9

Conclusion

IN RESPONSE TO the current fisheries crisis, a number of States have experimented with property-rights-based fisheries management systems. These moves have been strongly driven by economic arguments, which posit that the introduction of private property rights into a common pool resource will prevent a destructive race to capture the resource and result in more efficient resource use. In most marine fisheries, the introduction of rights-based instruments has resulted in the improved economic performance. Excess capacity has been reduced. Fisheries are maintaining or producing higher economic returns. There have even been reported improvements in the physical condition of the stocks, although it is still too early to predict the longer term impact of rightsbased mechanisms on stock sustainability, non-target species and marine ecosystems. There is also evidence of right-holders being more willing to participate in the management of stocks, which can make the design of management systems more inclusive of the interests of key stakeholders. However, rights-based systems are not a panacea. By-catch levels remain high. High-grading of catches and discarding remain a problem. Whilst quota systems can be effective for single species fisheries, they are more difficult to implement in complex multi-species fisheries. Such difficulties are compounded by the growth of legal obligations to take account of the impact of fishing activities on the marine environment more generally. Although many communities may benefit indirectly from more efficient fisheries, rights-based systems have resulted in some adverse social consequences. For example, rights-based systems may disenfranchise individual fishermen and result in fishing rights being aggregated by larger fishing organisations or commercial bodies. Also although stakeholder participation is regarded as a public good, it can have some adverse effects, particularly when powerful stakeholders seek to exert pressure on

the political process that determines management measures.

Although property rights-based fisheries management systems may provide an opportunity to improve the operation of fisheries in theory, the economically optimum form of property right may not necessarily be available in practice. This is because property rights are fundamentally shaped by the legal system that proscribes, regulates and enforces property rights in practice.

396 Conclusion

In chapter 2, we saw how property rights come in a variety of legal forms, but in all cases they turn on the idea of excludability. Thus different property relations are characterised by the varying degrees of excludability to which a thing may be subject and by who determines this. Excludability is determined according to the physical characteristics of a thing, the capacity of law to facilitate excludability, and whether or not and how much excludability is morally desirable. We also saw how property in general is fundamentally shaped by a plurality of values, which in turn influence particular and specific forms of property. These general justificatory theories lend some support to private property rights and utilitarian/economic based calls for preference maximisation. However, this is not always an overarching consideration in the design over property rights. It is clear that certain core functions of property are common to all property justifications: the ordering function of property and ensuring that the acquisition or accumulation of property does not undermine certain basic needs or individual autonomy.

In chapter 3, it was suggested that the public function of property is frequently ignored or undervalued. This is surprising because property is a social institution and, as such, fundamentally shaped by social processes. Even in justifications of private property, this core ordering function of property is admitted. In an effort to redress this imbalance in property analysis, an account of the public function of property was provided. This firmly located the public function of property in the values and structures of the plenary legal community within which property institutions are located. It was then noted that the different values and structures of different communities result in distinct public functions for property. That said, some general attributes of the public function of property can be divined from certain features that are common to all plenary legal communities. Thus, first order public interests require property institutions to meet certain basic needs or levels of subsistence. This extends to meeting the needs of current populations and maintaining the opportunities necessary to ensure vital needs can be provided for future generations. Second order public interests require property institutions to conform to the structural requirements of a legal system. These include: protecting agency, thereby reaffirming first order interests; respecting allocations of jurisdiction; and conforming to the requirements of reciprocity, which demand a degree of direct or diffuse equivalence in legal transactions. Other important social objectives (third order public interests), such as fundamental religious or ideological tenets, may further dictate the shape and extent of property rules. These three orders of public interest are found in operative legal rules, and frequently in higher order norms such as domestic constitutions and jus cogens norms of international law. Apart from noting how these rules constrain the operation of property, it was observed how environmental norms were emerging as a powerful

Conclusion 397

constraint on the operation of property systems. Many such norms are concerned with the protection of first order interests and ensuring the conditions for meeting vital needs. International law in particular was concerned with how natural resources should be subject to certain public interest limitations, a point that is taken up in chapters 6 and 7.

As property possesses a dual function, facilitating both private and public interests, it is essential to understand the relationship between these facets of property. They may pull in different directions or place limits on the specific and particular property rights. This was considered in chapter 4. Whilst the existence of such interests may have extra-legal origins, once such interests are reduced to legal norms or subject to legal processes, then it is the function of law to determine the relationship between these interests in particular cases. In part the relationship between various interests may be determined by the physical qualities of a resource. However, given that legal excludability can frequently overcome the limits of physical excludability, it is crucial to understand how legal excludability operates. In many cases this is simply a matter of looking to the relevant operative rules of law. However, at a more fundamental level the way in which law operates shapes the relationship between public and private interests. To this end it was shown how the reason dependency of law in a pluralist context commits us to a determinable relationship between private and public interests. That is to say one where there are no absolute priorities between private or public interests. This does not mean that strong private rights are always permissible. Law as a form of practical reason operates by certain rules, rules that determine the weight to be given to particular claims and arguments. The rules of practical reason (universabilty of propositions, consequence sensitivity, coherence and reasonableness) can be used to explain how law resolves conflicts between private property rights and public interest demands. Together, the elements of legal and physical excludability suggest that a more complex form of property relationship—stewardship—may provide the appropriate framework for the regulation of certain natural resources.

