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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 l.jpg

Property Rights

Principle 4: Incentives Matter.

Principle 5: Markets work with competition, incentives, information and property rights.


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After one hunting season No Property Rights

Unit 13: Property Rights


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After one hunting season With Property Rights

Unit 13: Property Rights


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What’s the Difference?

Unit 13: Property Rights


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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


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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


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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


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The Tragedy of the Commons

  • The Llama Children

Unit 13: Property Rights


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Maximizing Family Income

Unit 13: Property Rights


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


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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


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Preserving Endangered Species

Why don’t we see deer, elk, antelope, and bear roaming the streets

of San Bernardino?


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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

Unit 13: Property Rights


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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


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What’s the Difference?

Unit 13: Property Rights



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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


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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


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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


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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


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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


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The near extinction of the beaver

  • 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


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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


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Native Americans Preserved Wildlife without Property Rights??

What happened to the Wooly Mammoth or the Sable Toothed Tiger?

Unit 13: Property Rights


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Will wildlife become extinct? Rights??

  • .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


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Will wildlife become extinct? Rights??

  • .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


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Will wildlife become extinct? Rights??

  • Establishing property rights to valuable animals provides an incentive to preserve the animals.

Unit 13: Property Rights


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How to destroy endangered species Rights??

  • 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


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Cleaning the air efficiently, Policy 1 Rights??

Unit 13: Property Rights


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Cleaning the air efficiently, Policy 2 Rights??

Unit 13: Property Rights


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Cleaning the air efficiently, policy 3 Rights??

Unit 13: Property Rights


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Compare the Policies Rights??

Unit 13: Property Rights


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Main Points Rights??

  • 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


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Main Points Rights??

  • 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


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Main Points Rights??

  • Establishing property rights by creating a market for pollution permits maximizes the efficiency of cleanup.

Unit 13: Property Rights


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