Property Rights in the Commons
* Research article. Ostrom’s Law: Property Rights in the Commons. Lee Anne Fennell (University of Chicago Law School, [email protected]). International Journal of the Commons, Vol 5, No 1 (2011).
"Elinor Ostrom’s work has immeasurably enhanced legal scholars’ understanding of property. Although the richness of these contributions cannot be distilled into a single thesis, their flavor can be captured in a maxim I call Ostrom’s Law: A resource arrangement that works in practice can work in theory. Ostrom’s scholarship challenges the conventional wisdom by examining how people interact over resources on the ground – an approach that enables her to identify recurring institutional features associated with long-term success. In this essay, I trace some of the ways that Ostrom’s focus on situated examples has advanced interdisciplinary dialogue about property as a legal institution and as a human invention for solving practical problems. I begin by highlighting the attention to detail that characterizes Ostrom’s methodology. I then examine how Ostrom’s scholarship yields insights for, and employs insights from, property theory. Next, I consider the question of scale, an important focal point of Ostrom’s work, and one that carries profound implications for law. I conclude with some observations about interdisciplinarity as it relates to research on the commons."
Lee Anne Fennell:
"A precise vocabulary is an important prerequisite to thoughtfully assessing and addressing commons situations. Ostrom has emphasized three distinctions that are especially important for legal scholars interested in understanding situations and crafting workable alternatives: the distinction between open-access regimes and common property, the distinction between the common-pool resource itself and the property regime that governs it, and the distinction between resource systems and resource units (1999, pp. 335–338).
Open access vs. the commons
When Hardin (1968, p. 1244) asked his readers to “[p]icture a pasture open to all,” he was referencing an ungoverned open-access regime from which nobody could be excluded. Yet by calling the resulting collective action problem “the tragedy of the commons,” the notion of common property became conflated with the lawless (or law-free) condition of open access. The distinction between open-access and common property was made decades ago by Ciriacy-Wantrup and Bishop (1975) and has been reiterated by Ostrom (e.g. 1999, pp. 335–336; see also Schlager and Ostrom 1992) and others (e.g. McCay 1996, p. 113; Dagan and Heller 2001, pp. 556–557; Eggertsson 2003, pp. 75–76). Yet confusion on this point has yet to be fully eradicated. Recognizing that nearly all “private” property is actually owned (or at least used) by groups, such as households or firms, offers one way around this blind spot. These everyday examples of non-tragic commons lead us to ask not whether common property is feasible at all, but rather under what circumstances and at what scale.
Resource attributes vs. property regimes
Also crucial for legal scholars is the distinction between resources and the legal regimes that govern them, even though the two interact. For example, the attributes of resources that make them a “common pool” – difficult exclusion and rival resource units – do not dictate any particular governance solution (e.g. Ostrom 1999, pp. 337–338). Those attributes can mutate depending on technological advancements and human interventions, but at some level they represent facts about the world (Ostrom 2007, pp. 39–42). Property rights, in contrast, are matters of human construction (e.g. McCay 1996, p. 113). Although the attributes of the resource in question will influence how property rights develop – we cannot simply parcelize an ocean (see, e.g. McKean 1996, p. 228) – the fact that resources and regimes are conceptually distinct usefully clarifies the policy task.
Resource systems vs. resource units
In thinking and writing about resource dilemmas and the property rights associated with them, it is also imperative “to distinguish between the resource system and the flow of resource units produced by the system” (Ostrom 1990, p. 30). Although each of these facets of common-pool resources must be governed in some fashion (see Ostrom and Schlager 1996, p. 130), they may operate under different governance protocols. The distinction is therefore essential for descriptive clarity (if we say water is inalienable, for example, we need to know whether we are referring to the stock, the flow, or both). But the distinction is also important because it represents a “seam” of sorts in the common-pool resource that will often mark a change in property rights or ownership arrangements. As developed below (see section 3.2), the resulting abutment of property arrangements can produce incentive misalignments that require attention (see Alchian and Demsetz 1973, pp. 22–24)."
What is property? And why do we care?
