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Privatizing renewable resources: Who gains, who loses?

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  • Stoeven, Max T.
  • Quaas, Martin F.

Abstract

Renewable resources can provide society with (i) resource rent, (ii) consumer surplus and (iii) worker surplus in resource harvesting. In a dynamic analysis we show that privatization increases the present values of consumer surplus and worker surplus if harvesting costs do not depend on the resource stock. If they do, consumers and workers tend to lose from privatization and indeed prefer open-access if the discount rate is sufficiently high. Applying the analysis to the North-east Arctic Cod fishery, we find that socially efficient privatization would increase the present value of resource rent by 1.1 billion USD, while the present value of consumer surplus would decrease by 0.4 billion USD. These diverging interests may explain why rent dissipation often persists even if use rights could be defined and enforced. --

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Bibliographic Info

Paper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2012-02.

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Date of creation: 2012
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Handle: RePEc:zbw:cauewp:201202

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Keywords: resource rent; consumer surplus; worker surplus; distribution; political economy;

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  1. Paul A. Samuelson, 1974. "Is the Rent-Collector Worthy of His Full Hire?," Eastern Economic Journal, Eastern Economic Association, vol. 1(1), pages 7-10, January.
  2. Weitzman, Martin L., 1974. "Free access vs private ownership as alternative systems for managing common property," Journal of Economic Theory, Elsevier, vol. 8(2), pages 225-234, June.
  3. Colin W. Clark & Gordon R. Munro & U. Rashid Sumaila, 2010. "Limits to the Privatization of Fishery Resources," Land Economics, University of Wisconsin Press, vol. 86(2), pages 209-218.
  4. Andries Richter & Paulo A.L.D. Nunes, 2011. "Towards the Optimal Management of the Northeast Arctic Cod Fishery," Working Papers 2011.40, Fondazione Eni Enrico Mattei.
  5. Clark, Colin W. & Munro, Gordon R. & Sumaila, Ussif Rashid, 2005. "Subsidies, buybacks, and sustainable fisheries," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 47-58, July.
  6. Hannesson, Rognvaldur, 2010. "The “Rent Drainâ€: A Good Measure of the Gains from Better Resource Management?," Marine Resource Economics, Marine Resources Foundation, vol. 25(1).
  7. Grafton, Quentin R. & Arnason, Ragnar & Bjorndal, Trond & Campbell, David & Campbell, Harry F. & Clark, Colin W. & Connor, Robin & Dupont, Diane P. & Hannesson, Rognvaldur & Hillborn, Ray & Kirkley, J, 2006. "Incentive-Based Approaches to Sustainable Fisheries," Staff General Research Papers 12766, Iowa State University, Department of Economics.
  8. Ragnar Arnason & Leif K. Sandal & Stein Ivar Steinshamn & Niels Vestergaard, 2004. "Optimal Feedback Controls: Comparative Evaluation of the Cod Fisheries in Denmark, Iceland, and Norway," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 531-542.
  9. Brito, Dagobert L. & Intriligator, Michael D. & Sheshinski, Eytan, 1997. "Privatization and the distribution of income in the commons," Journal of Public Economics, Elsevier, vol. 64(2), pages 181-205, May.
  10. Clark, Colin W. & Munro, Gordon R., 1975. "The economics of fishing and modern capital theory: A simplified approach," Journal of Environmental Economics and Management, Elsevier, vol. 2(2), pages 92-106, December.
  11. De Meza, David & Gould, J R, 1987. "Free Access versus Private Property in a Resource: Income Distributions Compared," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1317-25, December.
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