NCPA - National Center for Policy Analysis

Property Rights and Environmental Quality

July 22, 2011

Public policy often regards pollution and other measures of poor environmental quality as public bads that result from market failure and require government intervention through regulatory policies and more stringent environmental standards.  Carrie B. Kerekes, an assistant professor of economics at Florida Gulf Coast University, argues that pollution and environmental quality should instead be regarded from a property rights perspective, in which institutions of clearly defined and enforced property rights create incentives that lead to reduced levels of pollution and an overall improvement in environmental quality.

  • Where property rights can be well defined and enforced, as with property rights pertaining to land and water, increases in the security of property rights lead to improvements in environmental quality.
  • For instance, as property rights become more secure, deforestation decreases and access to safe water and sanitation facilities improves.
  • When property rights cannot be well defined, such as property rights over the air, increases in the overall security of property rights may erode environmental quality.
  • For example, more secure property rights are positively related to several indicators of air pollution.

Property rights have both a direct and an indirect effect on environmental quality.  The direct effect is that as property rights become more secure, individuals have incentives to maintain, conserve and efficiently allocate resources.  More secure property rights also lead to increases in production, exchange and economic development, says Kerekes.

Source: Carrie B. Kerekes, "Property Rights and Environmental Quality: A Cross-Country Study," Cato Institute, Summer 2011.

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