Fisheries Compared With Other Natural Resources
Debates about the use of individual fishing quotas (IFQs) and other limited access measures in fisheries management are grounded in more general debates about how natural resources with common-pool characteristics should be owned, allocated, and managed. Common-pool resources are those having features that make it difficult to exclude others from them (hence the notion of "common") in which one person's use can affect what is available to another person (Box 2.1). Where common-pool resources are scarce, the problem of allocating access or rights to them is the difficult but central problem (Edney, 1981). Societies have addressed this problem in several general ways (Edney, 1981; Fiske, 1991). One is to do nothing. In fisheries this is known as "open access," and typically leads to overuse (Gordon, 1954; Scott, 1955).
In the sustainable, productive management of fisheries, catch is limited to surplus production of the stock, by taking into account natural population dynamics. This leaves the stock undiminished through time, providing a perpetual stream of production and harvest. However, nothing in an unregulated open-access situation confines catches to the surplus production. As catches exceed surplus production, the population declines (NRC, 1998b). Under certain circumstances, it is even possible for harvesting under open access to reduce the stock below the critical minimum stock size, resulting in commercial extinction of the species. For example, the formerly substantial fishery for Atlantic halibut has been so severely depleted that it cannot support a directed commercial fishery.
This situation is exemplified by the open-access problem in fisheries, in which each person gains the incremental benefit of their action while sharing the costs of that action with all other users. Consequently, individually rational actions may be contrary to the collective interest.
BOX 2.1 Fish as Common-Pool Resources
Fish populations are often thought of as common-pool resources (V. Ostrom and E. Ostrom, 1977). Common-pool resources have two major characteristics:
These characteristics create numerous challenging problems when the supply of a resource is limited in relation to its demand. When exclusion and subtractability are costly, many individuals can access and use a common-pool resource.
The following sections discuss how the public trust doctrine applies to fisheries, how other common-pool resources are managed, and similarities and differences in the management of different resources.
The Public Trust Doctrine and Fisheries
All fisheries management in the United States takes place within the context of a cultural and legal framework that strongly influences what is and can be done and also how various management measures are implemented. The public trust doctrine is a significant component of this framework. It is a common law doctrine (i.e., judicially developed, rather than statutory) that reflects popular and general political and cultural concepts, in particular the idea that the resources of the seas within U.S. jurisdiction belong to the public and that the government holds them in trust for the public.
Applicability of the public trust doctrine to U.S. fisheries has several ramifications for this study. First, in light of the essential inalienability of public trust resources, it reinforces concerns about the “giveaway" of public resources to private interests. Second, it confers on government a continuing duty of supervision and a responsibility to choose courses of action least destructive to trust
resources. Third, it strengthens the principle set forth in the Magnuson-Stevens Act that individual quotas are privileges, creating no property rights and therefore subject to modification or revocation without compensation to their holders. Finally, it suggests that conferring exclusive rights of use should be accompanied by some form of compensation to the public.
The public trust has its roots in the principle of Roman law that certain things, such as "the air, running water, the sea and consequently the shores of the sea,"1 are incapable of private ownership. As it developed, this principle was extended to fisheries. As the medieval scholar Bracton put it: "By natural law, these are common to all: running water, the air, the sea, and the shores of the sea . . . hence the right of fishing in a port or in rivers is common"2 (italics added).
