September 18, 1995
The following first appeared as “The Gospel According to St. John,” Chapter 13 of Property Rights in the Defence of Nature, by Elizabeth Brubaker, published in 1995 by Earthscan Publications Limited. It was reprinted as “Making the Oceans Safe for Fish: How Property Rights Can Reverse the Destruction of the Atlantic Fisheries” by the Atlantic Institute for Market Studies in September 1995.
The good shepherd giveth his life for the sheep.
But he that is an hireling, and not the shepherd, whose own the sheep are not, seeth the wolf coming, and leaveth the sheep, and fleeth: and the wolf catcheth them, and scattereth the sheep.
The hireling fleeth, because he is an hireling, and careth not for the sheep.
— St.John the Divine (1)
In the 1950s, the waters of the River Derwent, in north-central England, flowed unpolluted until they reached the Borough of Derby’s two sewer outfalls—one that occasionally released raw sewage and another that routinely discharged inadequately treated effluent from the local sewage treatment works. The river then passed through land owned by British Celanese Ld., whose effluent also polluted and warmed it. Downstream, discharge from the British Electricity Authority’s power station further increased the river’s temperature.
Because the changes in water quality and temperature killed the river’s fish and their food supply, an anglers’ club which owned a fishery in the Derwent and an earl who owned land along the river took the upstream polluters to court. The court found all three defendants guilty of nuisance and issued an injunction forbidding them from altering the river’s quality or temperature or interfering with the plaintiffs’ enjoyment of their fishing rights. The court gave the defendants two years to comply with the injunction.2
The Borough of Derby appealed to the court to substitute damages for the injunction. It could not simply rebuild its sewage system at will, it argued; it needed a licence, and, in order to borrow money, the consent of the Minister of Local Government and Planning.
But an injunction, one judge who upheld the lower court ruling countered, was not discretionary: “Anyone who creates an actionable nuisance is a wrongdoer, and the court will prima facie restrain him from persisting in his activities.” Damages, his colleague added, would be “a wholly inadequate remedy” since the angling club had “not been incorporated in order to fish for monthly sums.” An injunction was the best way to meet the fishery owners’ demand for clean water, added another judge: “The power of the courts to issue an injunction for nuisance has proved itself to be the best method so far devised of securing the cleanliness of our rivers.”3
The above scenario has been played out time and again in Britain, where virtually all fisheries are in private hands.4 There, owners have the legal tools to protect their assets. They also have strong economic incentives to do so. Individuals, fishing clubs, country inns, tourist operators, and other businesses command good prices for the use of their fisheries; the sale of fishing rights also attracts competitive bids. This combination of tools and incentives has succeeded in protecting British rivers, whose salmon and trout populations put their Canadian counterparts to shame.5
Many who own or lease threatened fisheries have sought the assistance of the Anglers’ Co-operative Association which, through common law court cases, obtains both injunctions to clean up rivers and damages to compensate for losses. The Anglers’ Association has argued hundreds of cases since its founding in 1948; it has lost only two.6 The association has worked on an endless variety of water pollution and withdrawal cases. In the early 1990s its targets included a sewage treatment plant whose phosphate-laced effluent killed fish in a Welsh lake, a water company applying for permission to withdraw water from small streams near Canterbury, and a trout-farm owner who allowed rainbows to escape into a river inhabited by brown trout.7
The Anglers’ Association stresses that ownership is essential in establishing rights to a healthy fishery. It warns its members, “It must therefore be understood that in case of pollution you cannot bring an action in the Courts unless you: (a) Own the water you fish or (b) Have a legal lease of the water you fish, or an exclusive right to the fishing.”8 Ownership empowers people; legally enforceable property rights invest owners with the authority—and the tools—to protect the fisheries and the waters they control.
One need not look as far as England for models of private ownership of inland fisheries. New Brunswick’s riparians enjoy fishing rights to some stretches of rivers. In Quebec, private clubs hold fishing rights on a number of salmon rivers. And before European settlement of North America, aboriginal families frequently established fishing rights in defined geographical areas. The Pacific Coast Kwakiutl Indians, for example, assigned exclusive territorial fishing rights to kinship groups; some held private rights to fish over designated halibut banks, while others owned entire salmon streams.9
Ownership doesn’t only facilitate stewardship; in a system of secure property rights, ownership also promotes stewardship. Like St. John’s shepherd, fisheries’ owners tend to behave more responsibly than their managers. And although they may not lay down their lives to protect their fish, they have proven far more reliable than their non-propertied counterparts. Individual, corporate, or community owners have incentives to maximize their resources’ value, taking into account not just their current worth but their future value as well. As one economist pointed out, “you don’t have to be an economist to know that it doesn’t pay to kill the goose that lays the golden egg.”10 Investment, conservation, and efficient use are in owners’ self-interest; it is they who reap the rewards.11
Self-interest likewise motivates the politicians and bureaucrats who are paid to manage common resources. But for them, personal gain often results not from protecting resources but from increasing their budgets, putting people to work, and ensuring reelection—incentives, as illustrated earlier, that have ravaged our forests.
