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Conservation and employment creation: can privatizing natural resources benefit traditional users?

Published online by Cambridge University Press:  29 January 2013

Jean-Marie Baland  and
Kjetil Bjorvatn
Jean-Marie Baland
Affiliation:
CRED, University of Namur, Belgium. E-mail: jean-marie.baland@fundp.ac.be
Kjetil Bjorvatn
Affiliation:
NHH Norwegian School of Economics, Department of Economics, Helleveien 30, 5045 Bergen, Norway. Tel: +47 55 95 95 85. Fax: +47 55 95 95 43. E-mail: Kjetil.Bjorvatn@nhh.no
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Abstract

The establishment of a private property regime is often proposed as a solution to the degradation of natural resources. While arguably more efficient than open access, private property often comes at a distributional cost (Weitzman, M. (1974), ‘Free access vs private ownership as alternative systems for managing common property’, Journal of Economic Theory 8(2): 225–234) as traditional users of the resource lose income and employment in the process. The present paper demonstrates that, in the case of renewable resources, traditional users may gain from privatization even if they are denied ownership of the resource. Indeed, a private owner maximizing profits tends to preserve the resource, which results in long-term increases in employment. We derive the conditions under which these long-term gains more than compensate traditional users for the short-run fall in labor demand and resource rents.

Type
Research Article
Information
Environment and Development Economics , Volume 18 , Issue 3 , June 2013 , pp. 309 - 325
Copyright
Copyright © Cambridge University Press 2013

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