Complex property rights and Coasean bargaining in natural resource management

ABSTRACT

This paper contributes to the debate on whether private or common property rights are better for advancing the sustainable management of natural resources. This contest between public and private ownership is often exaggerated, we claim, because in the real world, complex entitlements with varying degrees of privateness/publicness prevail. Property rights belonging to families, companies, clubs, corporations, and communities are simultaneously common to the members/shareholders and private to the entities. We call these entitlements private-common entitlements. When we acknowledge this complexity, it becomes evident that neither private nor common ownership rights are alone responsible for resource depletion. Instead, depletion is caused by freeriding or evading the payment of the full price of natural resources. This invites Coase’s solution to resource allocation. Therefore, the key problem is whether and how Coasean bargaining is employed to allocate ownership over resources threatened by depletion. We contribute to the debate by showing that Coase’s approach promotes not only economically efficient but also ecologically sustainable resource management. Often, this approach would lead to the establishment of largely private property or control rights by largely collective/public entities. We apply this theoretical framework to the development of a ski resort in Pirin Mountain, Bulgaria.