Watson 2006).
5. Property rights and environmental degradation
The Hardin’s story of the “tragedy of the commons” provides a support for analysing the link between property rights and environmental protection. Its argument is that resource degradation and pollution are caused by open access to resources. Since no one is excluded to access and use the scarce resource. The best way to avoid the tragedy is by restricting the access and use of the resource by everyone assigning property rights to individuals or private entities (Hardin 1968).
The solution to the supervision of common resources is to give exclusive rights of use to individuals, entities or government. Because an individual or private firm with exclusive rights to use and access the resource have incentives and can properly manage the resource so that the resource keep on providing services over time at a sustainable rate. The nature of property rights assigned to an individual or entity play an important role in the way how an individual uses the environmental asset. If the property right is exclusive, the owner of the resource has the incentive to make efficient use of the resource. Tragedy of commons occurs where there is no exclusivity in the use of the resource (Bromley, 1991).
5.1 The tragedy of the commons
The tragedy of the commons denotes the impact of common property and intense use of environmental asset where the rivalry turns into problem, whereby the resource is damaged by uncontrolled use (Hardin, 1968). Typically, the term “tragedy of commons” is used for open access resource whereby there is no exclusivity in the resource use. Particularly where users benefit or exploitation of the resource obstructs the governance. However, the benefit of using a resource increases as its use increase but with additional degradation of the resource. Therefore, there is no guarantee of future entitlement of depleted resource thus, weakening the incentive to conserve the environmental asset for future use, for example, if land is overgrazed and fisheries are depleted no one would claim the entitlement of rights over that asset (Alchian & Demsetz 1973).
In 18th and 19th centuries, many American and Indian tribes assigned private property for hunting to individuals on specific geographical areas. The assignment of the property rights resulted in incentives to manage and implement efficient hunting and eliminate shortage. This was particularly effective with smaller animals growing for trade and for the buffalo which was nearly in extinction.
Whenever the resource (land, animals, air, water, pants) has been held “in common” it has been degraded. In many developing countries, natural assets are common, thus no individual owns the resource instead they are collectively owned. As results the resources end up being misused, abused and degraded.
The assignment and enforcement of property rights to individuals or entities has been providing efficient use of the environmental asset and would provide a legal protection for the victims of the negative externalities (Guerin K., 2003). However the Hardin’s tragedy of the commons does not necessarily applies where there are common property rights, but where there are no property regime or open access regimes because at common property regimes outsiders can be excluded from using the resource whereas ate open access regime there is no exclusion to the resource use.
5.2 Coase Theorem & Bargaining
Property rights provide a framework for achieving allocative efficiency in which bargaining can take place. Therefore according to the Coase theorem, the efficient result will be accomplished independently of who has the ownership rights, as long as one is assigned the rights (Hunt 1995).
The famous example of coase is: suppose a railroad passes through a wheat field. The passing trains produces sparks that burn the wheat. Therefore if the farmer holds the legal rights over that land he could oblige the train operators to eliminate those fires. However the train owners can not eliminate it but they may negotiate a price to pay for damage caused to the farmer’s crop. Similarly, if the legal rights are owned by the train operators, the farmer may have to put up with the damage. If not sustainable he would pay the train owners to eliminate the fires. In either case, social efficiency is obtained. The legal right just determines who has to compensate the other (Pearce and Turner1991).
We can use the coase theorem to explain the figure above. Suppose we have a chemical firm and a fishing club. The chemical firm has the rights over a river. The fishing club, will have to compensate to the chemical firm an amount equal to the value of the damage caused by the chemical firm so that it will reduce its production from Xp to X*. Likewise if the fishing club is owns the rights, it will not tolerate the firm to produce at X*, because the damages exceed any payment the firm would want to pay (Tietenberg 1996).
Property rights have some drawbacks. For example if a property right is assigned and enforceable it would require some alteration to the existing law. The other problems are related to the cost of bargaining, differences in bargaining power and the complexity in measuring the damage caused and costs of enforcement that may require government or legal intervention. However, the solution provided by the property rights to externality is not conclusive.
6. Conclusions
The various literatures have produced different but persuasive arguments about the relationship between property rights and environment. Environmental degradation such as overgrazing, deforestation, overfishing water pollution etc is a repetition of the so called tragedy. And the solutions are assignment of individual property rights, which would internalize the externalities caused by excess exploitation of the resource, and the government should take action to force individuals to act in a sustainable manner. Once the rights are correctly specified, the nature of the area of origin will change.
When discussing property rights, one should not confuse common property with open access. Common property implies a collective ownership and it entails exclusion for outsiders. In contrast, open access is not exclusive since everyone can access and use the resource. However the government should focus more on efficient use of common properties and in assigning property to open access.
Property rights also affect incentives for efficient use of the resource. Holding other factors constant, if property rights are not correctly assigned they can facilitate the increase of emissions that contaminates water as well as over exploitation, thus assigning property rights to individuals or firms may reduce significantly the over exploitation and degradation of the environment.
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