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Property Rights

Property Rights. Principle 4: Incentives Matter. Principle 5: Markets work with competition, incentives, information and property rights. After one hunting season No Property Rights. After one hunting season With Property Rights. What’s the Difference?. PROPERTY RIGHTS.

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Property Rights

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  1. Property Rights Principle 4: Incentives Matter. Principle 5: Markets work with competition, incentives, information and property rights.

  2. After one hunting season No Property Rights Unit 13: Property Rights

  3. After one hunting season With Property Rights Unit 13: Property Rights

  4. What’s the Difference? Unit 13: Property Rights

  5. PROPERTY RIGHTS • The rights to use, control, and obtain the benefits from a good or service • Property rights • exclusively held by an owner (clearly defined) • easily enforced • transferable at low cost at the owner’s discretion Unit 13: Property Rights

  6. Property rights conserve and develop resources • Your desk • Your walls at home vs. your walls at school. • Your dog and your lawn at home vs. your dogand the lawn at the city park. Unit 13: Property Rights

  7. The Tragedy of the Commons • A scarce resource owned in common is overused since no individual pays the full cost of using the resource. Unit 13: Property Rights

  8. The Tragedy of the Commons • The Llama Children Unit 13: Property Rights

  9. Maximizing Family Income Unit 13: Property Rights

  10. Property owned in common will be overused. Establishing rights helps use the resource most efficiently.

  11. Examples • Commonly owned European forests. • Coca in South America • Irish potato famine – landlords unsure of length of ownership pillage the land. • Condominium dweller pays flat rate for utilities. Will he overuse the utilities? • It’s nice to share, but it’s not efficient! Unit 13: Property Rights

  12. Preserving Endangered Species Why don’t we see deer, elk, antelope, and bear roaming the streets of Yorba Linda?

  13. Two reasons some animals are disappearing. • If the dead animal is valuable, and there are no property rights, if I don’t kill it, someone else will. • To some, animals are nuisances and compete with humans for scarce land. • Bears, wolves, prairie dogs, alligators, crocodiles, mountain lions, bison, racoons Unit 13: Property Rights

  14. It is easier to establish property rights if: • the animal does not travel widely, • the animal is contained in one nation, • the animal does not “flow” as fish in streams, • enforcement costs are not high, and • people are willing to come together to preserve the species and to police themselves. Unit 13: Property Rights

  15. Saving Elephants in Zimbabwe with Property Rights Unit 13: Property Rights

  16. What’s the Difference? Unit 13: Property Rights

  17. Some facts • African wildlife is a food source, a nuisance to crops and a danger to humans. They look at them as “oversized, dangerous rodents.” • From the villagers’ perspective, they are far more valuable dead than alive. (A villager can earn up to 100 times the average income by poaching ivory.) • There is no incentive to preserve them and actual incentives to destroy them. • “Just say no”????? Unit 13: Property Rights

  18. Poachers and Villagers • There are huge profits to be made from poaching. • The villagers are glad to see the pests go. • In Kenya where elephant hunting is banned, the population has gone from 40,000 to 4,000 in 20 years. • In Zimbabwe, where hunting is permitted the elephant population is increasing. • Why? Unit 13: Property Rights

  19. Saving Wildlife through Property Rights • CAMPFIRE program established property rights (incentives for villagers) and disincentives for hunters. • Permits to hunt elephants are sold at $10,000. • Villagers “own” elephants and get 75% of the revenue from the permits. • The meat belongs to the villagers. • The villagers are compensated for crop damage. • Average village income has increased by 25%. Unit 13: Property Rights

  20. Saving Wildlife through Property Rights • Results • In Zimbabwe, land dedicated to game conservation has grown from 12% to 17% • In Kenya, elephant population has declined from 40,000 to 4,000 in 20 years of banned hunting. Unit 13: Property Rights

  21. Saving Wildlife through Property Rights • What has happened to the benefits to villagers of preserving the elephants? • What has happened to the costs of the villagers from preserving the elephants. Unit 13: Property Rights

  22. How did the silkworm save the beaver from extinction? • Europeans had overhunted them. • French came to new world for beaver. • Beaver increasingly scarce in America due to overhunting • with exception of Cheyenne territory where property rights were rigorously enforced • Beaver saved by silkworm Unit 13: Property Rights

  23. The near extinction of the bison • Indians live on less and less land, increasing competition for bison on that land • Bison hunted for robes and cows and calves were most desirable • Number of bison killed • 1874 – 20,000 • 1875 – 100,000 • Today, bison are raised for meat and tourism Unit 13: Property Rights

  24. Native Americans Preserved Wildlife without Property Rights?? What happened to the Wooly Mammoth or the Sable Toothed Tiger? Unit 13: Property Rights

  25. Will wildlife become extinct? • .02% of all animal species exist today. • There is an inevitable competition between humans and animals for land. • Profits in illegal poaching are high. • Banning ivory or other trade is not effective. Unit 13: Property Rights

  26. Will wildlife become extinct? • .02% of all animal species exist today. • There is an inevitable competition between humans and animals for land. • Profits in illegal poaching are high. • Banning ivory or other trade is not effective. Unit 13: Property Rights

  27. Will wildlife become extinct? • Establishing property rights to valuable animals provides an incentive to preserve the animals. Unit 13: Property Rights

  28. How to destroy endangered species • Enforce the ESA (endangered species act) • If an endangered species is found on my land, I lose the right to deal with my land as I like. • I must take certain precautions to preserve the animal at my expense. • I have an incentive to s…., s…….., and s…….. Unit 13: Property Rights

  29. Cleaning the air efficiently, Policy 1 Unit 13: Property Rights

  30. Cleaning the air efficiently, Policy 2 Unit 13: Property Rights

  31. Cleaning the air efficiently, policy 3 Unit 13: Property Rights

  32. Compare the Policies Unit 13: Property Rights

  33. Main Points • Effective property rights have three characteristics: they are • 1) clearly defined, 2) effectively enforced, and 3) easily transferable. • The Tragedy of the Commons occurs as a scarce resource owned in common is overused since no individual pays the full cost of using the resource. • Elephants, bison, beaver, water, air, rain forests, are all examples of the Tragedy of the Commons. • The Endangered Species Act can create negative secondary effects because it deprives people of their property rights. Unit 13: Property Rights

  34. Main Points • Establishing property rights for wildlife is easier if • the animal does not travel widely, • the animal is contained in one nation, • the animal does not “flow” as fish in streams, • enforcement costs are not high, • people are willing to form an agreement to preserve the species Unit 13: Property Rights

  35. Main Points • Establishing property rights by creating a market for pollution permits maximizes the efficiency of cleanup. Unit 13: Property Rights

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