In England, the Crown held trust resources for the nation. When the 13 U.S. colonies gained their independence, they assumed the trust prerogatives of the Crown over tidal and submerged lands, and other navigable waterways. Their interest in these waters, including the right to fish, was described as an essential attribute of their sovereignty and included a responsibility to manage public trust resources for the benefit of the nation.3
In one of the first major public trust cases, the New Jersey court in 1821 reiterated the nature of "the air, the running water, the sea, the fish, and the wild beasts" (italics added) as "common property," to be held and regulated for the common use and benefit by the sovereign. Its reasoning was subsequently adopted by the U.S. Supreme Court. 4
As it developed in this country, the public trust has three important attributes:
- The public trust is inalienable. It was a principle of medieval law that public rights in such common resources as the sea, its shore, and its resources were inalienable. Consequently, Bracton concluded that "all things which relate peculiarly to the public good cannot be given over or transferred . . . to another person, or separated from the Crown."5 More cogently, the U.S. Supreme Court held in Illinois Central Railroad v. Illinois, one of the cornerstones of U.S. Public
- trust doctrine, that a legislative grant of the Chicago waterfront to a private railroad was necessarily revocable because:
- As a public trust principle, this applies to fish, with the qualification that individuals can acquire title to fish once they have been reduced to possession.7
- The public trust gives the government, as trustee, continuing authority and responsibility for stewardship. The scope of the public trust as a constraint on the powers of government to deal with public resources has long been noted (Sax, 1970). In 1983, the California Supreme Court emphasized the scope of the trust and explained the responsibility of government as trustee with respect to trust resources. Relying on the principles of Illinois Central, the court held that the state has the power and duty "to exercise a continuous supervision and control over the navigable waters of a state and the lands underlying those waters" and that no one can claim a vested right to divert waters "once it becomes clear that such diversions harm the interests protected by the public trust" (in this case the shrimp and brine flies of Mono Lake in California).8 Subsequent litigation over nonnavigable tributaries into Mono Lake proceeded under statutes requiring that the fish in such streams be kept in good condition, which the appellate court held were legislative exercises of the public trust.9
The state can no more abdicate its trust over property in which the whole people are interested, like navigable waters and soils under them. . .than it can abdicate its police powers in the administration of government and the preservation of peace. . . . So with trusts connected with public property, or property of a special character, like lands under navigable waters, they cannot be placed entirely beyond the direction and control of the State.6
The public trust applies to fisheries. Although this doctrine has been traditionally associated with the state's title to the beds of waterways, it also applies to wild creatures. A traditional view of the ownership of wild animals, such as fish, is that they are ownerless until reduced to possession.10 In the late nineteenth century, some courts confused the Roman concept of ownerless things with the idea that such resources were owned by the state in trust for the people. Thus, a well-known scholar in water law noted the tendency to substitute the positive expression that such things belong to the state in trust for the people, for the older concept that they were "common" property, part of a "negative community."11 In Geer v. Connecticut,12 the Supreme Court accepted the state's argument that the title to wild animals "so far as they are capable of ownership, is in the State, not as a proprietor but in its sovereign capacity as the representative of and for the benefit of all its people in common" (Id. at 529). However, the Court subsequently repudiated the concept that states "own" wild creatures in the conventional sense, describing it as "pure fantasy,”13 when state ownership of fish was claimed to shield state regulations from constitutional scrutiny. Nevertheless, the Court did not consider the applicability of the public trust to ferae naturae. A number of state court decisions, like National Audubon, hold that protection of the public trust justifies measures such as limiting diversions of water, in the interest of protecting a fishery as a public trust resource (Johnson, 1989). These decisions are based on the concept that fish are public trust resources, subject to the same protections as other trust assets.
Although the Court subsequently repudiated the concept that states "own" wild creatures in the conventional sense when state ownership of fish was claimed to shield state regulation from commerce clause constraints, the applicability of the public trust to ferae naturae was never questioned. The contemporary view is that the state has no title to fish as personal property but they are nevertheless "owned" by government in its sovereign capacity as trustee for the benefit of its
citizens. Thus, a recent court quoted as the "contemporary view" the following language from the California Supreme Court:
The wild game within a state belongs to the people in their collective, sovereign capacity; it is not the subject of private ownership, except insofar as the people may elect to make it so; and they may, if they see fit, absolutely prohibit the taking of it, or any traffic or commerce in it, for the public good.14 We conclude that like other wild game, the abalone caught in the state's coastal waters belong to the people of the State of California in their collective, sovereign capacity. No individual property right exists in these shellfish. Rather the state acts as trustee to protect and regulate them for the common good. In this representative capacity, the state does not have a proprietary interest in these abalone that can be equated with the personal property of the state. Ex parte Maier (1894) 103 Cal. 476, 483, quoted with approval in People v. Brady, (1991) 234 Cal.App.3d 934, 286 Cal.Rptr 19.
Historically, fisheries have been at the core of trust protections. One of the earliest judicial declarations of the public trust in the United States dealt with the inalienability of tidal oysters beds. Thus, the government holds fisheries in trust for its people and has a continuous supervisory responsibility to manage them to achieve trust objectives (i.e., conservation, management in the public interest, and continuing oversight so that changes in fishery management can be made when the need arises).
Does the Public Trust Doctrine Apply to the Federal Government?
The relevance of the public trust doctrine to issues surrounding fisheries in federal waters hinges on its applicability to the ownership of wild animals in federal waters, beyond state jurisdiction. Relatively few courts have considered whether the public trust applies to the federal government in the same way that it applies to the states. This difference may result from a greater dependence of federal wildlife protection and management on laws and statutes, rather than case law. Although there is little, if any, appellate authority directly concerning this issue, the U.S. Supreme Court has inferred that the trust is applicable to both federal and state sovereigns in several cases. In what is probably the leading case, Illinois Central Railroad v. Illinois,15 the court describes the trust in general terms, suggesting that it is a doctrine of federal law applicable nationwide. In
Shively v. Bowlby,16 the court, in describing the historic trust obligations of the Crown that passed to the original 13 states, stated that as to trust resources not within the 13 colonies, "the same title and dominion passed to the United States (emphasis added)" Federal trial court decisions can be found on both sides, although the better view supports a federal trust. In the matter of Steuart Transportation Co., a federal court held that both the states and the United States are trustees, with the "right and duty to protect and preserve the public's interest in national wildlife resources" 17 (see Archer et al., 1994) and the weight of scholarly comment appears to suggest that the public trust is a federal as well as a state rule, applicable to resources within the jurisdiction of the United States as well as the states. For example, see Archer et al. (1994) and Wilkinson (1980).
