The author wrote this article when Senior Fellow in Marine Policy at the Woods Hole Oceanographic Institution. It is a revision and expansion of a short essay written in August 1979 while he visited the Institute for International Economic Studies, University of Stockholm, and published in Ekonomisk Debatt no. 6 (1979). The author thanks without implicating Mats Bohman, Colin W. Clark, Richard Hennemuth, Barbara Mitchell, Karin Negoro, Clas Wihlborg, and anonymous referees for their comments. His thanks also go to Ann Goodwin, Ann Martin, and Kaleroy Hatzikon, mainstay of the Marine Policy Program, W.H.O.I., since its start. The Program receives funds from the Pew Memorial Trust and from the U.S. Department of Commerce, NOAA Office of Sea Grant, under grant no. NA 80AA-D-00077. The Bank of Sweden Tercentenary Foundation provided a travel grant. W.H.O.I. Contribution no. 4834.

¹ Hardin, Garrett, “The Tragedy of the Commons,” Science, 13 12 1968Google Scholar.

² In 1970 the General Assembly declared the deep seabed the “common heritage of mankind” and convened UNCLOS III to draft a comprehensive new law of the sea. The Conference holds its eleventh session in March and April 1982. In 1979 the General Assembly declared outer space the “common province of all mankind” and declared its intention to negotiate an international regime for the exploitation of outer space resources. The second World Administrative Radio Conference met in 1979 under the auspices of the International Telecommunications Union to allocate radio frequencies and orbital slots for the next 20 years; it reconvenes in 1982. In 1980 the consultative parties of the Antarctic treaty concluded a treaty for the conservation of Antarctic living marine resources and are currently negotiating a treaty for mineral resources.

³ For analyses of these problems leading to different policy conclusions see Brown, S., Cornell, N., Fabian, L., and Weiss, E., Regimes for the Ocean, Outer Space and Weather (Washington, D.C.: Brookings, 1977)Google Scholar; and Eckert, R., The Enclosure of Ocean Resources: Economics and the Law of the Sea (Stanford, Cal.: Hoover Institution Press, 1979)Google Scholar. See also the thematic issue entitled “Managing International Commons” of Journal of International Affairs 31, 1 (Spring–Summer 1977)Google Scholar; Hollick's, Ann contribution to Arad, R. W. et al. , Sharing Global Resources (New York: McGraw-Hill, 1979)Google Scholar; Schachter, O., Sharing the World's Resources (New York: Columbia University Press, 1977)Google Scholar.

⁴ Villages in medieval Europe contained tracts of land, especially pasture and woodland, to which commoners as well as the lord of the manor had access. Their rights were usually clearly specified, allowing them to graze cattle, to gather wood, etc. These user rights were personal, and customarily the produce collected was not sold to others, so there were no markets affiliated with these rights. The rising price of agricultural produce created incentives to “enclose” the commons by hedge or by fence. When the price of wool rose in 13th century England, for instance, the lord of the manor characteristically attempted to reduce the commons by converting some land to pasture for his exclusive personal use. In response to rising food prices in 19th century Europe, common pasture was enclosed and converted to private farmland. By now enclosure was closely regulated in most countries and included consolidation of private holdings of land and compensation for loss of rights in the commons. For one view see Cohen, J. S. and Weitzman, M. L., “A Marxian Model of Enclosures,” Journal of Development Economics 1 (1975)CrossRefGoogle Scholar.

⁵ Ricardo noted the possibility that property rights might be extended to certain “gifts of nature which exist in boundless quantity,” such as air and water, once they became sufficiently scarce to generate rents to their owners. “If air, water, the elasticity of steam, and the pressure of the atmosphere were of various qualities; if they could be appropriated, and each quality existed only in moderate abundance, they, as well as the land, would afford a rent, as the successive qualities were brought into use.” The Principles of Political Economy and Taxation, 3d ed. (1821), chap. 2, “On Rent.” Compare this to the reaction of the Indian chief Tecumseh, a contemporary of Ricardo, when the white man offered to buy Indian land: “What! Sell land! As well sell air and water. The Great Spirit gave them in common to all, the air we breathe, the water we drink, and the land we live upon.”

