Semicommons in Fluid Resources.

JurisdictionUnited States
AuthorSmith, Henry E.
Date22 June 2016

Introduction I. Fluid Property II. Managing Water III. The Intellectual Property Semicommons Conclusion Introduction

Intellectual property has an exclusion problem. Much of the current controversy over intellectual property appears to stem from the excessive exclusion that intellectual property law affords the holders of rights--rights that derogate from the public domain and prevent what would otherwise be use that does not directly harm anyone. To the economist, it is the nature of information as a resource that causes us our ambivalence about exclusion rights to information: if information can be consumed at zero marginal cost, exclusion is an unalloyed bad. The only rationale for intellectual property would be as an incentive to produce the information in the first place, but once it is produced, we implement exclusion only with regret and should not do so if there is a cheaper way to provide an incentive for the production of information. Given that exclusion looks like a colossal waste, many would hold that one or more of these alternatives--from prizes to social recognition--simply has to be better. (1)

And intellectual property is not the only area in which exclusion proves controversial. As with information, many would claim that property rights of any sort in water, and especially those involving prior appropriation as in the American West, are inherently wrong and violate human rights. (2) Similar ire is directed against proposals for property rights in the radio spectrum and on the Internet. (3)

From these perspectives, property itself would appear to be the problem. It is property that erects the metaphorical fences around information, spectrum, water, and other resources with public goods characteristics; it is, therefore, property that so many would like to do away with.

In this lecture, I would like to propose a somewhat different diagnosis. Property is indeed at the heart of these questions over rights in fluid resources. However, I will argue that the picture of property is incomplete. Once we understand how property meets its own challenges, we will be in a position to see how problems involving intellectual property, water, spectrum, and so on--what I will call "fluid resources"--can be, and sometimes are, solved rather than created by means of property institutions. In particular, I will show that fluid resources are very likely to call for hybrid property systems combining private and common elements--a semicommons--and require much more fine-tuning through rules governing property use than do more-familiar kinds of resources.

To begin with, the notion of exclusion is not uncontroversial in property. People disagree about how central exclusion is to the notion of property (if there is such a notion!), and how far it should be pushed. (4) Further, if we do implement exclusion strategies in "regular" property, they lead to many of the same problems identified in the controversies over intellectual property, water, and the other mentioned resources, but often to a lesser extent. Whether for fluid or regular resources, exclusion always comes at a cost in terms of delineation and enforcement effort--and in terms of forgone harmless use. Intellectual property and water law problems are indeed problems, but they are property problems.

And yet, the difficulties in intellectual property, water law, spectrum, and the like are in a sense special, and bear a family resemblance. I will argue here that all these resources are "fluid" resources, and that it is precisely the intersection of fluid resources with the institutions of property that inevitably leads to challenges in managing potentially conflicting use. Once we can account for the nature of that use and for the actual function of the property institutions, we will see that property law is not the villain of this piece, but a highly flexible set of tools that allows for a surprisingly wide range of institutional responses to conflict.

What is a fluid resource? I am going to argue that certain resources are not just hard to bound, but are even hard to separate into legal things. Their uses are hard to isolate, period. Just as a legal thing is similar to, but different from, a physical thing, so economic and legal "fluidity" is similar to but different from physical fluidity--physical fluidity will typically lead to legal fluidity. Physical fluids deform continuously under shearing stress, and they flow in characteristic ways; this makes it difficult to keep track of particular bits of a fluid (compared to solids), and the study of fluids is statistical and aggregate. (5) For our purposes, legally and economically fluid resources will be defined as those for which separation between groups of uses is difficult. (6) As we will see, one way to pick out a broad class of uses for protection is to define a legal thing and protect it using an exclusion strategy. By definition, this is difficult in the case of fluid resource because any separation into classes of uses is itself difficult. Not impossible, though. The question becomes which set of separations and other devices to employ--if any--to manage the complex set of potentially conflicting uses of these resources. The problem is similar to, but a more extreme version of, that obtaining in the case of more-familiar nonfluid resources.

For the fluid resources we care most about, their fluidity leads to a dilemma. Many fluid resources are valued by multiple users and for multiple types of uses, sometimes on very different scales. At the same time, because of the fluid nature of the resource, the uses cannot easily be kept separate for purposes of tracking by the legal system. This has implications for how property will be delineated in such resources, if at all. The strategies for delineation range between two poles. (7) On one side are exclusion strategies, in which rough proxies of access are used to protect a range of uses. Trespass and the ad coelum rule are the prototypical methods of implementing such a strategy. At the other pole is governance, whose proxies focus in on smaller classes of uses for special treatment. Many institutions can zero in on particularly important uses; nuisance, servitudes, and land use regulation all do so, even though very different institutions supply them. In the case of fluid resources, we will see that the cost of exclusion and the benefits of singling out uses both push away from exclusion and toward governance, as a matter of degree.

Thus, these resources are often subjected to a regime of semicommons, in which different interacting uses are subject to different property regimes, some private and some common. (8) The problem is that when the uses interact and are not fully legally separated, actors can engage in strategic behavior--a user in one use may proceed with a view to gaining in another class of uses. The incentives in a hybrid system can be worse than in pure private property or pure commons; sometimes strategic behavior will allow shifting more than a proportionate cost to others and grabbing disproportionate benefits. (9) A historical example of a semicommons is the open-field system of medieval and early modern Europe, where peasants would own scattered long thin strips for purposes of grain-growing, which they would be obligated to throw open for common grazing after harvest and in fallow periods. (10) Circumstantial evidence suggests that the thin, scattered strips prevented strategic behavior--participants could not, during the common-use period favor, with extra manure land that would be theirs in the private-use period, and could not direct damaging trampling towards the strips of others. (11)

This essay will begin with the notion of fluid property and the special problems to which it gives rise. Part II will show how these problems are dealt with in water law. In Part III, a similar picture is painted for intellectual property. The parallel institutions in both areas are more extremely governance-oriented, as we would expect from the delineation cost account. I conclude with some thoughts on the use of property talk in intellectual property.

  1. Fluid Property

    If exclusion is controversial in water and intellectual property, this very controversy is not unknown to property law either. In property theory itself there is a lively debate about the importance of, and desirability or undesirability of, exclusion. one might think, though, that the debate is different, in that intellectual property and, for some purposes, water are nonrival resources. This is true, but it should be kept in mind that one of the costs of exclusion in regular property is forgone use. Not every use that an excluded actor would make of a resource would conflict with that of an owner or possessor. And yet the right to exclude, combined with transaction costs, will preclude that kind of use, along with those that are truly harmful. Trespass does not include a harm requirement, unlike the law of nuisance and many other torts.

    As noted in the introduction, exclusion has been a flashpoint in intellectual property as well as property. In other works, I suggest that a fixation on exclusion--for or against--is often a stand-in for ambivalence over the role of the thing in property. Thus, the right to exclude can be exaggerated as a sine qua non of property because it is doing the work of the thing as a starting point. (12) While it is true that notions of possession and exclusion strategies key off the thing more directly than do governance strategies, effacing the role of the thing makes the "right to exclude" look like a particularly important stick in the bundle or an essential feature, which runs into trouble when we get to property rights such as easements. By the same token, those who seek to deemphasize exclusion are often the ones who are most against property as a right in a thing, or who dismiss talk of things altogether. (13)

    When it comes to...

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