This conceptual framework was tested in the context of the development of marine natural resources regimes in chapter 5. In general, the historical development of these regimes was strongly influenced by international law. As a result different values shaped marine resource regimes than land-based natural resource regimes under domestic law. What was also apparent was the initial isolation of exclusive claims from important socialising factors that limited the development of property under domestic law, and which permitted largely unhindered and exclusive legal claims over natural resources. This resulted in few legal limits to exclusive claims. This analysis revealed the central importance of physical factors in the early development of sovereignty over maritime spaces and property rights in marine resources. Thus the unboundable

398 Conclusion

nature of the sea precluded its exclusive appropriation. Of course, such claims were eventually sustained through the use of legal excludability. However, consolidation of exclusive rights faced a long struggle to overcome the dominance of non-excludability that had become entrenched in international law. It should be noted that international law in its formative period was as much the product of political self-interest as it was the application of legal principle, and this often resulted in the latter taking second place to pragmatism. However, despite some scepticism, a more careful examination of early maritime claims reveals that the operation of the techniques of legal reasoning has always been present. Into the 20th century the legalism of international law became much more obvious and much more influential on the formulation of legal rules. This was the result of a number of factors. First, the institutionalisation of international law and acceptance of it as a positive legal order meant that action was to be dictated in accordance with legal rules rather than political selfinterest. Moreover, the institutionalisation of international law facilitated the development of international community interests that transcended the interests of individual States. In this context, considerations of propriety and order emerged to balance the strong liberal paradigm that favoured the autonomous and decentralised allocation of authority in international law. Secondly, the increasing availability and complexity of international rules concerning the regulation of oceans spaces and resources made it much more important to ensure coherence in the formulation of new legal claims. This reached its apogee in the late 20th century with the consolidation, systematisation and near universal acceptance of the law of the sea in the form of the Law of the Sea Convention. Here the ordering role of the principle of reciprocity becomes fundamentally important.

Throughout the development of the law of the sea there has been a strong reliance on property concepts to explain the basis of State authority over maritime space and resources. In chapter 6 an essentially proprietary theory of territorial sovereignty was advanced, which enabled the construction of sovereign rights over natural resources to be conceived of in terms of private and public incidents of ownership. Even if this approach is considered to blur the precise nature of the discreet legal relationships, it cannot be wholly discounted because this only serves to mask the fact that both property and territorial sovereignty are concerned with allocations of competence and the fact that limitations on sovereignty necessarily generate limitations on property. It also overlooks how marine resources, ie the mineral resources of the continental shelf, are regarded as State property under domestic law. International law clearly places a number of public interest type limitations on the use of natural resources. Of particular importance is a burgeoning body of environmental rules. These rules are very much a response to developments in science and our understanding of the natural world. With the aim of protecting natural

Conclusion 399

resources, these rules service first order public interests by protecting the means of satisfying basic needs. Of particular importance is the development of rules on the protection of biodiversity and the protection of ecosystems because these show how traditional property rules are ill-suited to regulating quite complex ecological conditions and servicing multifaceted and diffuse private and public interests. It is suggested that in the context of natural resources, stewardship provides a more adaptable and suitable vehicle for facilitating these ends.

In chapter 7, the detailed international framework for the regulation of marine resources under the Law of the Sea Convention was examined. This reveals how the exclusive competence of States over the territorial sea, archipelagic waters, continental shelf and exclusive economic zone provides States with sufficient authority to establish property rights-based resource management regimes. However, such rights are far from untrammelled. It remains the case that certain physical attributes of natural resources predispose them to particular forms of regulation, for example in the common property treatment of the high seas. Although the obvious influence of physical excludability in respect of oceans spaces has seemingly waned with the vast expansion of exclusive claims in the 20th century, the international law of the sea has embraced a pivotal role for science in the regulation of ocean spaces and resources, especially in the context of fisheries regulation. Thus the Law of the Sea Convention, in its rules on the TAC and MSY, places the physical attributes of the resource and its broader environmental context at the heart of the regulatory framework. These provisions have been supplemented by much more explicit technical requirements in post-Law of the Sea Convention developments, such as the Fish Stocks Agreement and FAO Code of Conduct for Responsible Fisheries. These require a much more carefully calibrated use of science through the ecosystem approach and precautionary principle. As a result, a much more sophisticated form of physically excludability has become determinative of resource use regimes.

In addition to these physical influences on resource regulation, the Law of the Sea Convention places important legal limits on resource use. Thus it establishes duties to ensure certain rights of navigation, to conserve and manage natural resources and to protect the marine environment more generally. In practice, these obligations comprise important public interest type limits on the use of natural resources. For present purposes the most important of these are the conservation and management obligations that form an essential component of the package of coastal State entitlements to utilise the resources of the EEZ. The need to balance resource conservation and economic utilisation of natural resources has resulted in a sui generis regime that echoes the model of stewardship outlined in chapter 5, where use rights are subject to overarching public responsibilities. Although these responsibilities are broadly drawn and the accountability

400 Conclusion

of the State to the international community is not strongly provided for, the basic regime has been enhanced by developments since the adoption of the Law of the Sea Convention. More importantly, conservation and management responsibilities are increasingly reaffirmed in domestic resource management regimes as part of widespread efforts to prevent the further degradation of marine resource systems.