In the Magnuson-Stevens Act, the United States has undertaken to impose sovereign rights and exclusive management authority on the fisheries of the exclusive economic zone (EEZ), surrounding them with statutory protections and restrictions tantamount to exercising dominion and control over them, just short of reducing them to possession. Under similar circumstances, a federal court has held the United States had acquired a property right in wild and free-roaming horses and burros (U.S. v. Tomlinson, 574 F.Supp. 1531 [D. Wyo. 1983]).
Moreover, although the public trust traditionally has been applied to state waters as an attribute of sovereignty,18 its historic roots in English common law provide a basis for its application to waters managed by the federal government (Jarman, 1986; Jarman and Archer, 1992). The states are the constitutional repositories of sovereign power in the United States.19 However, within the EEZ and beyond state waters the United States has "paramount power," asserts "national dominion," and exercises sovereign authority.20 With sovereign authority comes sovereign responsibility, including that imposed by the public trust.
Fisheries within federal waters are held in public trust for the people of the United States. Public trust principles are thus applicable to any allocation of fishing rights. The government has an affirmative duty to take the public trust into account in conferring IFQs. Such allocations cannot be irrevocable, but remain subject to the government's continuing supervisory responsibility over them, to hold and manage them on behalf of the people. Although fishing privileges can be granted, they remain subject to modification in light of current knowledge and current needs.
Lessons from Other Common-Pool Resources21
Fisheries are not unique among common-pool resources in generating conflicts among users. A variety of approaches have been used to manage and reduce such conflicts in other resources; these approaches may provide insights for fisheries management.
Another resource besides fish that has been managed with the use of quotas is the air we breathe. In this case, the quotas limit the amount of pollutants that can be emitted into the air.
Nature of the Resource
Managing air pollution is similar to managing fisheries in several ways. Both have historically been treated as open-access resources, and as a result, both have experienced unsustainable levels of exploitation. Whereas the problem with a fishery involves excessive catch, for the airshed the problem is emissions levels that exceed human health standards. Both resources are considered part of the public domain, creating resistance to transfers of the resource to private owners.
Spatial aspects are important for both resources. For some pollutants, the location of emissions is very important. (Emissions that are concentrated in space, for example, cause more damage than dispersed emissions.) In some fisheries, where the fish are caught matters as well. Different areas may have much higher bycatch rates of juveniles or non-target species, or may reduce the foraging success of at-risk marine mammals and seabirds, and the concentration of fishing activities (e.g., bottom trawling) in certain areas may cause more significant environmental impacts than if these activities were more dispersed.
Both resources typically involve multiple control targets (species in the case of fisheries and different pollutants in the case of the air). In practice, this means that controlling any one species or pollutant will inevitably produce consequences for others.
Perhaps the strongest contrast between the issues faced by managers of these two resources involves attitudes toward the resource. Whereas fishing is considered an important part of the culture of communities affected by it, activities that generate pollution sometimes get little respect in terms of the importance of the industry in the community. In addition, whereas most holders of emission quotas are commercial and industrial firms, IFQ holders range from owners of large corporate factory trawlers to individual fishermen operating out of small boats.
The Path to Quotas
The initial approach to air pollution control relied on a rather traditional form of legal regulation in which the government took upon itself the responsibility for defining management goals, choosing the best approaches for meeting these goals, and monitoring and enforcing compliance with its mandates.
Ambient standards, which establish the highest allowable concentrations of the specified pollutants in the ambient air or water, represent the targets of this approach. To reach these targets, emission or effluent standards (legal discharge ceilings) were imposed on a large number of specific discharge points such as stacks, vents, outfalls, or storage tanks. Following a survey of the technological options of control, the control authority selected a control technology and calculated the amount of discharge reduction achievable by this technology as the basis for setting the emission or effluent standard. The responsibility for defining and enforcing these standards has been shared in legislatively specified ways between the national government and various state governments.