The guardian of Canada’s fisheries—the federal government—has likewise overseen that resource’s destruction. It has allowed pollution to devastate the Great Lakes’ once vigorous commercial fisheries. It has permitted hydroelectric dams to destroy valuable river habitats. Communities, firms and individuals who relied on—but did not own—these fisheries have been powerless to save them.
Nowhere is the government’s failure to protect fisheries more evident than on Canada’s East Coast. Major federal involvement there began in the 1970s in response to a series of crises in the fishing industry. The government, in keeping with international agreements, extended its jurisdiction to 200 miles from the shore and introduced a number of regulations and licensing schemes.12
According to the 1982 Task Force on the Atlantic Fisheries, in the late 1970s “[a]n attitude quickly developed that any financial problem in the industry could be solved by a greater volume of production.”13 The government’s self-described “expansionist development philosophy”14 enabled the fishing industry to increase while catches steadily decreased. More and larger boats pursued fewer and fewer fish, until several fisheries—most notably northern cod, haddock and other groundfish—collapsed.15
While the fish disaster brewed, keeping people employed dominated the government’s concerns. Managers based catch limits not just on what they thought the fishery could bear but also on the economic needs of fishing communities.16 A 1982 report noted the consideration of “community dependence” in resource allocation decisions and included maximizing employment as a policy objective.17 Such concerns prompted ongoing assistance—including construction and insurance subsidies, tax breaks, loan guarantees, and unemployment insurance benefits—for fishermen, boat owners and processors.18 Essentially, the government was paying people to destroy a valuable resource by enabling them to enter and stay in an industry that couldn’t support them; it was encouraging ecologically destructive and economically inefficient expansion.
Not surprisingly, such perverse policies had disastrous effects. The collapse of the cod fishery led in 1992 to a moratorium, expanded the following year and expected to last throughout the decade, that left 30,000 fishermen and plant workers without jobs. The loss of the cod, worth $700 million to the Newfoundland fishery just three years earlier, devastated an entire society and left the government trying to wean people from an industry on which it had so long encouraged dependence.19
Historically, property rights have evolved in response to growing demand, be it for agricultural land, minerals, timber or fish. As long as there has been plenty to spare, there has been no need for property rights. As resources have grown scarce (and increasingly valuable), property rights have become needed and resource users have become more willing to bear the costs of establishing and enforcing them.20
In the seventeenth century, aboriginal people in what is now Quebec and Labrador owned neither land nor wildlife, both of which were plentiful. As the development of the commercial fur trade increased fur’s scarcity and value, it became economic to husband fur-bearing animals. Husbandry depended in part on being able to prevent others from hunting the animals; thus, private property rights in land developed. By the early eighteenth century, Algonquin and Iroquois families had developed exclusive hunting and trapping territories; they practised conservation and retaliated against trespassers.21
Increasing scarcity invites the establishment of long-term, tradable property rights in Canada’s fisheries.22 A number of countries have assigned property rights to inland and ocean fisheries. In some of the most successful ocean fisheries cases, the rights have taken the form of individual transferable quotas (ITQs) that allocate to individual fishermen a percentage of a total allowable catch. ITQs provide a number of incentives to use resources efficiently. Confident that their rights to fish are secure, fishermen need not waste money building bigger boats and equipping them with more advanced gear in a race to catch fish. And those who are unable to use their quotas efficiently can sell them to others who can put them to better use. ITQs also promote conservation. With valuable assets tied up in their property rights to a percentage of the catch, fishermen have an economic interest in conserving fish stocks and in keeping out interlopers: it is they who will capture the benefits of such activities.
In New Zealand, which introduced ITQs in the mid-1980s, the system now governs 32 different fisheries. More efficient fishermen have bought out their less efficient counterparts, eliminating the excess capacity that had previously characterized the fleet. And with economic incentives to preserve and enhance the fishery, quota holders are financing research, exploration, enhancement, and policing measures.23
Ideally, government-regulated ITQ regimes for harvesting fish are just one stage in the evolution of private ownership of the fisheries. Although governments frequently set total allowable catches, ITQ systems can become completely self-regulating, with an association of all ITQ holders setting catches and taking on other management responsibilities. Such a shift in responsibility occurred in several New Zealand fisheries in the early 1990s.24 A further evolution could entail outright ownership of fisheries, removing owners’ obligation to utilize their resources exclusively as fisheries when conservation, tourism or other uses proved more valuable.
