Transcript Introduction to Property Rights

William L. Hoover
Professor of Forest Economics
Department of Forestry and
Natural Resources
Purdue University
West Lafayette, Indiana, USA
Asumamos que
sepamos cuál es la
solución!!!
Sabbatico, CATIE,
Turrialba,Costa Rica
Profesor de economía
Property Rights:
The Game Depends on Who Is Playing
The “game” is “rent seeking”
Cristóbal Colón
Rent Seeking
• “People” seek economic
gain by,
– Changing the rules of the
game, or
– Exchanges of property
(wealth capture)
• In general, it’s human
behavior creating and
adapting property rights
systems
SE
ALQUILER
Focus on Legal Aspects?
• To what extent can
“the law” -- its
administration and
enforcement affect
human behavior?
• What are the roles of
customs, family and
personal relationships,
aggressive behavior?
James D. Wolfenson, President,
World Bank Group
January 21, 1999,
“A Proposal for a Comprehensive
Development Framework”
“A government must ensure that it has an effective
system of property, contract, labor, bankruptcy,
commercial codes, personal rights laws and other
elements of a comprehensive legal system that is
effectively, impartially and cleanly administered by a
well-functioning, impartial and honest judicial and
legal system.”
James D. Wolfenson, President,
World Bank Group
January 21, 1999,
“A Proposal for a Comprehensive
Development Framework”
Writing Codex Justinianus
Concerning a “Private Sector Strategy” he states
that: “whether the issue is protection of property
rights or fair and equitable labor practices,
governments must give certainty to the investor
about the “rules of the game.”
Focus on Idealized Economic Aspects?
• Efficiency achieved when property rights are
characterized by,
– Universality
• All resources privately owned
• All rights completely specified
– Exclusivity
• Owner receives all benefits and incurs all costs
– Enforceability
• All rights secure from involuntary seizure or encroachment
– Transferability
• All rights transferable from one owner to another in voluntary
exchanges
Taxonomy of
Property Rights “Games”
High degree of
legal formality
International
law
High
degree of
political
formality
National
law
Provincial
law
Legal system
Municipal
law
Local
customs
Politics &
Social Capital
Low degree
of political
formality
Avoid legal
formality
Family
relationships
Property Rights “Structure”
The rules of the game as understood by those
in the game, i.e. those having an interest in
“property”
Written law
Customs
Legal
Pluralism
Bride burning in India
Examples of Property
Rights Games
Modern Multi-National Corporation
• Ready and cost effective
access to
– Legal systems
– Political systems
• Fee simple (pleno dominio)
title to property
• Efficient PR structure
– Fairly easy to identify
– Firms’ behavior predictable
Domestic Business
• Somewhat less ready and
cost effective access to
– Legal systems
– Political systems
• Fee simple (pleno
dominio) title to property
• Efficient PR structure
– Fairly easy to identify
– Firms’ behavior predictable
“Extralegal” Enterprises
• Operate outside legal
systems
• Focus is on urban enterprises
• May seek recognition in
local political systems
• PR’s self-enforced within
immediate community
• Effects of “tenure program”
difficult to predict
Institute of Liberty and
Democracy, Lima, Peru
Rural Landowner - latifundio
• Can afford lawyers and
not afraid of legal system
• Works local political
system very well
• Fee simple (pleno
dominio) title to property
• “Takes advantage” of local
real estate market
Rural Land Renter - ejido or tierra privado
• Depends on local politicians
for community land to rent
• Usually try to avoid legal
system
• Works political system in
terms of party affiliation
• Object of land tenure
programs
– Has better access to land than
may at first appear
– My not want to risk
“goodwill” developed over the
years
Landless Campesino - labriego
• Depend on landowners for work
• May have milpa on land of family
or employer
• Avoids legal system
• Limited political involvement
• Frequently intended beneficiaries
of land tenure programs
– Hard to pay required fees
– Uncertain of title because of previous
chain of ownership
– Hard to predict affect of programs
because of effect on customary
practices
Better than average milpa
Indigenous Peoples resguardos or territoro
• May be extralegal - legal pluralism
applies
• Property rights based on “kinship
group,” family, semi-political group
• Most land may be common property
• Access to resources controlled by
custom and village leadership
• Frequently non-agrarian
UN Intl. Labor Org. C169 - Indigenous
and Tribal Peoples Convention, 1989
L
Emberá Culture, Panama
Photo credit: Indigenous Artisans of
Panamá
http://panart.com/artisans.htm
Basic Concepts
• What is property?
• What are rights?
• What is a PR
structure?