In 1975, the government introduced a form of tradable permit to increase the flexibility with which emission targets could be met. Evidence available at that time suggested that the traditional approach was much more expensive than necessary. Providing greater flexibility was seen as one way to reduce these costs and this expectation has been validated by experience with the lead phase-out and sulfur allowance programs (Tietenberg, 1985, 1995; Hahn and Hester, 1989). Estimates suggest that the flexibility provided by the sulfur allowance program has saved about $225-$375 million (Ellerman et. al., 1997, p. 62), whereas the lead phase-out program saved about $265 million (Nussbaum, 1992, p. 35).
Since these initial efforts, tradable quota programs to control air pollution have been used specifically to eliminate ozone-depleting gases, to eliminate the lead in gasoline, and to control acid rain and tropospheric ozone. The adoption of this approach has also spread to other countries; Canada, Chile, and Germany all
have air pollution control policies that involve some form of tradable permits (Tietenberg, 1995, 1998).
Comparing Management Systems
Tradable quota programs for pollution control share several similarities with IFQs. For example,
- Both involve limiting access. Fishing quotas limit catch or effort. For acid rain control, quotas limit the total amount of emissions allowed from utilities.
- Both typically involve an initial allocation of the quota that is based on previous activity (harvesting or emitting).
- Both involve a market process for transferring quota and may involve some restrictions on transferability.
- Both involve significant monitoring and enforcement components.
- Both have attempted to resolve the tension between the desire to protect the investment of quota holders and the desire to ensure that the public trust nature of the resource is adequately respected by defining the "rights" as privileges of access rather than ownership rights.
These two types of quota systems also have some rather interesting differences. For example:
- Although auctions typically play no role in IFQs, the acid rain program has an auction component that serves to ensure both the availability of quota and good price information to potential buyers. This "zero-revenue" auction (see Box 5.1) does not raise money for the government; rather it returns auction proceeds to the quota holders who are required to place a small percentage of their quotas up for auction each year (Hausker, 1990, 1992).
- Under the acid rain program, the costs of continuous monitoring are borne by the quota holders, whereas in U.S. fisheries, most monitoring and enforcement costs have been borne by taxpayers. In New Zealand fisheries, monitoring and enforcement costs are borne by quota holders.
- IFQs usually limit the purchase of quota shares to narrowly defined eligible populations of those engaged in fishing. Several of the air programs allow anyone, including environmental groups, to purchase and retire quota shares. Since retired quotas are not used to authorize emissions, they directly result in better air quality (Tietenberg, 1998).
- While for IFQs the total allowable catch (TAC) may be specified annually and based on the latest data on stock dynamics, for air pollution programs the emissions limit is typically specified several years in advance. In some cases,
- such as the RECLAIM system in Los Angeles, the limit declines by a fixed percentage over time (Fromm and Hansjurgens, 1996).
- Whereas IFQs are normally defined in terms of a percentage share of the TAC, for air pollution the quota is typically defined in terms of an authorization to emit a specific number of tons in a given year.
- Air quota programs share with some IFQ programs the characteristic that some of the rent created by the quota program is transferred to the larger community, but the sharing may occur in rather different ways. In the Alaskan IFQ programs, this sharing is accomplished by community development quotas. In the ozone-depleting gas program, rent is transferred by means of a tax on the activity authorized by the quota; the revenue goes to the general treasury (Tietenberg, 1990).
Transferable quotas to control air pollution have a sufficiently different purpose than IFQs that experience with them is certainly not automatically relevant for evaluating IFQs. On the other hand, such experience does provide a potentially useful source of ideas on some of the issues with which this report must grapple.
Property rights can be acquired in surface water, but unlike those in land and tangible things, they are characterized as usufructory 22 in nature, more limited to begin with and subject to a greater reach of the police power. In United States v. Gerlach Live Stock Co.,23 the U.S. Supreme Court characterized these rights as follows:
As long ago as the Institutes of Justinian, running waters, like the air and the sea, were res communes—things common to all and property of none. Such was the doctrine spread by civil-law commentators and embroidered in the Napoleonic Code and in Spanish law. This conception passed into the common law. From these sources, but largely from civil-law sources, the inquisitive and powerful minds of Chancellor Kent and Mr. Justice Story drew in generating the basic doctrines of American water law.
These principles are essentially the same for both riparian and appropriative rights.24 The principal difference between the two systems, of course, is that riparian rights arise from ownership of the land adjacent to the water source,
whereas appropriative rights are based on beneficial use and the "first-in-time" principle.25 Interestingly enough, Chancellor Kent analogized the acquisition of water rights to the ferae naturae theory—a property right based on capture similar to the manner in which ownership of wild game and fish is acquired.26
Most significant to a study of IFQs are these points:
- Water rights are transferable and may be used as collateral for loans.27 However, such things as changes in source, use, and point of diversion are subject to review under most systems.