Technological advances, by facilitating the enforcement of property rights, spur their development. In the mid-nineteenth century, cattlemen in the American West didn’t have sufficient stone or timber to fence the vast acres of prairie shortgrass required for cattle. Initially, there was plenty of land to go around. But as land grew scarcer and more valuable, it became increasingly important to define and enforce property rights. Brand registries were established and fine-tuned. Numerous attempts were made to restrict entry onto land that had previously been held in common. Governments passed laws to restrict grazing on public lands. But it wasn’t until the 1870s, when barbed wire became available, that private landowners could start fencing their land and effectively enforcing their property rights. Sales of barbed wire leapt from 10 thousand to 8.5 million pounds between 1874 and 1880.25
As increasing scarcity makes the establishment of property rights in the fisheries more pressing, technological developments will make their enforcement increasingly feasible. Satellite technology is a case in point. Assigning property rights to ocean fisheries has traditionally been hindered by the difficulty of keeping out trespassers. Satellites make “fencing” the ocean possible. In the United States, NASA has experimented in policing the oceans with satellites that can identify boats by the unique “fingerprints” in their exhaust.26 Similar technology may likewise enable owners to monitor their fishing zones, and to enforce their property rights in fisheries.27
Broader property rights in fisheries, as in other resources, would be a two-edged sword. Inevitably, some owners would—either through error or ignorance—deplete their stocks.28 As long as their activities did not violate others’ property rights, the law would permit them. But with the removal of governments’ perverse incentives to harvest resources uneconomically, the destruction of private property would occur less frequently. That which did occur would be modest compared to the wholesale environmental devastation wrought directly or abetted by governments.
What is true for fisheries is equally true for many other resources: secure, enforceable property rights would empower citizens or communities to protect forests, waters and minerals. With the limits of today’s technology, property rights cannot be assigned to all resources; the atmosphere, for example, remains “unfenceable.” While property rights cannot be assigned to the atmosphere, however, they can be assigned to the atmosphere’s assimilative capacity, or to its capacity to absorb wastes. Under a system of tradable emissions permits—such as that used to control sulphur dioxide emissions in the United States—governments establish a cap on allowable emissions in a particular airshed and then allocate shares of that cap to polluters. Polluters who reduce their emissions may sell their excess allocations to others, including environmental groups wishing to retire them in order to bring emissions below the government cap.29
Whenever property rights cannot be clearly assigned, they will fail as tools for environmental protection and second-best measures must be relied upon. In such cases, attempts to compensate through government regulations or other mechanisms are essential. But the more precisely property rights can be defined, and the greater the extent to which they are assigned to specific groups and individuals, the better the environment will fare. If given the proper tools, owners will protect their resources. As observed more than two centuries ago by the celebrated English author on agriculture, politics and economics, Arthur Young, “Give a man the secure possession of bleak rock, and he will turn it into a garden; give him nine years lease of a garden, and he will convert it to a desert. . . . The magic of property turns sand into gold.”30
5. Peter Pearse notes that in England’s Country Life magazine, the owners of fishing rights advertise fishing opportunities (personal communication, September 21, 1994). According to Clark, fisheries change hands at high prices (cited by Dales, ibid., 68).
Clark, ibid., maintains that Britain’s fine game fisheries are superior to those in any accessible part of Canada, while Pearse notes that some Canadian sportfishermen search out Britain’s salmon and trout (“Property Rights and the Development of Natural Resource Policies in Canada,” 315).
6. Personal communication with Anglers’ Co-operative Association staffer, June 16, 1994. The ACA had 30 cases underway at the time.
According to Clark, the ACA investigated almost 700 pollution cases in its first 19 years (cited by Dales, op. cit., 68).
9. Pearse, “Property Rights and the Development of Natural Resource Policies in Canada,” 315; Pearse, Rising to the Challenge, 47, 62, 136; Anderson and Leal, Free Market Environmentalism, 128; Higgs, “Legally Induced Technical Regress in the Washington Salmon Fishery”; and Johnsen, “The Formation and Protection of Property Rights Among the Southern Kwakiutl Indians.”
For more information on the ways in which property ownership promotes good stewardship see Bromley, Environment and Economy, 23-8, 148-9; Pearse, op. cit.; Demsetz, “Toward a Theory of Property Rights,” 355-6; and Fox, “The Pricing of Environmental Goods: A Praxeological Critique of Contingent Valuation,” “Ownership and Stewardship of Natural Resources,” and “Free Market Environmentalism.”
