We have all heard the statistics about ecosystems’ demise. More than a billion people live in water-scarce regions. Thirty percent of the world’s forests have been cleared, and another 20 percent degraded. And nearly 500 million people live in drylands that are becoming increasingly vulnerable to climate change.
But what many people do not realize is that a lack of property rights rests at the heart of much of this environmental degradation. Property rights, or people’s legal right to own, use and sell land, resources and other goods, provide an incentive to sustainably use natural resources. However, people in many countries around the world do not have clear property rights over land, water, minerals and more, putting natural resources at great risk.
Here are three reasons why clear and enforced property rights are essential for keeping ecosystems healthy:
1. Property rights can prevent ecosystem degradation.
Many natural resources are considered common resources—that is, no one owns them but everyone can use them. Their overuse by some can negatively affect everyone. For example, groundwater in some places is considered a common resource that all farmers can withdraw. But if an individual user only cares about watering his or her own crop, and wants to use as much water as possible from a shared watershed with limited water availability, it can lead to over-extraction, causing all users in the area to suffer shortages. Similar scenarios often ensue when it comes to fishing in the open sea and logging in forests. Garret Hardin described these situations as the “Tragedy of the Commons.”
Assigning property rights to resources may help reduce degradation. For example, in the Philippines’ zanjera irrigation community, the government granted ownership over the water supply to a farming community. Farmers then established rules governing the use of water, where farmers would withdraw water in rotation under the supervision of another farmer. If conflicts arose, a local court would resolve them. This arrangement—which effectively avoided overexploitation of the local water source—would never have occurred without community property rights.
2. Property rights can encourage the provision of ecosystem services.
Human well-being is dependent on the services that healthy ecosystems provide, such as clean air, nutrient cycling, flood and erosion control and scenic beauty. The problem is that while everyone can benefit from these services, there’s not actually a market for them—no one pays for the erosion control a healthy forest provides. This is what’s known as a “free rider” problem in economics. These services are often under-provided due to the lack of market incentive.
Here’s where property rights come in: Unlike an abandoned lot or open field, if a person or a community owns a particular piece of land, they have a sense of (and sometimes a legal) obligation to care for it. And they have an economic incentive to do so, too, since they as the owners can capture some of the direct benefits of productive, sustainable use of the resources. Keeping an area healthy also provides ecosystem services that benefit people far outside the property lines. For example, maintaining tree health in community-owned forests can improve water retention in the soil, and benefit all farmlands in the surrounding area through effective flooding and erosion control. And the forest’s carbon sequestration benefits the global community.
3. Property rights can promote investment in conservation and efficient use of resources.
Nature conservation often cannot be achieved at zero cost, and there can be competing uses for land with clear economic value. Even when conservation would lead to the highest benefits to society, it is often resource-strapped communities who absorb the costs of maintaining a healthy ecosystem, making it hard to realize this outcome without some external support. A key question for policymakers is how to finance conservation in resource-rich regions where the citizens are poor. Here, too, securing property rights can play a role.
For example, Chile, Mexico and California assign property rights to water, with each user allocated a certain amount. This creates a market that incentivizes sustainable use. For example, farmers will adopt water-efficient practices to stay within their allotted amount of water, or even use less than they’re allowed. They can then sell their unused allocations to other farmers or businesses who need more water than their allotment. This is an economically efficient solution to sustainable water use, as farmers can have the opportunity to make extra money by saving water, while other users will have more water to meet their production needs. Of course it’s not always possible that individuals or communities can turn resource rights into something “marketable,” so some external financing from governments or other entities may still be needed to promote conservation.
Moreover, clearly defined property rights can also ensure landowners receive awards or incentives for the sustainable management of resources that provide benefits to others. For instance, Evian Natural Mineral Water has paid local farmers in France for preserving the water quality through sustainable agricultural practices.
Investing in Property Rights Is a Cost-effective Investment in Nature
We may not be charged for nature, but the costs of ecosystem loss and degradation are felt by all. While governments could regulate resource use and punish overuse, this sort of arrangement can be costly, time-intensive and difficult to enforce. Strengthening property rights is an efficient way to benefit people, land and resources.