The 'Background Principles' of Natural Capital and Ecosystem Services - Did Lucas Open Pandora's Box?

Abstract:     
In his majority opinion in Lucas v. South Carolina Coastal Council, Justice Scalia established the relevant background principles of state property law as the reference point for testing whether public regulation or private property goes so far as to constitute a categorical taking of property. He also confirmed, however, that those background principles evolve with new knowledge and changed circumstances.

Over the past decade, the discipline of ecological economics has produced a burgeoning body of research illuminating the significant economic value that functioning ecosystems, acting as natural capital, supply humans in the form of direct and indirect ecosystem services, such as the capacity of coastal wetlands to mitigate storm surges. This article explores how these findings fit into the Lucas calculus.

Based on work by Professor John Sprankling, the Article concludes that the background principles of property law have resisted integrating concepts like natural capital and ecosystem services into property doctrine. On the other hand, based on work by Professor Michael Blumm, the Article confirms that the amassing body of research about natural capital and ecosystem service values is precisely the kind of new knowledge that ought to transform those background principles. The Article concludes by discussing two recent cases in which courts have done exactly that - to integrate knowledge about natural capital and ecosystem service values in order to apply common law property doctrine in ways contrary to the established background principles. If this trend spreads, Lucas will indeed have opened a Pandora's box, with impacts on the common law it is difficult to imagine the Justice Scalia and majority had in mind.

Working Paper Series