Property Rights, Markets and Freedom, by Anissa Khan
6/15/14
The annual “Property Rights, Markets, and Freedom” student colloquium is hosted by the Property and Environment Research Center (PERC) located in Bozeman, Montana. This colloquium allows a diverse set of 25 students to explore and discuss a variety of topics related to free market environmentalism. Anissa Khan is an economics student at Miami University. She is a summer EAF intern working for Dr. Sabina Shaikh on projects related to stormwater management and the Mekong River. She attended the PERC conference to get a broader perspective on how to deal with environmental issues using the free market.
Last week students gathered in Bozeman, MT for the annual “Property Rights, Markets, and Freedom” student colloquium hosted by the Property and Environment Research Center (PERC) and co-sponsored with Liberty Fund, Inc. This colloquium brings together 25 students from around the country to learn about and discuss property rights and their relation to the environment. On the first day, students were taught that at the base of each environmental issue is a property rights issue. That is to say, environmental issues are the result of ill-defined property rights. When the students discussed the applicability of this assumption, they realized that it is difficult to define the property rights of certain resources, such as air, because they are public goods—non-excludable and non-rival in consumption.
Another topic that was discussed was the positive and negative aspects of private versus public (federal) ownership for environmental resources, such as land. General consensus among the students was that private ownership would be more environmentally and economically beneficial for federally owned lands in the west (over 50% of lands in the west are federally owned). However, private ownership of Yellowstone National Park, for example, would not be politically feasible even if it were more economically efficient; the reason being that the general public places an existence value on Yellowstone and feels a sense of safety when it is in government hands. The general public is also unaware that “numerous publications on the ecological health of Yellowstone document destruction, not preservation, within the park,” which can be attributed to poor park management (Anderson et al. 1999). Going further, this poor park management can be attributed to detrimental incentives. One solution discussed was a leasing structure where the federal government would lease Yellowstone to a private entity. This would allow the benefits of private ownership to be realized while keeping the public minds at ease.
Additionally, students learned about differing water rights and how these rights guide incentives for use. All water is owned by the state, but individuals and companies can obtain rights to use the water. The rights discussed fall under two categories—riparian and prior appropriation. As the United States advanced away from a primarily agricultural economy riparian rights became limiting because they grant water rights to the landowners that live adjacent to watercourses. Prior appropriation rights were thus created. These granted “first in time, first in right” water rights to the individuals who could divert the water and put it to reasonable use. If the right owner does not use the water, he loses his right. In today’s environmentally aware world, prior appropriation rights worry many because they create an incentive to divert and use large amounts of water as quickly as possible. This can create water availability problems for users downstream; one famous example of this problem is the Colorado River. As a result of prior appropriation incentives, interstate agreements and court decrees have been needed to ensure water availability to the lower basin states.
Other topics explored at the conference include environmental entrepreneurs, conservation easements on private lands, how household recycling is and is not worth the cost, how to mend the tragedy of the commons, and the costs and benefits of hydraulic fracturing. In their small discussion groups, students debated the differences between common law and regulation, the morality of economics, whether or not innovation is always positive, and whether the free market will mitigate the effects of climate change.
Overall, the program was a wonderful experience in a variety of ways. All of the hands and minds that went into creating and guiding our learning experience were thought provoking and supportive throughout the week. I value the opportunity to have listened to 24 students with differing ideas discuss a plethora of topics. I appreciated the fact that we were able to achieve true dialogue during discussions and avoided debates and arguments. The conference made me curious and skeptical about the benefits of recycling and I am conflicted every time I recycle a piece of paper (we were taught that recycling paper does not save trees). The core idea of the conference—that all environmental issues are a result of ill-defined property rights—has altered my thought process when approaching these problems. I would say this deceivingly simple idea is my most valuable takeaway from the week.
Suggested Readings
Anderson, Terry Lee, and Donald Leal. “Nature’s Entrepreneurs.” Enviro-capitalists: Doing Good While Doing Well. Lanham, MD: Rowman & Littlefield, 1997. 1-19. Print.
Anderson, Terry Lee, and Laura E. Huggins. “1.” Property Rights: A Practical Guide to Freedom and Prosperity. Stanford, CA: Hoover Institution, 2003. 1-12. Print.
Anderson, Terry L., Vernon L. Smith, and Emily Simmons. “How and Why to Privatize Federal Lands.” Policy Analysis 363 (1999): 1-25. Print.
Burness, H. Stuart, and James P. Quirk. “Water Law, Water Transfers, and Economic Efficiency: The Colorado River.” Journal of Law and Economics 23.1 (1980): 111-34. JSTOR. Web.
Fretwell, Holly L. “The Accidental Environmentalist.” PERC Reports for Free Market Environmentalism 28.3 (2010): 32-35. Print.
Heyne, Paul T., Geoffrey Brennan, and Anthony Michael C. Waterman. “Are Economists Basically Immoral?”: And Other Essays on Economics, Ethics, and Religion. Indianapolis: Liberty Fund, 2008. N. pag. Print.