Date of this Version
Cornhusker Economics (February 6, 2013)
One of the concerns in environmental and ecological economics is the overexploitation of natural resources, often leading to pollution. Proponents of market based solutions to these pollution problems argue that one only needs to move away from common property (the way almost all natural resources, other than land, are owned now), to individual property, i.e., privatize the natural resource ownership, in this case create individual property rights in the capacity of some body of water to process water pollutants. These proponents also do not see (or downplay) the usually significant transaction costs, instead presuming that bargaining and other interactions between individual property owners is essentially costless and efficiency is easily achieved. In such a case, the role of government would be limited to: 1) providing a way to allocate the initial property rights, and 2) supporting the legal system to enforce the property rights.