Property rights

One of the common sources of environmental problems is the lack of or failure to enforce private property rights.

Economists call this problem the “Tragedy of the Commons”, which is where natural resources that are not owned by anyone are subject to degradation. When no one owns a resource, no one has any incentive to take care of it.

This concept explains why deforestation, overfishing, overgrazing or even animal endangerment are real problems. The problem isn’t capitalism or greed, its the absence of an important market institution: private property rights.

This is why economists have recommended the privatisation of common-pool resources as a policy. In a famous case, the southern white rhinos, which were close to extinction due to years of poaching in South Africa, were subject to privatisation. This happened in 1991, and since then the rhino population has recovered and is one of the most common species on the planet.

Another interesting example is how private property rights heavily featured in the resource management of Native Americans. They were careful to specify fishing territories, and had well-defined salmon fishing rights in the Pacific Northwest. This is why they avoid overfishing, a problem all too common elsewhere. The Tragedy of the Commons was averted. According to Stanford professor Terry Anderson, their technology was so efficient that they could have depleted salmon stock, but they instead allowed some of the spawning fish to escape so that there would be ample fish supply remaining for future use. There was an incentive to do so considering how they had the fishing rights to the area and wanted to preserve the long term value of their land.