For information on the adverse economic and environmental consequences of the absence of property rights in resources see Hardin, “The Tragedy of the Commons,” Sweeney et al., “Market Failure, the Common-Pool Problem, and Ocean Resource Exploitation,” and Gordon, “The Economic Theory of a Common-Property Resource.”
12. For information on the crisis besetting the Atlantic fisheries and the introduction of federal regulation, see Sinclair, “Regulating the fisheries.” Scott and Neher detail the considerable extent of federal fisheries regulations in Public Regulation of Commercial Fisheries.
18. Ironically, even when the fishery was at its peak, it couldn’t provide an adequate living for all involved (Canada, Department of Fisheries and Oceans, Task Force on Incomes and Adjustment in the Atlantic Fishery, Charting a New Course, 10). Fishermen and processors have long relied on unemployment insurance to supplement their incomes, inflating their numbers and creating even more capacity in the industry and greater pressure on the fishery.
For an overview of federal assistance to fishermen and processors, see Scott and Neher, op. cit., 59-60.
The Conference Board of Canada’s Hull notes the disastrous consequences of government subsidies to the east coast fishing industry in his discussion entitled “Perverse Side-Effects of Government Initiatives” in Valuing the Environment, 4.
21. Fur trading on the West Coast also prompted the emergence of private hunting rights that could be passed from one generation to the next (Demsetz, op. cit., 351-3, citing Eleanor Leacock, American Anthropologist, Volume 56, No. 5, Part 2, Memoir No. 78, 15, and Frank G. Speck, “The Basis of American Indian Ownership of Land,” Old Penn Weekly Review, January 16, 1915, 491-95). For more information on the evolution of property rights in aboriginal communities see Political Economy Research Center, PERC Reports.
23. For information on ITQs in New Zealand see Pearse, “Developing Property Rights as Instruments of Natural Resources Policy,” 115-20. For other examples of ITQ systems, see Anderson and Leal, op. cit., 130-2; and “Fresh angle,” The Economist.
In another development, in July 1994 the U.S. Coast Guard started requiring oil tankers in Alaska’s Prince William Sound to carry black boxes that would enable satellites to monitor their positions (“The July Almanac: Environment,” The Atlantic Monthly, 12).
27. Pearse notes that transponders on fishing boats can provide a continuous reading—regardless of darkness or fog—on the location of every vessel in every fleet. Fishermen can also use the devices to transmit information about their catch (personal communication, September 21, 1994).
Technological advances of a different sort may eventually help solve problems associated with establishing property rights in sea life that is by nature mobile, and doesn’t respect boundaries. Owners may soon be able to identify far-ranging species, such as whales, with radio tracking devices. University of Chicago economist Robert Taylor recommends conserving whales through private ownership—and tracking them as noted above—in his 1992 paper, “The Market and the Environment” (Daily Telegraph, “‘Save the Whales by Privatisation’ Call”).
What Taylor suggests for whales has already occurred with wildlife. Red wolves in South Carolina wear radio-activated collars that inject them with tranquilizer if they wander too far afield. Alternatively, wolves could wear collars similar to those worn by dogs restrained by invisible fencing; they would receive a shock if they approached a boundary line (Anderson and Leal, op. cit., 34).
28. Charles Hurwitz’s threat to log ancient redwoods provides one of the most egregious examples of an owner’s willingness to destroy a precious resource. In 1993, the financier demanded $600 million from the government in exchange for leaving 4,500 acres of trees standing in the United States’ largest privately owned redwood forest. His company had earlier logged the country’s second-largest private redwood stand, home to the rare marbled murrelet, in a challenge to wildlife regulations that it claimed violated its property rights (Wall Street Journal, “Cutting Costs: For Takeover Baron, Redwood Forests Are Just One More Deal”).
29. Governments’ incentives to establish politically popular emissions caps, to raise the caps once established, or to lower them more slowly than planned could limit the effectiveness of tradable pollution permit systems. Some industries—particularly inefficient newcomers—would lobby for higher caps. But many industries would join environmentalists in lobbying for lower caps. Depending on how the government set the caps, and to whom it distributed shares, those working to keep caps low (and to keep the value of pollution shares high) could include efficient industries (new or established) that would suffer less than their inefficient competitors from higher pollution costs, and established industries wanting to avoid competition, to avoid putting up money to purchase additional shares, to avoid any devaluation of their investments in pollution abatement, and to avoid a dilution of the valuable assets that their shares represent.
For a seminal book on tradable emissions permits, see Dales, op. cit., Chapter 6. For a more current look at how a tradable emissions system could be used to reduce sulphur dioxide emissions in Canada, see Economic Instruments Collaborative, “Controlling Acid Deposition Through Emission Trading,” in Achieving Atmospheric Quality Objectives Through the Use of Economic Instruments.