- Appropriative water rights—those almost universally employed in the arid West—are based on Locke's concept of labor. They are rewards for the diversion of water "by costly artificial works . . . for miles over mountains and ravines."28 They rest on the first-in-time principle, and water acquired pursuant to the appropriative theory must be dedicated to beneficial use.
- Virtually all water rights in the United States are now subject to a permit system imposing numerous conditions to protect the public interest.
- In an increasing number of states, water rights are subject to modification at any time based on reasonable or beneficial use principles or on public trust needs.
The scope of property rights in water has been characterized as becoming progressively smaller in the face of increasing regulatory demands and the growth of the public trust doctrine. Perhaps the most dramatic trend in this context is the application of public trust principles. In United Plainsmen's Assn. v. North Dakota Water Conservation Commission, 29 the North Dakota court held that the state has a trust responsibility to consider and plan comprehensively for the overall impacts of major water diversions on trust uses. Then, in National Audubon Society v. Superior Court,30 the California court held that the state has a continuing supervisory authority over water rights under the public trust, a responsibility to consider adverse effects on trust uses by diversions, and an obligation to avoid such adverse effects whenever feasible. This approach has been adopted by a number of other state courts, including those of Alaska, Idaho, Montana, and Washington.
The law of water rights furnishes a number of useful analogies to the use of IFQs. Both systems involve the problems inherent in allocating a common re-
source. Both involve questions of state regulation and conditions and the extent to which vested rights are created.
- The allocation of water rights, particularly under the appropriative system, recognizes the past experience and labor of the permittee. Appropriative rights are based on the application of water to a beneficial use. There is a rough analogy between the allocation of water rights based on the work and experience of the diverter and the distribution of IFQs based on the previous activities of the fisherman.
- The nature of IFQs as property is conditioned on the public trust nature of the fishery, just as water rights are held subject to public trust. Under the National Audubon rule, once an appropriation has been approved,
[T]he public trust imposes a duty of continuing supervision over the taking and use of the appropriated water . . . the state is not confined by past allocation decisions which may be incorrect in light of current knowledge or inconsistent with current needs. The state accordingly has the power to reconsider allocation decisions.... No vested rights bar such reconsideration. (33 Cal.3d at 447 [italics added]).
- Fish and game have historically been considered as held by the state in trust until reduced to capture.31,32 In California Trout, Inc. v. State Water Resources Control Board,33 the court states, "Wild fish have always been recognized as a species of property the general right and ownership of which is in the people of the state. And fisheries are one of the oldest trust uses."34
The significance of the application of the public trust is heightened by the U.S. Supreme Court's admonition that limitations on the exercise of property rights equivalent to a deprivation of all economic use may be a "taking" that must be compensated by the government, unless justified by background principles of nuisance or property law.35 Consideration of a fishery as a common resource
- Fish and game have historically been considered as held by the state in trust until reduced to capture.31,32 In California Trout, Inc. v. State Water Resources Control Board,33 the court states, "Wild fish have always been recognized as a species of property the general right and ownership of which is in the people of the state. And fisheries are one of the oldest trust uses."34
- held by government in trust for the people, albeit allowing harvest privileges, largely eliminates the issue of an unconstitutional takings when the privilege is curtailed.
- Water rights systems may furnish guidelines to the termination of IFQs. The history of water rights is one of steadily increasing state regulatory authority, whether in the form of standards for reasonable use, beneficial use, or continuing public trust jurisdiction. In addition, a substantial body of law has accumulated governing the manner in which water rights permits may be terminated. This can take place in a number of ways, including forfeiture, abandonment, revocation, and prescriptive rights. Such experience may be applied to future situations in which IFQ privileges must be terminated.
Surface water resources and fisheries also share the characteristic of being stochastic resources. Variability in water flows and fish stocks has led to problems in management of both resources. For example, the initial allocation of Colorado River water rights was based on average flow levels during a sequence of El Niño years in the late nineteenth century. Because the rights were to acre-feet rather than to a percentage of the annual flow, the system was unable to satisfy all the assigned rights during normal and dry years until a long and costly renegotiation of rights had been achieved.
In many states, the hydrologic connections between surface water sources and groundwater basins are not recognized. Consequently, a distinct body of statutes and cases governs surface water and groundwater.
Groundwater is considered a public resource and, until recently, has been subject to few access and use restrictions. For most states, owners of overlying land were allowed to pump and use as much groundwater on their land as they could put to reasonable and beneficial use. Apart from a few jurisdictions that considered the transport of groundwater off overlying land to be an unreasonable use, reasonable and beneficial use failed to restrict groundwater pumping. This situation can result in overdraft (the removal of groundwater in excess of the capacity of the water basin to recharge) and subsidence (the downward movement of the land surface due to collapse or compaction of the underlying aquifer as a consequence of groundwater pumping).
