Seeds of institutional change: the biopiracy of Brazilian rubber

How do technological breakthroughs alter the governance of common-pool resources? Economists and other social scientists have long studied commons as problems of overuse or of institutional design, dedicating less attention to how resource dynamics themselves can trigger institutional change – even across borders. This work examines a striking nineteenth-century case: Britain’s appropriation of Brazilian rubber (caoutchouc) seeds and their transplantation to Southeast Asia, an episode now widely regarded as biopiracy. Using factual and historical evidence, game-theoretic reasoning, and counterfactual analysis, it shows that vulcanisation, which increased rubber’s commercial value, exposed a vacuum in Brazil’s formal institutions and created incentives for Britain to seize rents that Brazil could not protect. The resulting shift from wild extraction to plantation cultivation expanded global output and reduced prices. Brazil’s dominance was unlikely to be sustainable under any scenario, and the unintended aggregate outcome was positive-sum, albeit with uneven consequences – a Kaldor-Hicks rather than Pareto improvement.