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Property and rights: Owning ideas, fish and forests

By Manoj Nadkarni

All debates about property - whether it's water, medicines or a piece of music - revolve around two fundamental questions: who should have the rights to own and benefit from the property; and what should those rights consist of?

What links the privatisation of water, traditional medicines, cheaper generic drugs and the slum clearance drive in Mumbai? They are all about property. All debates about property — whether it is intangible and intellectual, or solid and physical — revolve around two fundamental questions: for any resource or goods, who should be allowed to own and benefit from it, that is, in whom should property rights be vested for those resources? Second, what should those rights consist of?

The idea of ownership and sovereignty, meaning 'I (we) can do what I (we) like with it because it is mine (ours)', is a very emotive issue. A good example is the ongoing debate on the privatisation of water; the angry discussion sends out the intuitive message that not only can someone else own and control something basic to my survival, but they can also sacrilegiously make a profit out of it. Governments and municipalities seem to be willing to hand over this right to profit-making companies, even foreign private companies.

Unfortunately the emotiveness of the discussion actually turns an extremely complex subject that has lots of grey areas into an either/or situation. Understanding this complexity and delineating those grey areas gives us tools with which to defend positions and serves to make discussions more informative and in the long run more useful. For example, in the discussion on urban water privatisation it is often not made clear if it is the water that is being privatised or the water purification and delivery system, which are just pumps and pipes, not water. A delivery system is usually private, whether a panchayat, a business company or a municipal corporation owns it.

Property is about resources, anything that has a value: water, food, drugs, poetry, or goodwill. This is an extremely old area of study and some of the oldest written records available from around the world are about property and property regimes. However, rather than retracing historical discussions, a good starting point for understanding property and resource management, especially as related to environment and development, is ecologist Garrett Hardin's 1968 article on Managing a Commons. In his article, a commons was a village grazing area which no one owned but everyone was allowed to use. Hardin's seminal article pointed out that if no one owned it, no one had any incentive to look after it, while still having an incentive to make use of it for free food for their livestock. The more cattle you grazed the more money you made when you sold those cattle. As everyone realised this, more and more cattle would be grazed on the commons and soon overuse would degrade it to the point where it would be useful to no one. As each person individually tries to maximise their use of a particular resource, they collectively destroy it. Free riding becomes established. It seemed that the only way out was for someone to own the commons and make rules as to how many cattle it could sustain and who could and who couldn't use it.

The commons was a metaphor for the whole world and the resources it provided. Trawlers destroyed fisheries and wiped out species because no one owned the seas; factories destroyed lakes and rivers because no one cared that pollution was being dumped until it was too late. The only solution was to give someone ownership, and hence rights to benefit from that resource, hence incentive to protect that resource so that they could be used over longer periods. This view, that ownership creates sustainable resource management, applies to every resource: water, drugs, biodiversity or music. (Copyrights and patents are property rights as applied to ideas.)

Though this is superficially plausible, researchers noticed that in areas where traditional resource management was practiced, the commons were actually thriving. They had survived for centuries in many countries, in spite of population growth, changing cultures, and many types of resources, be it Swiss alpine pastures, African coastal fisheries, Indonesian forests or irrigation water everywhere.

As economists studied these sustainable management practices, patterns began to emerge and slowly an understanding of property rights and management tactics began to be understood. These combined with earlier micro and macro economic and political economy theories to give a good picture of what property rights actually are. The emerging Internet — decentralised, seemingly anarchic, free of all control — also forced economists to think along new lines, as did the global south's demand for control over its own biological resources, be it medicinal plants or refusing GMOs.

One fundamentally important point that economists noticed is that common property regimes are not the same as open access, meaning a free-for-all, which is what Hardin's commons actually were. The commons and the resources which survived over centuries were actually forms of 'private' property which had rules and regulations; tested, modified and established over centuries. In a way the private property arguments were correct; most resources are best managed when they are owned by someone. Yet, this conclusion was not so straightforward: research showed that this someone did not have to be a single person, and in fact many resources were better managed under multiple ownership.

There are some important points to note about property, property rights and resource management. A mistake is to conflate the varied uses the word 'private' and 'public' refer to. These terms make completely different claims when they refer to resources, ownership rights and representation, yet are often used interchangeably.

Whether a resource is private or public depends on just two factors, whether the goods diminish when someone makes use of them, and secondly, how easy or hard it is to deny someone those goods. This is generally termed their subtractability and their excludability. These physical, natural or mental attributes do not say anything about how it can or is managed and stem from the physical or 'real' property of the good itself, not rights. No ownership or management system is inherent in the resource and any resource can be managed in any manner.

 

Exclusion easy

Exclusion difficult

Subtractable

Private goods (manufactured goods, cattle, trees in an orchard)

Common pool resources, (air, the seas, some environmental sinks)

Nonsubtractable

'Club' goods (cinemas, cable TV, religious groups)

Public goods (public health, radio and TV broadcasts, national defence)

These resource types are managed by systems of property rights defining ownership, these rights are social or cultural inventions, not inherent in the resource. Private rights/ownership implies that certain people can be kept away from that resource, while public rights/ownership implies otherwise. Empirically it is seen that e asily excludable resources seem to be managed best with private property rights; while those with low excludability and low subtractability are public goods, which usually the State provides. Those with low excludability and high subtractability are common pool resources.