Citizens, particularly in the western United States, have found themselves embroiled in groundwater basin dilemmas, primarily overdraft and subsidence, but also interference among wells. Groundwater pumpers receive the full benefit of all water that they pump, but are able to spread the costs of pumping to all users of a basin. Each well contributes to declining water tables in a basin. As water is removed from the ground, in addition to ground subsidence, trees and plants that rely on groundwater may perish as water tables decline. If substantial
declines occur in water tables, water quality problems may emerge because water at greater depths is often of poorer quality. In coastal zones, groundwater pumping may also lead to saltwater intrusion, affecting water quality, soil fertility, and the viability of estuarine systems.
Groundwater pumpers and citizens have been aided in their efforts to address these dilemmas by state governments, which have responded by defining property rights in groundwater. Groundwater pumpers are given exclusive rights of use, but not of ownership, of groundwater. States have taken additional steps to locate alternative sources of water and to create water conservation plans.
A variety of mechanisms can be used to define groundwater rights and to manage groundwater basins to address the multiple dilemmas that groundwater pumpers face (Blomquist, 1992). For instance, in a “home rule" state such as California, the state does not define groundwater rights, nor does it engage in much regulation of groundwater. Instead, the state has made available several different management options from which groundwater users may select. Groundwater users may choose to adjudicate their basin. Hydrologic studies are conducted to determine the extent of the overdraft and the amount of water that can be withdrawn from the basin annually without lowering water levels. Groundwater pumpers devise a sharing scheme among themselves, allocating shares of the groundwater available for pumping each year. Markets have developed to enable groundwater pumpers to buy and sell water rights. Thus, these self-organized systems legitimated by the court system are, in essence, individual transferable quota systems for groundwater. Typically, sharing schemes are based on historical pumping rates. When most groundwater pumpers agree to the allocation scheme, a state court is asked to recognize the contract. The court appoints a water master to monitor the basin and the sharing scheme. Each year, the water master publishes each pumper's pumping record. The state does not enforce the sharing schemes. Instead, it is the responsibility of the pumpers in a basin to take civil action against contract violators. Some of these systems have been operating for more than 40 years at very low transaction costs and very low rates of overpumping, for example, in Los Angeles County (Ostrom, 1990; Blomquist, 1992).
If California groundwater users decline to adjudicate their basins, they may, nevertheless, form water districts. Several different types of districts may be formed, with varying levels of authority. Some districts engage in limited forms of regulation, such as prohibiting the transport of groundwater outside a basin. Other types of districts actively manage and carefully monitor their groundwater basins. For instance, the Orange County Water District controls groundwater pumping through pricing. The price of water increases as the amount of water pumped increases, encouraging groundwater pumpers to use surface water supplies made available through the water district. The water district uses the pumping fees to import surface water and to recharge the groundwater basin.
Thus, California has made available to its citizens a number of different
mechanisms by which they may address groundwater basin dilemmas. However, the state does not require groundwater pumpers to adopt one of the alternatives. As a consequence, a number of basins that were once in overdraft are now actively managed, and a number of basins that are experiencing critical problems are not managed at all.
Whereas California is at one end of the spectrum in helping pumpers to devise their own solutions to groundwater dilemmas, Arizona is at the other. The State of Arizona, through its active management areas, directly manages the state's most overdrafted basins. The 1980 Arizona Groundwater Management Act created the Arizona Department of Water Resources and directed it to define and quantify groundwater rights based on type of use. Agricultural, mining and industrial, and water utility rights have been defined and allocated. Agricultural rights, and mining and industrial rights have been allocated strictly on the basis of historical use. For instance, for each acre-foot of water a mine pumped on average each year for the five years prior to 1980, the mine was granted a property right. Groundwater pumpers are required to report their groundwater pumping annually. The Arizona Department of Water Resources monitors and enforces groundwater rights.
Groundwater rights were allocated with little immediate consideration given to limiting the overdraft of basins. Groundwater overdraft and subsidence problems will be addressed over time through the retirement of groundwater rights, the gradual phasing-out of agriculture, the importation of surface water supplies through the Central Arizona Project, and increasingly strict water conservation requirements.
Most states fall along the continuum defined by California and Arizona. For instance, Colorado, which relies on a system of state water courts, water masters, and individual rights holders to define and enforce surface and groundwater rights, comes closest to California. Nevada, on the other hand, has adopted an Arizona-like groundwater management approach. No matter which approach, or combination of approaches, a state has adopted to address groundwater aquifer dilemmas, all states have attempted to define rights of use, while subjecting these rights to consideration of the public's interest.
State programs that define exclusive use rights in groundwater share several similarities with IFQs, for example:
- Both involve limits on harvesting the resource flow.
