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September 27, 2005
MPS Iceland 9: Protecting the environment
So finally, we came to the most interesting part of the MPS meeting in Reykjavik. The part about the environment and science.
Professor Rögnvaldur Hannesson discussed the privatization of the oceans, last commons where property rights are to be introduced.
Ever since the 19th century ideas of the inexhaustible fish (vide Huxley in 1884) supplies there had been a limited impact from fishery. The new impact is not mainly deriving from new technology (where we should also consider the natural fluctuation of fish stocks, which can be quite obscure), but in from the lack of exclusive fishing rights. Property rights develop when the benefits of claiming and defending claims to property outweigh the cost of doing so. The central point here is scarcity.
In 1945 the Truman declaration regarded the US claiming a zone off their coast. This regarded resources on the sea bed, mainly oil supplies. But Iceland, Argentina and Mexico raised the issue of including fish in nations’ claims. The idea of a 200 mile zone came from the whale oil processing industry in Valparaiso, Chile. Chile has a narrow continental shelf and naturally wanted to expand this, thus a thought from the Panama-declaration in 1939 was revived of instituting a sort of a “neutral zone” between the nations’ coast lines. This ensured a zone where only Chileans could catch whales. Why 200 miles? It was actually just taken from a sketch in the Chilean magazine “La Semaña Internacional”. Thus it was just a sketch, not something that had grown out of custom.
In the 1950s, anybody could still fish when and whatever he liked up to three nautical miles from shore. This is no longer the case. Access to fishing within 200 nautical miles from base lines is now controlled by the coastal state.
Since most of the fish resources of the world are located within 200 miles, the 200 mile zone has in effect turned these resources into state property. Some countries have gone further and established private use rights for the resources within their zone, although seldom property rights to the resources themselves.
The important question from history is if our institutions are shaped by events or models that are irrelevant for the problems at hand? Why and how do they survive? Can we observe evolutionary institutional development?
At the third UN conference on the law of the sea (UNCLOS 3) the 200 mile exclusive economic zone was established through both the prevailing mood at the time to give poor nations control over their own resources rather than having them controlled by corporations in rich countries and of the gains that the US and the USSR could make from having ample space for the passing of their submarines and of making benefits to their fishing areas.
Thus, professor Rögnvaldur concluded that 200 miles is an arbitrary economic zone that has nothing to do with the biology and fish behavior. The 200 miles have in a number of cases proven insufficient to ensure control over fish stocks. Maybe we should extend these zones to midpoints between seafaring nations?
Having a well-defined fishing zone is essential to establish jurisdiction, limit the number of parties with interests in fish stocks and establish a framework for private use rights. The present institutions have been at loss to do this.
An advantage of private use rights to be secure for the long term is the incentive they provide for the rights holders to promote prudent management of fish stocks, simply because the value of their use rights depends critically on how well the stocks are managed.
Will we be able to establish a functional definition of fish stocks? There is a problem that today a further extension of national jurisdiction over the seas is not discussed. The environmentalist organizations increasingly regard the seas as an unexploitable wilderness. Extended national jurisdiction is useful for promoting efficient consumptive use of fish resources, but less so for non-consumptive uses. The same goes for private use rights. But when we see the sea as an icon, we will have more trouble in protecting it than if we saw it as a resource to be cared for.
Terry Anderson from PERC discussed the notion that since Pigou we have seen problems in the environment as a market failure to be amended through regulations, taxes, subsidies, public ownership in order to minimize “externalities”. Public choice theory, launched by Buchanan & Tullock show that we rather can see a government failure in many environmental problems through the often common “public trust” policy in which natural resources are put in the vague hands of “the people” at large or said to belong to nature. Such vague terms are unhelpful to establish responsibilities for the environment in fact creating a tragedy of the commons.
I would like to add to Professor Anderson’s reasoning that we perhaps do not see a “market failure” but neither a “government failure” but perhaps a “nature failure”. That is in what view we have of how the environment works. Do we see the environment as a static system, where a restorable pristine balance is easily identified? If we do, we would certainly see merit in the precautionary principle, and in centralized environmental agencies. If we, as modern ecology, see the environment as a dynamic system, which has always been influenced by human action, we will find it easier to see merit in humans valuing the environment differently and putting more merit in localized knowledge. Ecological theories do matter, and if we want to provide better protection for the environment discussions about biology, ecology will matter as much as economics.
Posted by Waldemar at September 27, 2005 01:54 AM