In chapter 8 we considered the way in which an increasing number of States have sought to use property rights to regulate a common pool natural resource. This brings us back full circle to an assessment of rights-based fisheries management systems. Although the jury is still out in respect of the overall benefits of this approach, it seems clear that property rights have improved the efficiency of fishing activities and reduced over-fishing. These benefits alone will sustain calls for the use of property rights in fisheries management regimes. They will also lead to calls for the strengthening of such rights, by giving individuals permanent, less restricted rights in fisheries and a greater say in the management of fisheries. However, it is important to caution against an uncritical acceptance of this approach. Whilst the perceived improvements in rights-based fisheries may support stronger private property rights in fisheries, the existence of defects in such management systems provide equally strong reasons for retaining a strong degree of public control over fishing activities. Moreover, as we have seen throughout his book, the introduction and operation of property rights is not simply a matter of economics. Property rights are legal rights and so shaped by legal considerations. Property rights play a fundamental role in allocating wealth in societies. Property rights form a fundamental building block of society and are central to allocations of power. Property institutions have a strong social, political and philosophical dimension. Property is a pluralist, bivalent concept in which economics is just one strand of thought. This study has sought to reinvest the debate about privatising fisheries and other natural resources with a more rounded, legal perspective on property. This has lead to a number of specific cautions being offered up against a casual acceptance of merits of privatising fisheries.

First, it is not only private property rights that are capable of preventing the tragedy of the commons. Other forms of property are capable of regulating common pool natural resources. Indeed, other forms of holding that limit access to natural resources, such as common property or collective property or even community held property may be as effective as individually held entitlements, as well as providing for other social benefits.

Secondly, property rights systems are underpinned by a range of values, of which preference maximisation is but one. These values may support other forms of property. In particular, the explicit prioritisation

Conclusion 401

of sustainability and the protection of other public interests in natural resources may militate against privatisation, or at least strong forms of private property. This is particularly the case in regimes where the parameters of the resource, ie the object of the property right, are determined by scientific factors. Fish stocks, which are determined by complex models, are a case in point. Of course, a fundamental difficulty with all fisheries management systems is precisely this dependence upon science to provide the basis for management decisions. As long as science is lacking, incomplete or open to debate, statutory regimes that involve some degree of cost benefit analysis as to the risk of regulatory action are vulnerable to legal challenge, particularly when management decisions run counter to the interests of the rights holders. The potential for such challenges can be mitigated by ensuring that the fishing rights are precisely defined (and limited) so as to permit wide regulatory control of the fishery. However, as the case of Antons Trawling Co demonstrates, in systems with strong private rights this may result in more frequent challenges to management steps taken on a highly precautionary basis.

Thirdly, the way in which property rights are constructed as a matter of law means that stronger forms of private property in fisheries may not be possible in practice. This is very much the result of how the physical, legal and moral excludability dictate the evolution of property rights in natural resources. Thus exclusive harvesting rights exist because of the practical difficulty of establishing property rights in ferae naturae. These harvesting rights may be subject to important legal limits. For example, in order that States can meet their international obligations and pursue domestic community objectives, the incidents of use and management of harvesting rights are typically reserved to the State. These incidents are exercised by States with the aim of ensuring resource sustainability and protecting the environment. As these are linked to first order interests they ordinarily take priority. The transboundary aspects of marine living resources, either through the characteristics of fish stocks or marine ecosystem and biodiversity considerations, may result in further limits on exclusive rights, such as the creation of positive duties to cooperate in resource use. Finally, the requirements of legal coherence mean that property rights in fisheries must fit with existing principles of law. Thus the strong constitutional protection of property rights in some States precludes the emergence of anything more than statutory entitlements. Even in States where statutory forms of holding were intended to take on the lineaments of strong property rights, the statutory origin of such entitlements means that they remain subject to important public law limitations concerning their construction and operation. There must also be coherence with other relevant bodies of law and, in particular, environmental law. As the exercise of fishing rights invariably impacts upon the environment, the legal framework for the protection the environment becomes an

402 Conclusion

essential component of any system of fisheries management. This results in further limits to any exclusive use rights.

The existence of complex values, rights and interests in marine living resources systems together with property and environmental laws have resulted in quite sophisticated forms of holding for marine fisheries. Indeed, as the review of domestic fisheries management regimes suggests, it seems misleading to characterise existing rights in fisheries as private property. Although they have some of the attributes of private property, they are fundamentally linked to certain public interests, such as ecological sustainability. Given the complex arrangement of rights and interests that truly characterises these forms of holding, they are better regarded as a form of stewardship. The fundamental linkage of rights and responsibilities under international and domestic law combined with the fact that complex forms of holding are already quite well-established under domestic law, shows that we have good reason for treating calls for stronger forms of private property in marine fisheries with a degree of scepticism.