The political economy of property rights

Even though the assigning of the formal property rights are the most obvious response to externalities involving the environment and natural resources, they typically are not the first action taken. Indeed, they often are the last, coming only after a crisis. Why is that? One reason is that property rights are costly to define. Property rights involve political costs because they define ownership and hence a distribution of wealth, status, and political influence. As a result, they often are controversial and political risk leads politicians to delay in assigning rights. A crisis can resolve distributional disputes by making the benefits of taking action or the costs of not doing so clearer. For this reason, it may be efficient and politically understandable why property rights are adopted late.