Water rights, markets, and changing ecological conditions.

• Author: Adler, Jonathan H.

1. INTRODUCTION II. PROPERTY RIGHTS, MARKETS, AND ENVIRONMENTAL PROTECTION III. WATER RIGHTS AND WATER MARKETS IV. CHANGING ECOLOGICAL CONDITIONS V. WATER MARKETS AND CLIMATE CHANGE VI. CONCLUSION I. INTRODUCTION

   Conventional environmentalist thought is deeply suspicious of private markets and property rights. Mainstream environmentalist thinkers believe the segmentation and commodification of land and natural resources place ecological values in peril. (1) As environmental law pioneer Eric T. Freyfogle counseled, individual parcels of land are, by definition, "a tiny piece of an entirety that is, in nature's terms, interconnected and indivisible." (2) From this perspective, property rights and markets must be curtailed and restrained if ecological values are to be preserved. (3) Property rights may be useful, but only if carefully limited; constitutional protection of property rights, on the other hand, would present a mortal ecological threat. (4) Markets may need to be tolerated for economic purposes, but only if subject to extensive regulation. Indeed, the organizing principle of much environmental regulation is that government intervention is necessary precisely because market institutions are incapable of safeguarding ecological values to any meaningful extent. (5)

   Professor James Huffman is among those who have challenged this "orthodox" environmental view. (6) Through his scholarship and other activities over the past few decades, (7) Professor Huffman has argued that property rights and market institutions are not only "critical to the efficient allocation of scarce resources," (8) but are essential for environmental protection as well. (9) As Professor Huffman would have it, greater protection for property rights and respect for markets can lay the foundation for more effective environmental conservation and ensure that environmental goals are achieved in a more equitable fashion. If more conservation is what people want, markets will provide conservation more efficiently than government administration or regulation. As a consequence, much of Professor Huffman's scholarship has sought to defend the ecological value of markets and buttress the case for constitutional protection of private property rights. (10) Professor Janet Neuman, although not endorsing Professor Huffman's brand of "free market environmentalism," has also helped demonstrate the conservation value of property rights in natural resources, particularly in the case of water, through both her scholarship and her work as President of the Oregon Water Trust. (11) Reflecting on their work provides an opportunity to reconsider the role of property rights and markets in environmental protection.

   The perspective that private property rights and market institutions provide an effective foundation for environmental conservation remains a minority view. (12) Despite the success of property-based conservation strategies and the prevalence of market-driven ecological advances, most environmental thinkers continue to view property and markets with suspicion. Property rights legislation and judicial decisions insulating private property rights from governmental regulation are derided as "antienvironmental," (13) and there is a never-ending stream of proposals for additional layers of regulation to constrain markets for the benefit of ecological resources. (14)

   The conventional environmental view has drawn strength from the emergence of larger and ever more challenging environmental problems, many of which are the consequence of industrial development and other human activities. Chief among these is global warming, a "super wicked" environmental problem, if ever there was one. (15) It is now widely accepted that human activity has contributed to an increase in the concentration of. greenhouse gases in the atmosphere and this will produce some degree of atmospheric warming. (16) The prospect of global climate change, and consequent ecological disruptions, has fueled the call for additional limitations on private property rights and constraints on markets, and not merely to the extent that market activities have themselves contributed to the accumulation of greenhouse gases in the atmosphere.

   This Essay suggests that the conventional view of property rights and environmental protection is misguided. Specifically, this Essay briefly explains why environmental problems generally, and the prospect of changing environmental conditions such as those brought about by climate change in particular, do not counsel further restrictions on private property rights and markets. To the contrary, the prospect of significant environmental changes strengthens the case for greater reliance on property rights and market institutions. (17)

   Water is a particularly pressing environmental concern, in the United States and around the world. The need for water institutions capable of adapting to inevitable climatic changes requires greater reliance upon markets, not less. (18) Change is constant, and those institutions best able to accommodate and adapt to such changes are those most necessary to help address the threats posed by climate change. Above all else, this Essay posits that if we take environmental concerns seriously, and if we are concerned about the consequences of global climate change, we have to be more open to private rights and private markets than the conventional environmental perspective has been to date. (19)

2. PROPERTY RIGHTS, MARKETS, AND ENVIRONMENTAL PROTECTION

   It is somewhat curious that private property rights are held in such low regard by many environmental thinkers. The early American conservation movement relied heavily on private conservation efforts undertaken on private land. (20) Some early conservation successes were dependent upon the security private rights could provide for threatened environmental resources. (21) Throughout American history, property rights and markets have been a source of sustainability, whereas government interventions--often at the behest of powerful economic interests--have subsidized or otherwise encouraged unsustainable practices. (22)

   Well-defined and defended property rights encourage greater resources stewardship and sustainable utilization. This was a point made by ecologist Garrett Hardin in his seminal article on "The Tragedy of the Commons"--albeit a point that has been too often overlooked. (23) The problem, Hardin noted, was not property rights, but the difficulty in extending such rights to the full range of threatened resources. (24) Property rights, where enforced, discipline resource use and encourage sustainability. (25) A robust system of property rights can also mitigate the consequences of political indifference or broader cultural ignorance about the negative ecological effects of productive activity. (26) It does not take a majority vote of the legislature or the successful navigation of the administrative process to protect private land. At the same time, the failure to protect and safeguard property rights tends to undermine resource stewardship and shorten time horizons. Where property rights are insecure, relatively little conservation takes place.

   These are not theoretical claims. As a general proposition, private rights in nature have tended to do more good than harm. As one looks at ecological resources around the world, one observes a general pattern. Those resources that are more fully integrated into property institutions tend to be managed more sustainably than their unowned or politically managed counterparts. This is not an invariable tendency--there are exceptions to be sure--but there is a discernible pattern supporting Hardin's thesis.

   Fisheries provide a useful case study. Marine fisheries are, in many respects, the archetypal open-access commons. In the 1950s, fishery economists noted the commons problem that plagued all too many marine fisheries, and suggested property rights as a solution. (27) Since then, extensive empirical research has shown that property-based fishery management is more successful than traditional regulatory approaches at averting the tragedy of the marine commons. (28) As a recent review in Science showed, the implementation of property-based systems tends to halt, and often reverse, trends toward fishery collapse. (29) Traditional government regulation has been ineffective and other forms of government intervention, including subsidies for favored interests, have been disastrous.

   The experience of marine fisheries is not an isolated example. Similar patterns can be seen with mineral resources, (30) forests, (31) terrestrial species, (32) and even water. (33) As one review of environmental and economic performance across countries observed, "environmental quality and economic growth rates are greater in regimes where property rights are well defined than in regimes where property rights are poorly defined. (34) Property-based systems and market institutions, for all their imperfections, tend to encourage more sustainable and efficient resource use and protection than the available alternatives. Where such institutions can be implemented, they tend to represent an environmentally superior--or, at the very least, a less environmentally inferior--management approach. (35)

   It is important to recognize that reference to private property rights does not necessarily entail individuated ownership by profit-seeking individuals. Property rights may be held and controlled in many forms. Lands owned by the Nature Conservancy or a local land trust are just as much private property as those owned by Ted Turner, Charles Koch, International Paper, or ExxonMobil. Many regimes characterized as "common property" are really forms of collective private ownership, a less-formal variant of a cooperative or condominium. Private ownership comes in many forms, but it is distinct from a lack of ownership and either de jure or de facto ownership by the state.

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