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Rights to discov-

extensively regulated to control catch rates)

separate or repackage tracts and rights in

they pleased. Regular stock dividends or

response to changing information and eco-

ered oil and gas in

adjustments in the exchange rate between

nomic conditions.

petroleum reser-

deeds to fish and fish consumed could be

Third, the expropriation of squatters'

voirs could be

used to compensate for growth in the fish

rights already recognized by the government

stock or variations due to other factors.

(for example, outstanding BLM grazing per-

assigned in the

Similarly, rights to discovered oil and gas

mits) is avoided by deed assignment to those

form of freely

in petroleum reservoirs could be assigned in

individuals. This aspect of the plan would

the form of freely marketable and transfer-

discourage opposition to divestiture from

marketable and

able deeds based on the estimated size and

individuals who rightly feel they have some

transferable deeds

extent of the reservoir stock.6 6 The owner of

real economic stake in the present system.

based on the esti-

the oil and gas rights on a tract of land with a

Fourth, the bidding mechanism provides

proven well need not drill additional wells to

an incentive for combination bids to express

mated size and

exercise the right to oil and gas. Instead, the

maximum willingness to pay, by guarantee-

extent of the

owner might sell his oil deed certificates to

ing that except in rare cases (for example, tied

reservoir stock.

the owner of an adjoining tract on which

bids) the winning bidders will pay prices that

drilling may be less costly or to a neighbor

are less than the amounts bid. The effect is to

who has already drilled an efficient number

maximize allocative efficiency.

of producing wells. The idea is to create a

Fifth, the proposal provides opportunities

property rights system in which the value of

and incentives for environmentalists and

oil reservoir stocks can be captured without

their organizations to participate directly in

producing oil for the market. In this way the

the ownership and management of amenity

decision to drill wells or to produce from

resources by bidding for the surface rights to

existing wells can be based on the profitabili-

park and wilderness lands. Present federal

ty of those activities rather than on a concern

laws that restrict certain parcels of land to

that others will capture any oil that is not

specified economic uses (such as timber har-

recovered.

vesting or mining) would be abolished.

Finally, in the case of certain common

pool resources such as ground water and

Conclusion

fisheries, we propose that the appropriate

governmental unit issue deeded certificate

The divestiture proposal in this paper is  rights to unrecovered ground water and to

characterized by the following principal fea-  live fish by species. These transferable and

tures. First, it is fair in the sense that all citi-  marketable certificates would then be surren-

zens would share equally in the value of the  dered in payment for extracted water or for

628 million acres of federal land that would  landed fish. Equality between the stock of

be capitalized into the market price of land  outstanding certificate claims and the esti-

share certificates, and all would benefit from mated stock of the resource could be main-

the productive opportunities created by  tained by periodic adjustment of the surren-

der terms of certificates to reflect updated

divestiture.

Second, elementary property rights are  estimates of the resource stock. This proce-

defined by deeds to the various functional  dure, in effect, creates exclusive marketable

uses of unit tracts of land. The size of owner-  property rights in common property

ship parcels and the manner in which use  resources, which allows the natural scarcity

rights to the land were combined into pack-  of such resources to determine their prices

ages of ownership rights would be deter-  and thereby discipline the individual owner's

mined by the market in the primary auction  decision to extract the resource.

Many individuals and groups may oppose

by a combinatorial sealed-bid mechanism,

and subsequently by exchanges that could  the divestiture of public lands because they

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