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Elinor Ostrum on "bundles" of property rights and "diversity of property rights systems"

From Elinor Ostrom and Charlotte Hess, "Private and Common Property Rights" [PDF]:

A property right is an enforceable authority to undertake particular actions in a specific domain (Commons 1968). Property rights define actions that individuals can take in relation to other individuals regarding some ‘thing’. If one individual has a right, someone else has a commensurate duty to observe that right. Schlager and Ostrom (1992) identify five property rights that are most relevant for the use of common-pool resources, including access, withdrawal, management, exclusion, and alienation. These are defined as:

Access: The right to enter a defined physical area and enjoy nonsubtractive benefits (for example, hike, canoe, sit in the sun).
Withdrawal: The right to obtain resource units or products of a resource system (for example, catch fish, divert water).
Management: The right to regulate internal use patterns and transform the resource by making improvements.
Exclusion: The right to determine who will have access rights and withdrawal rights, and how those rights may be transferred.
Alienation: The right to sell or lease management and exclusion rights

(Schlager and Ostrom 1992).

In much of the economics literature, private property is defined as equivalent to alienation. Property-rights systems that do not contain the right of alienation are considered to be ill-defined. Further, they are presumed to lead to inefficiency since property-rights holders cannot trade their interest in an improved resource system for other resources, nor can someone who has a more efficient use of a resource system purchase that system in whole or in part (Demsetz 1967). Consequently, it is assumed that property-rights systems that include the right to alienation will be transferred to their highest valued use. Larson and Bromley (1990) challenge this commonly held view and show that much more information must be known about the specific values of a large number of parameters before judgments can be made concerning the efficiency of a particular type of property right. Instead of focusing on one right from the bundle, it is more useful to classify five types of property-rights holders [as follows]. In this view, individuals or collectivities may hold well-defined property rights that include or do not include all five of the rights defined above. This approach separates the question of whether a particular right is well-defined from the question of the effect of having a particular set of rights.

Wow, economists have an impoverished notion of property because markets. Who knew? Even more interesting, fieldwork shows that individuals can participate in more than one property system at the same time:

In a classic study of the diversity of property-rights systems used for many centuries by Swiss peasants, Netting (1976, 1981) observed that the same individuals fully divided their agricultural land into separate family-owned parcels, but that grazing lands located on the Alpine hillsides were organized into communal property systems. In these mountain valleys, the same individuals used different property rights systems side-by-side for multiple centuries. Each local community had considerable autonomy to change local rules, so there was no problem of someone else imposing an inefficient set of rules on them. Netting argued that attributes of the resource affected which property-rights systems were most likely for diverse purposes. Netting identified five attributes that he considered to be most conducive to the development of communal property rights:

  1. low value of production per unit of area;
  2. high variance in the availability of resource units on any one parcel;
  3. low returns from intensification of investment;
  4. substantial economies of scale by utilizing a large area; and
  5. substantial economies of scale in building infrastructures.

Steep land where rainfall is scattered may not be suitable for most agricultural purposes, but can be excellent land for pasture and forests if aggregated into sufficiently large parcels. By developing communal property rights to large parcels of such land, those who are members of the community are able to share environmental risks due to the unpredictability of rain-induced growth of grasses within any smaller region. Further, herding and processing of milk products is subject to substantial economies of scale. If individual families develop means to share these reduced costs, all can save substantially (Agrawal 1999). Building the appropriate roads, retaining walls and processing facilities may also be done more economically if these efforts are shared.

Key takeaway: "Diversity of property-rights systems."

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Cujo359's picture
Submitted by Cujo359 on

Netting argued that attributes of the resource affected which property-rights systems were most likely for diverse purposes.

Makes sense to me. A resource that no one is motivated to take over for himself, and may not be valuable all the time, makes sense as part of a communal resource. Pasture lands and water tables tend to be that way.

This reminds me a little of conversations I have with people about the free market fairy. There are times and conditions where markets work well, and others where they don't. Ditto with ownership of resources.