Common pool resources are often confused with common property regimes. The first is a resource that people cannot be kept from using, while the second is a management system based on multiple ownership and applicable to any resource. But it does so happen that traditionally many common pool resources were managed by common property regimes of different types, but this is not a logical necessity.

It should also be noted that claims about representation, such as 'private' or 'public', are not claims about property: A private company tries to make profits for its owners and hence represents its owners; but the owners can be an individual, shareholders or institutions. In the case of nationalised companies, the owners are the citizens of the country. A private company can produce private personal cars for the rich of a country but the management of that company can be government bureaucrats and the shares of the company owned by nationalised financial institutions representing the will of the people of that country. A water distribution part of a municipal corporation can be a private company whose profits, derived from water charges, end up as tax rebates for the population of that municipality.

A final point is that the flow of goods is distinct from the stock. For example, the fish caught is not the same as the fish stock in the lake. The firewood taken from a forest is not the same as the timber of trees; nor the water in an aquifer the water pumped out. This is not as trivial as it sounds, the stock makes the flow possible and often the best way to mange something is to have different ownership rules for stock and flow units. A way to look at this is like the corpus funding of many NGOs; they can use the interest as they please, but are not allowed to do anything with the principal.

Rights are generally designed to make sure that the flow of goods continues without the stock diminishing. In the case of intellectual property, rights try to encourage innovation and creation, while enabling access. So the creator has rights which allow him to be recognised as the creator, to profit from that creation and to give ownership to another person if they want. Other people buy rights to use and enjoy that creation, but not make money from it or stop the creator from earning money from his creation.

Generally rights are lumped together in a bundle in a rights regime. These bundles of rights themselves are 'buyable' in the sense that they are amenable to exchanges and transactions. Some such rights are access, withdrawal, transferableness, management, and exclusion.

Along with rights is a system of rules and regulations, altogether called 'institutions'. These decide how these rights are to be honoured, how they are to be seen and how they are to be enforced. A person could buy or be given a right to access a field, from the field they could withdraw some product such as fodder or leaves and could have the further right to stop others from going into the field. But they could not choose which grasses are grown in that field, nor could they sell ( transfer) their right to collect fodder to someone else. Another person, perhaps the owner of the field, could decide how best to manage the field and to leave (transfer) the field to his children upon his death. Someone else may just have the right of access, meaning they were allowed to walk across the field while getting to the well, but no usufruct rights and they would not be allowed to cut or pluck anything along the way.

The traditional rights in a single large village pond may include limited or species-based fishing rights, limited or unlimited drinking water abstraction, irrigation water abstraction, shore use for clothes washing, bathing, seasonal access rights, recreational rights, shore construction rights, livestock bathing and watering rights, reed cutting rights. In traditional systems rights were enforced by punishment, by fines, social or religious excommunication, or the legal system of the State. These would often be coupled with caste or other religious rights, making an extremely complex system.

Many property rights are historical, local, traditional, informal and not codified. Clashes take place when institutions, designed for different scales and timeframes, attempt to manage resources which are best managed locally. A classic example of this is forestry laws in India : Rural villagers had traditional rights to access non-timber forest products in local forests. These rights were used to meet their daily needs and were honoured by local kings who actually owned the land, and in some cases honoured even by the British. But when the Indian government took over forests they saw forests merely as a source of financially valuable timber, and as owners of the land they restricted access to all forests, denying people their traditional rights and livelihoods, since they were not actual rights in the eyes of the law. Only with recognitions of autonomy for the panchayats, and recent programmes such as joint forestry management (JFM) or community-based resource management, are these rights being recognised as being vital for the survival of local people and resources.

Scales, timeframes and codification are also where a lot of the problems of intellectual property stem from: a rights system for recorded music which worked when no one could make records at home was not suitable for the age of cheap cassette players and even less for the Internet age. The only thing that we can be sure of is that property rights will be of concern to human beings long after these specific issues are resolved, just as they were when ancient Egyptians tried to divide up flood plains on the Nile.

Some links which serve as a good starting point for further information:
 

Decentralised resource management and panchayats:
http://www.panchayats.org/

A starting point for the Community-Based Natural Resource Management network:
http://www.cbnrm.net/resources/index.html

A microeconomics digital library has some basic information on property and property rights
http://www.econport.org:8080/econport/request?page=man_pg_table

An excellent website on common property and common pool resources. Especially interesting is the section marked "activists & thinkers"
http://onthecommons.org/

A site which features research on collective action and property rights
http://www.capri.cgiar.org/capri.htm

Most university economics departments have website devoted to property and property regimes, for example:
http://www.indiana.edu/~iascp/library.html

A short simple economics of IPR can be found at the online textbook.
http://www.cerna.ensmp.fr/PrimerForFree.htm

For international news on trade and treaties relating to IPR and some good links to online texts:
http://www.iprsonline.org/index.htm

InfoChange News & Features, March 2005