Lee Anne Fennell:
"Although property is sometimes treated as an all-or-nothing concept, ownership and control over resources comes in shades and degrees (e.g. Schlager and Ostrom 1992). One influential model for understanding that fact has been the “bundle of rights” idea of property associated with the work of John Commons (1893, p. 92) and the legal realists (see Stone 2009, pp. 9–10). Yet property theorists have increasingly challenged the “bundle” metaphor (see e.g. Penner 1996), focusing instead on property’s in rem nature (e.g. Merrill and Smith 2001) and emphasizing the significance of boundaries and exclusion (e.g. Merrill 1998; Smith 2004). How does Ostrom’s nuanced treatment of ownership in common-pool resource contexts, which draws in part on the “bundle” idea (see, e.g. Ostrom 2009a, pp. 28–29), fit together with these ongoing conceptual debates about property’s meaning?
Merrill and Smith criticize the bundle metaphor’s implicit message that property is infinitely decomposable, comprising nothing more than “a list of use rights” (2001, p. 397). Schlager and Ostrom’s (1992) taxonomy of property rights dodges this concern. The five resource control rights they identify – access, withdrawal, management, exclusion, and alienation – are cumulative in nature and available only in functionally meaningful combinations (ibid., p. 252). As they explain, “to hold some of these rights implies the possession of others. The exercise of withdrawal rights is not meaningful without the right of access; alienation rights depend upon having rights to be transferred” (ibid.). This vision of property does not, then, contemplate a bundle that can be thrown together – or pulled apart – in just any old way. But can it be squared with the growing tendency to equate property with exclusion rights that are good against the world?
In one sense, the answer appears to be yes. An understanding of property based on exclusion dovetails with Rose’s important insight that a limited-access commons constitutes “property on the outside” (1998, p. 144). That exclusion can help transform what would otherwise be an open-access regime into a manageable commons has been well noted, even if more than mere exclusion is necessary to make a commons work (see Ostrom 1990, pp. 91–92; 2009a, 32). But an exclusion-focused view of property also carries some limitations that are especially relevant in the context of common-pool resources. Most obviously, much of the relevant action for such resources occurs “on the inside,” where participants share a commons (see Rose 1998, pp. 144, 155). Blunt boundary-based exclusion mechanisms would be non-sensical within such a shared resource setting, and giving each participant a right to block the use of the others would likely lead to the problematic underuse often associated with the tragedy of the anticommons (see Michelman 1982, p. 6; Heller 1998; 2008).
The fact that governance rather than outright exclusion is required within a commons does not mean property rights are absent (see, e.g. Smith 2002), but it does limit what a vision of property that focuses on exclusion alone can tell us about them. Katz’s (2008, p. 277) observation that boundary-exclusion theories focus more on the implications of non-ownership than on the complexities of ownership has particular traction here. Similarly, an exclusion-focused account of property tends to be relatively inattentive to other potential adjustments to property packages that might prove useful within a commons – including alienability restrictions (see e.g. Rose-Ackerman 1985; Fennell 2009). This omission is significant, given that resource entitlements featuring less than full alienability are frequently observed in CPR institutions, where they appear to perform the core property functions of incentivizing production and investment (see Ostrom 1999, p. 341).
Property theorists also have much to learn from the complex ways in which resource users slice and dice entitlements into special-purpose “tenure niches” (ibid., p. 340, citing Bruce 1995; see Bruce et al. 1993). For example, various forms of “tree tenure” have evolved in many localities that control who may access which trees at what times and for what purposes (Fortmann and Bruce 1988; see Bruce et al. 1993). In addition to reopening questions about whether property can or should be conceptualized in terms of individual use rights, such entitlements stand in some tension with the numerus clausus principle, which calls for constraining the menu of permissible property forms (see, e.g. Merrill and Smith 2000). These issues offer important – and largely unexplored – avenues for further interdisciplinary work.
