Negative-Value Property

56 Pages Posted: 23 Aug 2021

Date Written: August 20, 2021

Abstract

Ownership is commonly regarded as a powerful tool for environmental protection and an essential solution to the tragedy of the commons. But conventional property analysis downplays the possibility of negative-value property, a category which includes contaminated, depleted, or derelict sites. Owners have little incentive to retain or restore negative-value property and much incentive to alienate it. Although the law formally prohibits the abandonment of real property, avenues remain by which owners may functionally abandon negative-value property, as demonstrated recently by busts in certain coal and oil & gas markets. When negative-value property is abandoned, whether formally or functionally, the rehabilitation of such property typically requires public expenditure—an externality which cuts against property’s general and salutary tendency to internalize spillovers at a low social cost. The existence of negative-value property, as well as its increasing abundance, reveals an underdeveloped aspect of property theory and a pressing need to fortify legal mechanisms that prevent abandonment and enforce owners’ financial responsibility for severely degraded property.

Keywords: environmental law, temporal spillovers, property theory, bonding, financial assurance, decommissioning, orphaned wells, abandoned mines

JEL Classification: D62, H23, K11, K32

Suggested Citation

Huber, Bruce R., Negative-Value Property (August 20, 2021). Washington University Law Review, Vol. 98, No. 1461, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3908607

Bruce R. Huber (Contact Author)

Notre Dame Law School ( email )

P.O. Box 780
Notre Dame, IN 46556-0780
United States
(574) 631-2538 (Phone)

HOME PAGE: http://law.nd.edu/people/faculty-and-administration/teaching-and-research-faculty/bruce-r-huber/

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