THE ROLE OF PROPERTY RIGIITS IN ENVIRONMENTAL PROTECTION

This paper examines the potential role played by legislation about property rights in the formulation of environmental policy. There is a need for a fresh look at property rights because the treatment of these rights in recent policy-oriented publications by governmental agencies as well as in other policy oriented literature is unsatisfactory. The main reason for this state of affairs is that in these government documents and in the other literature hardly any distinction is made between regulation on the one hand and legislation about property rights on the other. Yet this distinction is crucial from a positive as well as from a normative point of view. Positively, regulation and property rights legislation have different effects on allocation and distribution. As a consequence, it seems plausible that decision making about changes proceeds differently in both areas. Normatively, the advantages and disadvantages of both types of policy are different. In this paper an attempt is made to clarify the concept of property rights, particularly in the sphere of environmental protection. Section 2 defines property rights and compares legislation about property rights with regulation. Section 3 examines the allocational and distributive effects of property rights. In view of these effects, the decision making process is considered. For this purpose it is assumed that policies are supposed to originate in a representative legislative body. Section 4 discusses tradeable permits. Such permits allow the production of a fixed output of a negative external effect. Tradeable permits are property rights themselves and it will be argued that this fact has important consequences for the decision making process by which such permits are established. Section 5 assesses the opportunities for new legislation about property rights in view of the preceding results.