All Commentary
Thursday, June 1, 1972

Pollution and Property

Mr. Cooley is Associate Professor of Economics at Ohio Northern University.

In all the welter of worry about “the environment,” seldom is property and its relevance to pollution mentioned.

To own property is to have a measure of control over a definable portion of one’s environment. If one has property, he has a degree of power to prevent his environment from being despoiled. Indeed, the purpose of property, it seems, is to enable man, the owner, to bring environment under control and make it yield up a maximum of satisfactions.

It has often been noted that people pollute least — that is, take best care of — that part of the environment which they themselves own. The householder is more solicitous of the home he owns than the renter is of the house in which he is but a temporary tenant. A family which, on a picnic, might leave litter in a public park and beer cans by the roadside will not dump waste on their own front lawn.

Is it possible, one might ask, for an owner to “pollute” his own property? To the extent that it is his to utilize as he sees fit, whatever he does with it will be, in his view, its best use. And when a resource is being put to its best use, it can hardly be said to be “polluted.”

If I deliberately pipe sewage into a pond on my own land, presumably I consider using the pond as a cesspool to be its optimum use. Hence, there is no abuse, no pollution. If however, either purposely or inadvertently I allow my sewage to flow into a neighbor’s pond, against his will, I am without question polluting. I am lowering the value of his property. The obvious remedy is for him to assert his property right and ask me to cease; if I do not, he may ask the public authorities, a major function of which is to protect his and everyone’s property rights, to enjoin my action. This is the normal way in which property is protected in a civilized society.

It does not follow that in the case cited the neighbor would, invariably, bring an action against the polluter of his pond. This depends, on the one hand, on how much damage he is suffering or about to suffer from the pollution, and on the other, on how much it will cost him to get the matter corrected. If the damage is trivial, he will not press the matter; or if he does, his case probably will be dismissed. Even if the damage is considerable, the cost of proving it might be greater, in which case he would endure it as an unavoidable “neighborhood effect” or minor externality.

A Private Lake Erie?

If, now, the pond is Lake Erie and has no specific owner, but is said to be “social property” or “in the public domain,” people  will take a quite different attitude. To pollute it is to injure well-nigh everyone in general but no one in particular. “Everyone” does not go to court and seek injunction. Hence, it seems one may pollute this “pond” with impunity, there being no owner to object. And so it becomes a public sewer.

As such, it is at first very useful, for the dilution is so great that no harm is evident; but as the sewage content of the water increases, injury is done to those who would drink the water, to would-be bathers, to fishermen whose catch dwindles, to hunters of waterfowl, and even to people who live along the banks. None of them takes action, however, mainly because he does not consider that he owns that body of water. He does not consider that it is his to utilize and that he can therefore exclude — and enlist the State to help him exclude — all others from its use. In short, Lake Erie is unlike the farm pond, it is not private property. That is why it is polluted. It is public domain, and the public domain easily becomes a public dump.

If, now, Lake Erie were converted into private property — let us assume it becomes the recognized property of the “Lake Erie Company,” which proves itself the legal heir of those who bought it from the aborigines — we would have a quite different situation. The company would want to maximize income from the lake, as from a tract of owned farm land, residential property, forest, coal-bearing land, or other asset. It might do so by selling rights to fish, to sail, to bathe, to transport passengers or freight, and by selling water to cities. It would undoubtedly improve its property by stocking with desirable species of fish, deepening ship channels, improving beaches, and so forth.

The owner would naturally strive to conserve its lake property in the most practical ways possible, so that it would reap a generous income, both now and in the future. At the moment, it might pay to sell to the cities along the lake the right to use it as a sewer; but this would threaten the future income to be gleaned year after year from the fishermen, bathers, shippers, boaters, drinkers, and other potential users. Only if the cities would pay the company a sum greater than the present value of all the streams of anticipated future income would the lake be turned into a sewer; and that, one may surmise, would cost such cities as Cleveland and Toledo a pretty penny.