In all of these instances, operational details in the real world offer property theorists an important gauge against which to test their theories. Property has a job to do, and watching how things get done under different working conditions gives us important insights into what property’s occupational requirements look like. Such a functional approach to property can retain skepticism of an unconstrained bundle of rights while directing attention to the rich and complex ways that property rights can work both inside and outside a commons. Significantly, a theory’s ability to accommodate within-commons entitlements is not an esoteric frill of interest only to a small cadre of subspecialists. The reason is simple: we are always operating at least partially within a commons of some sort. The next section explains." (http://www.thecommonsjournal.org/index.php/ijc/article/view/252/182)
All the world a semicommons? The ubiquity of mixed systems
Property, as experienced on the ground, is never wholly individual nor wholly held in common, but instead always represents a mix of ownership types. Indeed, two of the most foundational institutions in modern life – the neighborhood and the corporation – plainly constitute “mixed systems of communal and individual property rights” (Ostrom 1999, pp. 351–352). A family may privately own a house and the lot it sits on, but that family also holds interests in common with other households with respect to the neighborhood’s ambience and the community’s amenities. If we look inside the house, we will see that much is owned in common by the household, although certain elements (food harvested from the refrigerator, or rooms reserved for certain occupants) are effectively privatized (see Ellickson 2006, pp. 319–320).
Interacting combinations of individual and collective entitlements are also found in the what we might ordinarily view as “the commons” or even in wholly open-access contexts. Indeed, the prototypical tragedy of the commons is produced not by common ownership alone, but rather by the interface between a communally owned element (the pasture) and individually owned elements (cows, and the grass they ingest) (see Fennell 2011, citing, e.g. Alchian and Demsetz 1973, pp. 22–23). Many modern resource interactions similarly represent instances of “partial propertization” that are capable of being resolved in more than one way (see Rose 1998, pp. 152–153, 169–173). Privatizing ownership of more elements is one option, but as long as some resources cannot be reduced to individual control, propertization must remain partial [see ibid., p. 173 (noting “the ease of propertizing land in comparison to the diffuse resources to which land is attached, like air, water and wildlife”)]. Alternatively, more elements could be placed under common control, as where the commoners share rights in the cattle as well as the grazing land (see Alchian and Demsetz 1973, p. 23). But this, too, is an incomplete move. Insofar as labor inputs remain under private control, efforts to restrain grazing must be replaced by efforts to control shirking (ibid., pp. 23–24).
Property theory, then, largely boils down to intelligently confronting (and, as necessary, adjusting) the interface between individual and collective entitlements. Theoretical work on the semicommons offers a useful starting point in thinking about that challenge. As Smith explains, medieval common fields accommodated two activities – farming and grazing – carried out at different scales under different ownership regimes (2000, pp. 135–136). Strips of farmland were private property, with each farmer owning a number of strips scattered throughout the common field, but the field itself was collectively used as a grazing area on a seasonal basis (see ibid., p. 132, 135–137).
Smith suggests that the scattered-strip ownership pattern, by interweaving property interests, controlled the impulse toward self-serving behavior (ibid., pp. 146–154). Without a contiguous parcel of one’s own, actions designed to benefit or burden one’s own land become more difficult to carry out; one cannot help oneself without also helping others or harm others without also harming oneself (ibid.). Similar functions are served by the cattle “wintering rules” used in Swiss villages, which prohibit sending more cows to the grazing lands than one can feed during the winter (Ostrom 1990, p. 62), as well as by schedules that mingle positive payoffs like festivities with “work days or days of reckoning” (ibid., p. 65). In all these cases, thoughtfully designed links between private and communal elements help to soften the disjunction in incentives that might otherwise occur in these hybrid systems.
Thinking about property in this way emphasizes its potential, as a human institution, to adapt dynamically to changing circumstances. When the incentive misalignments associated with a particular mixed property regime become too great, the law can react by moving the wall between common and private elements (e.g. converting some privately owned elements, like grazing animals, to common ownership, or, conversely, privatizing some commonly owned elements, as through the parcelization of land) or by changing the shape or content of the entitlements on either side of the wall (by, for example, placing limits on use or alienability, or altering the way in which private elements interact with ones held in common, as through the use of scattered farming strips in a common field). Incentives can be realigned by altering the rules or payoff structures in other ways as well, whether through regulations, taxes, harvesting caps, or limits on the time, place, or manner of harvesting (see, e.g. Rose 1991, pp. 8–12; Krier 1992, pp. 334–335)." (http://www.thecommonsjournal.org/index.php/ijc/article/view/252/182)