The Allocation and Dissipation of Resource Rents: Implications for Fishery Reform

ICER Working Paper No. 13/2009

38 Pages Posted: 23 Jul 2009

See all articles by Gary D. Libecap

Gary D. Libecap

University of California, Santa Barbara (UCSB) - Donald Bren School of Environmental Science & Management; University of Arizona - Karl Eller Center; National Bureau of Economic Research (NBER); PERC - Property and Environment Research Center

Terry L. Anderson

PERC - Property and Environment Research Center

Date Written: July 21, 2009

Abstract

In the move to adopt rights based arrangements for renewable resources to avoid the losses of open access and the inefficiencies of prescriptive regulation, we argue that grandfathering the allotments of local users can be the most efficient distribution mechanism. We differ from the standard support among economists for auctions which contends that auctions allocate rights to the highest valued users and thereby maximize rents. Our contention is that rents are not a fixed stock as is commonly assumed, but rather depend upon the actions of those who use the natural resource and convert it into valuable goods and services. First-possession allocation assigns ownership and rents to existing users, reinforcing their incentives for stewardship and rent maximization. Resource rents are an important source of wealth and well being, especially in developing countries. By contrast the alternative, auction allocation, assigns ownership to winning bidders, but the rents are captured by the auctioneer, often the state, not local agents. We argue that there can be important efficiency effects. Our empirical focus is on fisheries, but the implications extend to other settings.

Suggested Citation

Libecap, Gary D. and Anderson, Terry L., The Allocation and Dissipation of Resource Rents: Implications for Fishery Reform (July 21, 2009). ICER Working Paper No. 13/2009, Available at SSRN: https://ssrn.com/abstract=1436917 or http://dx.doi.org/10.2139/ssrn.1436917

Gary D. Libecap (Contact Author)

University of California, Santa Barbara (UCSB) - Donald Bren School of Environmental Science & Management ( email )

4670 Physical Sciences North
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HOME PAGE: http://www.esm.ucsb.edu/people/usernew.asp?user=glibecap

University of Arizona - Karl Eller Center ( email )

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HOME PAGE: http://www.bpa.arizona.edu/~libecap

National Bureau of Economic Research (NBER)

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Terry L. Anderson

PERC - Property and Environment Research Center ( email )

2048 Analysis Drive
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Bozeman, MT 59718
United States

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