⁶ Demsetz, H., “Toward a Theory of Property Rights,” American Economic Review 57 (05 1967)Google Scholar. Demsetz argues that property rights develop to internalize externalities when the gains exceed the costs of internalization. He illustrates his argument by pointing out that the emergence of property rights among the Indians of the Labrador Peninsula in the 18th century was due to the low cost of enclosing the relatively stationary beaver combined with a high return as foreign trade increased the demand for furs. The absence of property rights to land among the Plains Indians was due to higher costs relative to benefits of enclosing grazing cattle.

⁷ While a commons is characterized by the legal form of ownership, the term “common property resource” refers to certain physical rather than legal characteristics. High costs of enforcing individual property rights and high returns from coordinated use make it socially inefficient to subdivide the resource. Thus, common property resources are exploited more efficiently if production is coordinated. For other resources, private property rights are socially more efficient than communal ownership when the resource is scarce; a classical proof of this statement is provided by Weitzman, M. L., “Free Access vs. Private Ownership as Alternative Systems for Managing Common Property,” Journal of Economic Theory 8 (1974)CrossRefGoogle Scholar.

⁸ See de Klemm, Cyrille, “The Conservation of Migratory Animals through International Law,” Natural Resources Journal 12, 2 (04 1972)Google Scholar. An international convention on the conservation of migratory species of wild animals was signed in June 1978. The text, with comments, is published in Environmental Policy and Law Journal no. 5 (1979).

⁹ Indeed, when the size of the resource is unknown, it may in practice be difficult to convinc those who exploit the resource of the need to limit the harvest.

¹⁰ See Munro, G. R., “The Optimal Management of Transboundary Renewable Resources,” Canadian Journal of Economics 12 (08 1979)CrossRefGoogle Scholar.

¹¹ An external economy occurs if the rate at which A exploits the resource affects the exploitation costs for B, or vice versa, or both. Its occurrence serves to define common property resources, according to Robert Dorfman: “Any economic unit's behavior can affect the welfare or productivity of others in a vast number of different ways, through altruism, envy, congestion, pollution, and a myriad of other kinds of connection. Sometimes the connection is physical. That is to say, sometimes there is an identifiable physical medium through which the effects of one agent's activities are transmitted to other agents. Such a medium is what I shall mean by a common property resource. … [This] means that all problems attributable to the misuse or abuse of common property resources are instances of externalities, and the entire theory of externalities applies to them.” See “The Technical Basis for Decision Making,” in Haefele, E. T., ed., The Governance of Common Resources (Washington, D.C.: Resources for the Future, 1974)Google Scholar. I have argued in the text that the infeasibility of defining exclusive property rights and the resulting overlapping of rights is a distinctive feature of common property resources leading to the characteristic depletion of the resource. This is often related to the externality.

¹² Some historical examples of voluntary management of a commons are provided by Anderson, T. L. and Hill, T. J., “Property Rights as a Common Pool Resource,” in Baden, J. and Stroup, R., eds., Bureaucrats vs. Environment (Ann Arbor: University of Michigan Press, 1981)Google Scholar.

¹³ For instance, an international convention to abate pollution of the Rhine River in Europe has been difficult to achieve because of the many countries involved (five), and because of the asymmetry in the interdependence of “downstream” and “upstream” countries.

¹⁴ This is the familiar thesis of Olson, M., The Logic of Collective Action: Public Goods and the Theory of Groups (Cambridge: Harvard University Press, 1965)Google Scholar. See also his “Increasing the Incentives for International Cooperation,” International Organization 25, 4 (Autumn 1971)Google Scholar. The point is illustrated by Muhsam, H. V. in “An Algebraic Theory of the Commons, in Hardin, G. and Baden, J., eds., Managing the Commons (San Francisco: W. H. Freeman, 1977), pp. 34–37Google Scholar. For a practical illustration of the management problems posed by an internationally shared resource, see Bohm, P., “CFC Emissions Control in an International Perspective,” in Cumberland, J., Hibbs, J., and Hoch, I., eds., The Economics of Managing Chlorofluorocarbons: Stratospheric Ozone and Climate Issues (Washington, D.C.: Resources for the Future, 1982)Google Scholar.

