The Assignment of Property Rights on the Western Frontier: Lessons for Contemporary Environmental and Resource Policy

Abstract

In addressing environmental and natural resource problems, there is a move away from primary reliance upon centralized regulation toward assignment of property rights to mitigate the losses of open-access. I examine the assignment of private property rights during the 19th and early 20th centuries to five natural resources, mineral land, timberland, grazing and farm land, and water on federal government lands in the Far West. The region was richly endowed with natural resources, but assigning property rights to them required adaptation from established, eastern practices as defined by the federal land laws. The property rights that emerged and their long-term welfare effects provide a laboratory for examining current questions of institutional design to address over-fishing, excessive air pollution, and other natural resource and environmental problems. A major lesson is that property rights allocations based on local conditions, prior use, and unconstrained by outside government mandates were most effective in addressing not only the immediate threat of open-access, but in providing a longer-term basis for production, investment, and trade. Another lesson is how hard it is to repair initial faulty property allocations. Accordingly, path dependencies in property rules are real, and they have dominated the economic history of resource use in the West.

Adapting to the Weather: Lessons from U.S. History

“…If weather affects production or investment, adaptation can take several forms: adjusting the mix of production factors, choosing alternative technologies, or even developing a new technology that is more suited to the new climate. In addition, long-term changes in weather may lead to ecological changes, which might be amplified by human action, especially if property rights are not well-established (Diamond 1997; Libecap 2007). In any case, understanding the scope of long-term adjustment is key for measuring the impact of climate change.…”

Barbed Wire: Property Rights and Agricultural Development*

“…The efficiency gains from establishing and enforcing property rights may be large, and much attention has focused on the role of land rights in development (Alston et al 1996;De Soto 2000;Brasselle et al 2002;Lanjouw and Levy 2002;Galiani and Schargrodsky 2006;Libecap 2007;Besley and Ghatak 2009). Insecurity distorts farmers' investments (Goldstein and Udry 2008), and increased tenure security can increase farmers' investment in land (Banerjee et al 2002;Jacoby et al 2002).…”

Water Rights and Markets in the U.S. Semi Arid West: Efficiency and Equity Issues

“…Indeed, institutional arrangements for many resources, such as hard rock minerals and oil and gas reservoirs in the U.S., developed in a manner consistent with the Demsetz hypothesis (Libecap, 1978(Libecap, , 2007Libecap and Smith, 2002). Further in a broader context, commodity markets adjust rapidly to price differentials and reallocate the assets so that price gaps narrow over time.…”