Surface bound-
organizations to bid on the surface
self by limiting his resale market with a
rights to the national parks and wilder-
restrictive covenant. There is a vast difference
aries are inade-
ness areas;
between a government auction of certain
quate for defining
· employing restrictive covenants to limit
public lands with restrictive covenants
rights to
the uses of national park or wilderness
attached and the Nature Conservancy's buy-
lands; thus surface rights could be
ing land in the open market (or acquiring it
resources that
restricted to scenic or wilderness uses,
by voluntary gifts) and then reselling or leas-
migrate across or
suitably defined, as is now done in pri-
ing it with restrictive covenants. The latter is
vate deeds; and
a market-disciplined decision whose cost is
under those
· combining all extractive resource rights
borne privately, while the former is not disci-
boundaries.
with surface rights and including a
plined by an opportunity cost test, and the
covenant prohibiting all development of
cost is borne publicly.
those resources and requiring the land
to be preserved as wilderness.
Common Pool Resources:
Deeds to Water, Oil, Gas,
Those restrictions, however, set a danger-
ous precedent by giving special privileges to
and Fish
particular groups that would be chosen by
bureaucratic criteria. Although we have no
The surface boundary of land tracts is suf-
doubt that a mix of ownership of scenic
ficient in most circumstances to provide well-
resources by the Audubon Society, the Nature
defined property rights to cultivation, grass,
Conservancy, and other such groups would
timber, subsurface minerals, wildlife refuge
vastly improve upon the National Park
or habitat, wilderness, and recreational
Service, we think rigging the outcome of auc-
resources. But surface boundaries are inade-
tions is unwise. Those organizations and their
quate for defining rights to resources that
policies have evolved in an environment in
migrate across or under such boundaries.
which they have had to compete with com-
The economic objective in defining property
mercial enterprises for land acquisitions.
rights is to limit the quantitative extent of the
They have flourished under this discipline (as
rights to particular resources.
of 1994, the 21 largest U.S. environmental
Hence, to say that a person has grazing
organizations had a collective annual budget
rights to a section of land means that he has
of approximately $736 million and 14 million
the right to fence it and consume as much of
members),6 3 and there is no a priori reason to
the grass as he chooses, subject to the limita-
tions of his contract with the owner of sur-
suppose that they need be given any preferen-
face rights. A timber right gives a person sim
-
tial rights over commercial enterprises.
ilar control over all timber growing within
Moreover, we think covenants would be
certain boundaries. In each of those cases, the
very unwise as part of a general policy of
quantity of the resource to which he has a
divestiture of amenity resources. Owners of
right is whatever quantity he finds growing
surface rights are free to follow development
within his land boundary. Note that in those
policies that are as restrictive as they please.
cases the resource quantity or quality need
But such owners have earned that right by
not be certain for the right to be well defined.
paying the opportunity cost of the land, that
The market is entirely competent to discount
is, by bidding more than other potential own-
for uncertainty. Also note that the moment a
ers who would have followed less restrictive
person crosses beyond his boundaries to
policies. Similarly, any winning bidder at auc-
graze or log, he is poaching on the preserve of
tion should be free to resell the land with his
his neighbor, who would have clearly defined
own restrictive covenant provisions. Such an
rights under our proposal.
owner, having paid the opportunity cost,
But if fish swim and water, oil, and gas
would be free to impose a capital loss on him-
18