¹⁵ Discussions of international resource management would benefit from more explicit application of this distinction, which corresponds to the classical distinction in economics between the allocation, distribution, and stabilization branches of government. It is spelled out clearly by some economists dealing with this subject. See Tollison, R. D. and Willett, T. D., “Institutional Mechanisms for Dealing with International Externalities: A Public Choice Perspective,” in Amacher, R. C. and Sweeney, R. J., The Law of the Sea: U.S. Interests and Alternatives (Washington, D.C.: American Enterprise Institute, 1976)Google Scholar; Christy, F. T. Jr “Economic Criteria for Rules Governing Exploitation of Deep Sea Minerals,” International Lawyer 2, 2 (04 1968)Google Scholar; Alternative Arrangements for Marine Fisheries: An Overview (Washington, D.C.: Resources for the Future, 05 1973)Google Scholar; and Cooper, R., “An Economist's View of the Oceans,” Journal of World Trade Law 9, 4 (1975)Google Scholar.

¹⁶ Demsetz speaks in this connection of the valuation function of the price system: “The Exchange and Enforcement of Property Rights,” Journal of Law and Economics 7, 1 (10 1964)Google Scholar. By guiding resources to their most valuable use, the price mechanism contributes to efficiency. Consequently, free use of the scarce orbit-spectrum frequency means that too much of the spectrum is devoted to satellite communications instead of to other purposes, and that more labor and capital are devoted to constructing and launching satellites than would be required to lay an equivalent amount of transatlantic cable. Similarly, if the charges levied on seabed mining are in excess of the rent due to the mine site, more capital and labor will be devoted to landbased mining than would be required to mine the same amount of ore from the seabed.

¹⁷ For instance, Richard Cooper interprets the concept “common heritage of mankind” to mean that any rents “from use of the oceans or seabed should be used for internationally agreed purposes. That is, the international community as a whole should hold title to the property” and any net revenues be “used for a variety of common purposes: budgetary support for the United Nations, which is frequently strapped for funds; U.N. peace-keeping activities; and most obviously, development assistance to the poor countries of the world.” Cooper, , “Economist's View of Oceans,” p. 370Google Scholar. A similar approach has been presented by Tollison, and Willett, , “Institutional Mechanisms,” pp. 91–97Google Scholar.

¹⁸ See Zamora, S., “Voting in International Economic Organizations,” American Journal of International Law 74, 3 (07 1980)CrossRefGoogle Scholar. For an interesting example see Klevorick, A. and Kramer, G. H., “Social Choice on Pollution Management: The Genossenschaften,” Journal of Public Economics 2 (1973), pp. 101–146CrossRefGoogle Scholar; and Mingst, K. A., “The Functionalist and Regime Perspectives: The Case of Rhine River Cooperation,” Journal of Common Market Studies 20, 2 (12 1981)CrossRefGoogle Scholar.

¹⁹ S. Holt estimates the world marine catch, excluding whales, to have been $15 billion (U.S.) in 1974, or about 0.44% of world GNP. FAO statistics of the value offish landings have been discontinued since then, but allowance for inflation places the yearly value of the world marine catch at the end of the 1970s at roughly $20 billion. See Holt's, “Marine Fisheries,” in Borgese, E. M. and Ginsburg, N., eds., Ocean Yearbook 1 (Chicago: University of Chicago Press, 1978), p. 53Google Scholar. J. Gulland notes that only 1% of the total world catch of marine fish is caught beyond 200 nautical miles from shore. This 1% consists mainly of tuna. See his “Developing Countries and the New Law of the Sea,” Oceanus 22, 1 (Spring 1979), p. 36Google Scholar.