- Both involve an initial allocation of use rights or quota based on historical harvesting activities.
- Both involve a market process for transferring use rights or quota. In the California adjudicated basins, water rights are freely transferable among pumpers in a basin. In Arizona, groundwater use rights may be transferred among pumpers in a use class, or across uses.
- Both involve restrictions on transferability of "use rights" or "quota."
Most states place restrictions on transferring groundwater outside the basin of origin. Other restrictions include limits on the amount of water that may be transferred. For instance, in Arizona, only a portion of a groundwater right may be transferred from one use to another.
- Both require significant monitoring and enforcement.
- Both involve a tension between the desire to protect quota or use-rights holders and the desire to ensure that the public trust nature of the resource is adequately respected. In many state constitutions, water is specified as being owned by the state, with citizens having the right to use such water.
These two types of systems are also different in some ways:
- Most states impose some type of a pump tax or fee to pay for the costs of monitoring and enforcement. In fisheries, most monitoring and enforcement costs have been borne by taxpayers.
- In many states, groundwater monitoring and enforcement are shared by the state and pumpers. For instance, in California's adjudicated basins, the state monitors pumping, but pumpers are authorized to take action against rule breakers. In Colorado, enforcement of water rights is left to individual water rights holders. In fisheries, users typically do not participate in monitoring and enforcement, which are conducted by one or more public agencies.
- The purchase of groundwater use rights is generally less restricted to users than the purchase of fishing quota shares.
- In many states, groundwater use rights may be banked, or stored, from year to year. IFQ programs differ in terms of whether they let harvesters bank unused quota.
Finally, there is a fundamental difference between fish populations and groundwater basins. A groundwater basin stores water that has percolated into it through the soils from rainfall and surface runoff. With modern technology, accurate estimates of the groundwater resources, which come very close to an average sustainable yield, can be determined and quotas assigned. In bad years, the water levels in the basin may be brought down, but in good years the storage space is reoccupied by water and the total storage space is unaffected by overdrafts (unless overdrafting is accompanied by collapse of aquifer structures). In fisheries, recruitment can vary dramatically from year to year (depending on stock size, water temperature, and other exogenous factors). Fishing of a quota in a bad recruitment year may drastically affect the remaining stock on which future years depend and adversely affect the recovery of the stock. Thus, in fisheries, unlike in groundwater basins, stocks are more difficult to estimate accurately and drawing down the stocks is more risky.
Oil and Gas
Initially, oil and gas were treated like fish, as "minerals ferae naturae."36 It was recognized, however, that the owner of land under which these minerals lie is their absolute owner. Mineral rights in oil and gas can be, and are, conveyed as real property.
For historical reasons, "hard" and "soft" minerals on public lands were treated very differently. Under the common law, minerals on lands belonging to the Crown (and, by the same token, to the United States or various states of the union) were the property of the Crown. The same general rule applied under the Spanish and Mexican law to the lands acquired by the United States from Mexico. However, the pressures of the Gold Rush resulted in de facto recognition of rules developed by the miners and applied to the public lands on which they found their treasure, without regard to the legalities of title. In effect, an open-access system existed for gold mining, at least until a claim was perfected.37
Oil and gas received very different treatment. The enactment of the Mineral Leasing Act of 1920 represented a historic shift from more than a century of privatization. Supporters of this act characterized it as changing "the whole principle of the public land laws . . . by refusing to allow the title to lands to go into private ownership and (adopting) for the future a government leasing policy "38
This act has been described as a "bargain," in which states relinquished historic claims to the public lands within their borders in exchange for a federal quid pro quo—assurances that 90% of the revenue from these lands would go to the states—either directly or through the Reclamation Fund. The Bureau of Land Management awards oil and gas leases on public lands, and the proceeds from such leases are subject to state and federal taxes of various kinds.39
Where ownership of the land above oil and gas reservoirs is very fragmented, the landowners or those who have leased the mineral rights sometimes compete for the oil underneath, because the oil migrates toward the wells where the pressure is lower. This is a direct analogy with fisheries and has led to similar efficiency problems (excessive drilling of wells). The way the authorities (e.g., the Texas Railroad Commission) have dealt with this situation has sometimes
been as detrimental to efficiency as the typical fishing regulations, with the production per well being limited (prorationed), which further encourages the drilling of excessive wells. Alternatively, fractional ownership has often been addressed through unitization (e.g., in the North Sea). Under unitized development agreements, resource claimants negotiate sharing agreements and designate one firm to serve as resource manager. All firms share in the cost of drilling and extraction and in the resulting revenues. The field manager identifies optimal well spacing and pumping rates. The share of oil in the reservoir that each license holder can claim is fixed, eliminating the incentives for competitive drilling. The shares are sometimes subject to revisions according to agreed procedures as more becomes known about the reservoir.
