Property Rights, Not Regulation

The European Union has unveiled a complete overhaul of its Common Fisheries Policy, designed to prevent the endemic over-fishing of marine stocks in European Union waters. The previous incarnation was a centralised, distant and ineffective mess which did little to conserve fish stocks and much to line the pockets of special interests. In the 28 years it has been in effect, European boats have been forced to cast over the side thousands upon thousands of tons of dead fish to avoid exceeding set quotas, a move which has ultimately hurt fishing fleets both small and large. It is a relief that the Commission has recognised the abject failure of the CFP, with the Commissioner for Fisheries stating,

There is overfishing; we have 75% overfishing of our stocks and comparing ourselves to other countries we cannot be happy. So we have to change. Let me put it straight – we cannot afford business as usual any more because the stocks are really collapsing.

Indeed, the new policy has a number of features that are a vast improvement on the previous regulations. Specifics with regards to particular fish in particular seas will be largely devolved to individual states and the whole approach will mean a transition away from subsidy that has helped maintain inefficient fishing fleets and fishing boats. The proposals, however, do nothing to tackle the real reason for the seemingly terminal decline in European fish-stocks – that is, the lack of property rights and the strong economic incentives for conservation that come with them. Bureaucrats in Brussels, or London, Paris or Vilnius have no financial incentive to conserve fish stocks, and have no way of knowing whether their diktats lead to an efficient resource allocation. In other words, they are distanced from the impact of the decisions they make and face no financial repercussions should they fail in the performing of their job. The new regulations fail to overcome what economists term the “tragedy of the commons” – where everyone is free to exploit an economic resource, then individuals will tend to fish as much as possible to gain what they can before someone else comes along and does the same.

This latter situation is avoided where clear property rights exist. If I own a certain resource and make my living from it, then I have an economic incentive to conserve fish stocks so I can continue to benefit from my property over the long-term. It is a misconception to think that businesses only think short-term when it comes to resource consumption – indeed, the reverse is true.  Where I can exclude others from using my property, I will be able to prevent over-fishing and be able to tailor my fleet to take the best advantage of what I own. Moreover, and just as importantly, a business-owner who owns a resource will face the market test of profit and loss – where he does a good job, he is rewarded with profits. Where he fails to be efficient or effective in serving consumer demand, he suffers a personal financial penalty, unlike distant civil servants in the palaces and chancellories of Europe.

History is replete with examples of the over-consumption of resources thanks to “common” ownership – that is, where individuals have no direct personal stake in long-term resource conservation. It is also replete with examples of private owners ensuring that resources are used effectively and will continue to be so long into the future. Be it herds of elephant in Africa, forests or grazing land in the United States and Europe, the private sector has consistently demonstrated that it out-performs by a wide margin the state in attempts to ensure sustainability. Allow fishing stocks to be privately owned and the problem of over-fishing will all but disappear, all without burdensome regulation and crippling subsidies and diktats.  Of course, such a policy is, sadly, unlikely. Property rights don’t help to line the pockets of special interest groups, do they? In European politics, it seems that this is, sadly, what ultimately matters.

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