Alienable or inalienable, and how? Individual property rights in commons governance

Amid increasing natural resource privatization, the proper delineation of individual property rights and their alienability, i.e. the possibility to transfer them, and effectively hybridizing market and community governance are of utmost importance. Here, we investigate how community-based institutional arrangements evolve with market mechanisms to achieve sustainable resource management. We examine the grazing quota system developed within a common property regime on the Qinghai-Tibetan Plateau over the past two decades. Using the Calabresi & Melamed framework, we chronologically divide the institutional process into three stages: (1) introduction of non-transferable grazing quotas (inalienability), (2) market tradable quotas (property rules), and (3) alienable quotas through a village collective-based compensation mechanism (liability rules). By assessing social-ecological performance and conducting a qualitative analysis of transaction costs, we analyze how these three institutions evolved and what outcomes they produced. We find that quota alienability doesn't increase grazing intensity. Furthermore, quota transfers under liability rules, instead of property rules, exhibit better social outcomes through improving distributive equity, because the collectively managed compensation mechanism entails lower transaction costs. The findings demonstrate quotas under liability rules as a feasible pathway for integrating elements of individual alienable property rights into community-based natural resource management and achieve sustainability.