Timber and Timberland Resources
With respect to the primary definition of common-pool resources having characteristics of "difficulty of exclusion and subtractability," timber and land do not qualify as common-pool resources. However, it is interesting to compare and contrast timber and fish resources in light of property rights, renewable characteristics, public ownership, and changing public attitudes.
Timber and land rights have evolved over time through government action to encourage settlement and development of both public and private ownership. Government actions in the form of land grants, homestead acts, and sale of public lands have encouraged private development throughout the United States, particularly during the nineteenth century. With the set-aside of large areas as Yosemite National Park in 1864 and Yellowstone National Park in 1872, the federal government set the pattern for long-term public ownership and created the foundation for the U.S. national park system. In 1891, the General Revision Act authorized the President to "set aside and reserve in any State or Territory having public lands bearing forests, any part of the public lands wholly or in part covered with timber or undergrowth." This act created the basis for our national forest system.
National parks have from the outset been oriented toward preservation. National forests, in contrast, have historically been managed under the concept of conservation and multiple use. Under the leadership of Gifford Pinchot and the "scientific approach," timber was managed as a renewable resource based on sustainable harvest. Economic development of the forest was encouraged to support local economies by providing valuable jobs and products to the citizens of the United States. The conflict created between preservation and conservation has produced ongoing debate and at times caused significant change in long-term forest management policy. In the last decade, a shift in public values resulted in a shifting goal for national forests away from the harvest of timber to preservation of the forests for other public benefits. This has caused considerable economic dislocation for both individuals and communities and a shift in dependence from public to private-sector forest resources.
Under existing programs, most fisheries are managed on a sustainable yield basis through scientific assessment of fish stocks and the regular setting of TACs. The increasing public concern for habitat and wildlife protection has resulted in a shift in public attitudes from support of fish harvest to preservation of marine environments similar to the trends experienced in national forests. This shift is demonstrated by actions being taken by some organizations to promote the establishment of new marine protected areas and by the changes incorporated in the Magnuson-Stevens Act in 1996. Such shifting attitudes are creating economic impacts on fishing communities similar to those experienced in communities that depend on the harvest of forest products. The impacts on fishing communities will be more severe, however, because there are few private marine fishing grounds comparable to private timberlands to cushion the impact of the removal of public trust lands from commercial access. (Note, however, that aquaculture is a significant alternative to some wild harvest fisheries.)
The forest products industry relies on sawmills, plywood mills, and pulp mills to process its harvest. The fishing industry relies on both land-based and at-sea processors. Like most large fish processors, sawmills require large amounts of capital to be competitive and depend on a steady and reliable supply of raw material. When decisions were made to reduce the supply of public timber sharply, federal funds were made available to support retraining and provide other forms of social assistance to individuals, but sawmills and other timber processors were not provided financial compensation for changes in public policy.
In contrast to fishing, timber has a defined market value by species that is reflected in the purchase price paid at auction for standing timber. This value is recognized as economic rent owed to the public (for that part of the value exceeding operational costs and anticipated profit of the successful bidder). Currently, there is no comparable economic rent supplied to the public from fisheries.
Under existing regulations, most timber harvested from federal lands is required to be processed in the United States. Timber from private lands is unrestricted by regulation and can be sold to the highest and best markets, whether foreign or domestic. Existing laws limit foreign ownership and fish harvest in U.S. waters. Processing of fish is unrestricted in whether it occurs in the United States or abroad, but fish must be at least initially processed soon after capture in U.S. waters, because of their perishable nature. Additional processing may occur in other nations, such as surimi production in Japan from pollock caught in U.S. waters.
Public grazing lands have been subject to leases for many years, but only in relatively recent times has the amount charged for such leases been subject to serious scrutiny. The U.S. Forest Service began charging minimal grazing fees in 1906, but no fees were charged on public domain grazing lands until the enact-
ment of the Taylor Grazing Act in 1934.40 The Federal Land Policy Management Act (FLPMA)41 established the policy of retention of the public lands and attempted to create a uniform approach for their administration. Bureau of Land Management grazing leases, renewed automatically, set at controversially low levels, and treated as adjuncts to privately held ranches, have been subject to periodic scrutiny. Efforts to have them treated as property, protected by the takings and compensation provisions of the Fifth Amendment, have thus far proven unsuccessful. Grazing permits are, by law, revocable licenses. Transferable forage rights have been proposed for federal rangelands (Nelson, 1997). Anderson and Hill (1975) present the evolution of grazing rights as an interplay between resource demand, transactions costs, and technological change. Extending their argument to the fishery, "property rights" to fish could become ever more tightly defined as technological change and increased competition for access lead to the adoption of new institutional structures.