Photo credit: Fine Arts Museum of San
Franciso, http://www.thinker.org/
What is “Property”
• Numerous ways to classify animate and
inanimate objects - “things”
• Something is “property” if it has value to
someone after costs are considered
• Characteristics of a given “thing” affect how
rights are “structured”
Real
property
Personal
property
Incidents (Rights) of Ownership
•
•
•
•
•
•
•
Use and manage - control of property
Income - right to receive it
Capital - use for production of income
Possession - physically occupy
Security - borrow against it
Absence of term - rights don’t terminate
Prohibition of harmful use - can’t create
hazards or nuisances
• Residuary character - owner has all
rights not specifically excluded
Deed
Survey
What is “Property”
• Most things have a range of attributes
• Consider “land” as “property”
–
–
–
–
–
–
–
–
Till- grow crops
Pasture - graze
Timber - harvest
Non-timber forest products - gather
Wildlife - harvest
Minerals - extract
Improvements - buildings
Access -recreation
Divided Ownership May
Increases Total Wealth to Society
• Partition ownership of
attributes based on
– Transactions and production
costs
– Constrain uncompensated
exploitation
– Capacity to accommodate
variation in income stream
Examples
• Landowner could lease right to
–
–
–
–
–
Extract minerals
Raise crops and graze
Gather nontimber forest products
Hunting for wildlife
Access for recreation
• Landowner could sell or donate
development rights with a “conservation
easement” L
What is a “Right”
• Relationships among “people”
having an interest in a “thing”
– People - natural and corporate
– Relationships - legal, commercial,
social, family, personal
• Exist only to extent
Enforcement
Goodwill
– Recognized,
– Enforced,
– Rationale - value of right exceeds
cost of enforcement
Basic Structures
• Open access – Open to anyone to use
– Use will increase until no user can make a profit
– Degree of scarcity is critical issue
• Degradation will occur if level of use exceeds sustainable level
• Common pool (“commons”)– Open to a defined group
– Problems arise as scarcity increases
• Do users have means for “effective control”
Tragedy of the Commons?
• Open access resource
– tragedy inevitable when use exceeds sustainable level
• Common pool resources
– tragedy less likely but control mechanism must
be effective
Basic Structures
• Private
– “Single” owner - natural or corporate person
– Complete control
– Owner assumed to maximum long-term value of
property
• Capital asset value (resale value)
– Protects against misuse
– Optimizes rate of utilization
• Income flow - make best economic use of property
• Combinations
– Different attributes may have different structures
Rights Come at a Cost
• “Transactions cost”
– Maintain possession
• Physical
– Flows of income
– Occupy
– Maintain boundary lines
• Legal
– Transfer of rights
• Borne by
– Society
– Owner
– Third parties
Reflects Economic, Social,
Political Conditions
• Changes driven by
– Social conflict and cooperation
• Rent seeking behavior
– Increase in economic efficiency
• Maximize income
• Manner of operation
• Transfers to owners who can capture more rent
Commons to Private
• As “primitive” societies evolve tends to be
transition from common to private property
• Driving force is scarcity
• Balance between common and private property
determined by
– Cost of exclusion
• Proportional to
– Number of firms/people using the commons
– Size of commons
Commons for Environmental
Outputs
• Private production
– Voluntary output on private land
• Complementary with owner’s objectives
• Purchased specifically for this purpose
• Public intervention
– Provide incentives to private landowners
– Purchase land or acquire easements
Land Reform Programs
• Very expensive
• Requires
“reallocation” of
existing rights
• Poor record of
“success” in terms of
reducing rural poverty
Landless Workers
Movement, Brazil
Land Reform Programs
• Creates opportunities for
“rent seeking” behavior
• May require political
reform at local level
• Should include permanent
restructuring of
administrative and
adjudicative systems in
areas affected L
Landless Workers
Movement Training
Session, Brazil
“Redistributing land to small-scale
farmers can do much to reduce
their poverty. When rural families
have land, and secure control over
that land, they are likely to grow
more food and see their incomes
rise. Land security can mean food
security.”
(Communications and Public Affairs Unit, International Fund for
Agricultural Development, http://www.ifad.org/media/pack/land.htm)
"When one reads the list of items needed for
successful land reforms, it is a complete
menu for economic development. But then it
is probably better to aim explicitly at
economic development, and if such
development necessitates land reform, that
is the appropriate time to face up to this
issue."
Salim Rashid, Professor of Economics, University of Illinois, 2/1/0, [email protected]
Land Tenure Center
University of Wisconsin-Madison
USA
1357 University Avenue Madison, WI 53715
Phone: (608) 262-3657 Fax: (608) 262-2141
Email: [email protected]
TELEX: 3797422 Attn: Land Tenure
http://www.wisc.edu/ltc/
International Association for the
Study of Common Property
(IASCP)
WORKSHOP IN POLITICAL
THEORY AND POLICY
ANALYSIS
http://www.indiana.edu/~workshop/
International Union of Anthropological and
Ethnological Sciences
Commission on FolkLaw and
Legal Pluralism
Executive Secretary, Prof.Dr. Fons Strijbosch, c/o
Institute of Folk Law, Catholic University, Postbus
9049, 6500 KK Nijmegen, the Netherlands. E-mail:
[email protected]
http://www.jur.kun.nl/cflp/
World Bank
http://wbln0018.worldbank.org/Networks/ESSD/icdb.nsf/
D4856F112E805DF4852566C9007C27A6/
5B758F21508127B585256778004D0405
http://www.fao.org/sd/IN1_en.htm