²⁰ Brander, K. M. concludes: “The example set by Iceland [when extending fishing limits] may have been misleading to other coastal states in the Northeast Atlantic, because it is an island out on its own with few shared stocks. Other coastal states have not acquired exclusive property rights over stocks by extending their limits because most major stocks migrate between EEZs. Many species of fish migrate over wide areas for feeding and spawning and the eggs and larvae may be carried long distances by currents to nursery areas which often lie within the coastal waters of another country. Cooperation over their management is, therefore, still required.” The Effect of 200-Mile Limits on Fisheries Management in the Northeast Atlantic, FAO Fisheries Technical Paper no. 183 (EN) (Rome, 1978), p. 1Google Scholar. For a succinct analysis of these problems see Gulland, J., Some Problems of the Management of Shared Stocks, FAO Fisheries Technical Paper no. 206, FIRM/T 206 (EN) (Rome, 1980)Google Scholar. The Fisheries Division within FAO is preparing regional overviews of the main stocks that occur in two or more areas of national jurisdiction. See for instance Troadec, J.-P. and Garcia, S., The Fish Resources of the East Central Atlantic, Part I: The Resources of the Gulf of Guinea from Angola to Mauretania, FAO Fisheries Technical Paper no. 186.1, FIRM/T 186.1 (Rome, 1980)Google Scholar.

²¹ The 1979 agreement between the Canadian and U.S. governments to place Georges Bank under a binational commission is an example of the correct approach. President Reagan has withdrawn it from consideration by the U.S. Senate, which was deemed unlikely to pass it.

²² G. Saetersdal writes: “We are in fact confronted with an entirely new problem in international fisheries work: to undertake an allocation of various parts of a fish stock or unit resource between national parties. While Article 52 of the RSNT [the Revised Single Negotiating Text, a precursor to the Draft Convention] refers to such situations one seeks in vain for guidelines or principles of how to deal with them. The relevant countries are simply advised to cooperate in solving the problems. Based on past experience of such cooperation one may perhaps conclude that the expectations have been set too high. And the problem is by no means restricted to the North-East Atlantic Region. Similar situations where resource units are shared between several coastal zones or between a coastal zone and international waters occur in many important fishing regions around the world such as West Africa, South-West Africa, South-East Asia and others.” See his Problems of Managing and Sharing the Fishery Resources under the New Ocean Regime, Committee on Fisheries, FAO, COFI/77/Inf (11 April 1977), p. 2. See also Gulland, , Some Problems, and FAO, ACMRR Working Party on the Scientific Basis of Determining Management Measures, FAO Fisheries Report no. 236, FIRM/R 236 (EN) (1978)Google Scholar. Similarly, the Draft Convention simply recommends that countries cooperate in the management of highly migratory species.

²³ I know no studies quantifying the inefficiency that might result from application of extended fishing limits in a discriminatory way. The inefficiency consists of increased transport costs of vessels between port and fishing ground and of reduced exploitation of comparative advantage. Coastal nations react strongly to suggestions that a 200 nautical mile EEZ be granted only on condition that they grant access on a nondiscriminatory basis. This suggests that they welcome the opportunity provided by the Draft Convention to protect less efficient domestic fishermen from foreign competition.

²⁴ The Draft Convention of UNCLOS III allows the coastal state to give domestic fishermen prior claim to the resources of the EEZ, to determine unilaterally if these resources are sufficiently large to permit foreign fishermen to share in harvesting them, and to charge foreigners an entry fee upon admitting them. Such a fee may be larger than that charged domestic fishermen. Noncoastal states and others with an interest or a tradition of fishing in a foreign EEZ are dependent on the host country's permission.

²⁵ R. Cooper estimated the excess costs of harvesting the 1975 world marine fishing catch to be more than $2 billion. This represents rents that are dissipated through inefficiency. Appropriate conservation measures, furthermore, would increase the annual sustainable catch, making Cooper's estimate the minimum amount of rents generated by the world's fishing grounds. See his “The Oceans as a Source of Revenue,” in Bhagwati, J., ed., The New International Economic Order (Cambridge: MIT Press, 1977)Google Scholar.