In all the voluminous literature of conservation,1 seldom is it pointed out that only under private ownership are the resources of the earth most fully conserved, since it is the private owner who has the keenest incentive to maximize his returns in future as well as at present. This is because the private owner is conscious of having sacrificed to get his property, a fact which has indelibly impressed upon him that it is a scarce good, to be carefully husbanded. Public property, on the other hand, is regarded by the public as a “free good,” unlimited in amount both now and forever. Since it belongs to everyone, no one person can prevent others from using it. Hence, each reasons that he had better get his while the getting is good, that is, now. The result, far from conservation, is rapid exploitation and waste. The prevention of pollution is, of course, but a special case of the general principle of conservation.

Correction by Law

Environmentalists are wont to visualize land, water and air being protected and conserved by police action. Laws will be enacted — wise laws, enacted by socially minded legislators who somehow are gifted with the knowledge of just how each natural resource should be utilized to achieve the greatest good for the greatest number, both now and in the future. These laws will set the private, profit-seeking, polluting entrepreneur back on his heels. Once such laws are passed and enforced, the problem of pollution will melt away. This is the politician’s solution to what is essentially an economic problem.

Undoubtedly, changes in the laws are needed. Certainly we need changes which will spell out and define the rights of property owners more clearly and specifically than has been done up to the present. For example, just what are the property rights in a flowing stream? In a body of shifting air? In the ocean deep? In the fish that swim, birds that fly, animals that wander now largely at will about the environment? The present laws of property are concerned mainly with the solid land, but this constitutes only about one-fourth of the earth’s surface and represents an even smaller fraction of her resources.

Gordon Tullock in his booklet, The Fisheries… Some Radical Proposals (Columbia, S. C.: Univ. of South Carolina) now out of print, foresees the privatizing of the ocean fisheries. Once the ocean, at least the shallower parts of it, is divided into privately owned plots — and Tullock suggests in some detail how this might be done — it will be “farmed” much more productively than it is at present, he believes.

There was a time when man allowed the land to produce what it would — animals, birds, trees, fruits — and he hunted the product. But it was a laborious and hazardous business, and one may imagine every family ranging over many square miles to bag a living. Then, man learned to domesticate animals and to till the soil and grow crops. This vastly increased his production. But as to fish and other sea wealth, both organic and inorganic, we are still largely in the hunter stage. We have harnessed only a small fraction of the earth’s resources, yet we are already obsessed with the threat of over-population.

The Origin of Property Rights

As man evolved from hunter to herdsman to tiller, he devised property in land, for only as each could exercise control over his little corner of the environment could he be sure of reaping where he had sown. As Harold Demsetz² puts is: “Property rights arise when it becomes economic for those affected by externalities to internalize benefits and costs.” He cites Eleanor Leacock’s study of the Indians of eastern Canada. In early days, when they hunted merely for food and a few furs for themselves, conservation of wildlife did not pay, and hence they hunted far and wide, recognizing no property in land. But when the white men came and the fur trade became profitable, hunting lands and even individual beaver houses were allotted to families. In the language of economics, they internalized external costs and benefits. The cattle grazing industry acted similarly when the cattlemen discontinued the “free range” and fenced their individual holdings.

Man has been slow to define property rights in water and air, not only because of its seeming inexhaustibility, but also because of its fluidity. It is recognized, however, that an owner has a right to pure water on his land, even though it flows from his neighbor’s land. In like manner, a householder has a property right to pure air over his house and lot, for what would the latter be worth if overlaid with a vacuum? The growing insistence that power plants, steel mills, and the like cease polluting their neighbors’ air is a recognition of this right.

To pollute my neighbors’ land, air, or water is to trespass on his property. The rights of property need to be more sharply delineated and respect for them intensified. For maximum protection and conservation, resources now said to be in the public domain should be reassigned to the private domain.

Not the socialists but the capitalists have the solution to pollution! 



Social Reforms 

Social reforms which require the citizen to depend too directly on his government for food, occupation, employment, crops, clothes, and homes, compel abrogation or abandonment of constitutions and bills of rights…. The false laudation of the strength of these instruments naturally creates an impression that they constitute an unbreakable barrier against oppression. But nothing could be farther from the truth. They are futile in every respect if the general principles of government are not observed. They have value only in an economic structure of free enterprise and private property.

From “Liberals” and the Constitution by HENRY PLOW DEEPER

  • Mr. Cooley is Associate Professor of Economics Emeritus. Ohio Northern University, Ada, Ohio.