²⁶ R. Hennemuth observes that 60% of the global marine catch comes from the temperate waters of the northern Pacific and Atlantic oceans. The southern temperate zones contribute an additional 15%. See his “Marine Fisheries: Food for the Future?” Oceanus 22, 1 (Spring 1979), pp. 4–6Google Scholar. Cooper remarks in this connection: “ A major irony in the baffling politics of North-South relations is that originally less developed countries insisted on a wide extension of national jurisdiction into the oceans, a notion at first resisted by the major ‘powers,’ including the Soviet Union. But the latter gradually reversed their position as they realized the intensity of pressure by less developed countries on the issue and as they did their quantitative homework: nearly half of the ocean territory to be appropriated under the 200-mile economic zone will go to developed countries (including the Soviet Union), which together have less than a quarter of the world's population.” Cooper, , “Oceans as Source of Revenue,” pp. 110–11Google Scholar. See also Wijkman, P., “UNCLOS and the Redistribution of Ocean Wealth,” Journal of World Trade Law 16, 4 (1982): 29–34Google Scholar.

²⁷ The Draft Convention proposes to extend coastal state jurisdiction to a maximum of 350 nautical miles from the coast or to 100 n. miles beyond the 2500 meter isobath if one of several criteria involving sediment thickness and distance is fulfilled. Developed broad-margin states, but not developing ones, would be required to share with the International Seabed Authority revenues obtained from exploitation of the continental shelf beyond 200 n. miles from their coast line. This would replace the 1958 Geneva Convention on the Continental Shelf, which allows the coastal state to exploit the resources of its adjacent continental shelf out to a water depth of 200 meters, or as far out as the water depth permits exploitation.

²⁸ This statement is based on Levy, J.-P., “The Evolution of a Resource Policy for the Exploitation of Deep Seabed Minerals,” Ocean Management 5 (1979)CrossRefGoogle Scholar. Even given the restrictions on seabed mining proposed by the RSNT, seabed mining would produce 70% of world nickel demand in the year 2000. See Levy's Table 5, p. 65.

²⁰ See Mangone, G. J., ed., The Future of Gas and Oil from the Sea (New York: Van Nostrand, 1982)Google Scholar, for an informed survey of current and future technologies for exploring and exploiting offshore hydrocarbon resources. See Wijkman, , “UNCLOS,” pp. 34–37Google Scholar, for estimates of offshore hydrocarbon wealth and its distribution.

³⁰ Nodule fields are divisible and property rights to sites can be enforced cheaply in the courts once nations have agreed on a legal regime. While one firm's mining costs are not affected by mining conducted on other sites, they are affected if other firms mine the same site. This is because of the characteristics of the resource and of the exploitation technology. Nodules will be recovered from about 4000 meters of water depth by complex dredging systems. Unlike wild berries on a commons, they are evenly distributed on certain parts of the seafloor so that harvesting costs are lower when firms systematically comb a given area than when they sweep it randomly. When several firms work the same field, harvesting becomes random and, because of the large sunk costs of the dredging equipment, recovery costs rise significantly. Thus, exclusive mining rights to a site are important for minimizing costs.

The minimum economic size of a single site may be large. Since processing plants evidence economies of scale and each one is adapted specifically to process nodules possessing the chemical composition characteristic of that site, each site must be large enough to supply three million metric tons annually for 20 to 25 years. It has been estimated that this requires that mine sites be about 40,000 square kilometers in size assuming that profitability requires at least 10 kg of nodules per square meter and a nickel and copper content of 2.25% in the nodules. See Levy, J.-P., “Evolution of a Resource Policy,” pp. 23–24Google Scholar. Such prime sites may be few and expensive to find and consequently need to be husbanded.

R. J. Sweeney, R. D. Tollison, and T. C. Willett argued early that manganese nodule fields were a private rather than a common property resource. See their “Market Failure, the Common-Pool Problem, and Ocean Resource Exploitation,” Journal of Law and Economics 17, 1 (04 1974)Google Scholar.

³¹ See Wijkman, , “UNCLOS,” pp. 37–41Google Scholar, for an estimate of the size of these effects.

³² See Gault, Ian, “The Frigg Gas Field: Exploitation of an International Cross-Boundary Petroleum Field,” Marine Policy 3, 4 (10 1979)CrossRefGoogle Scholar. Note however that the British and Norwegian governments could not agree to build a single pipeline from the Ekofisk field. Each country will build its own.

³³ To become a Treaty nation and participate in the biennial consultative meetings, a nation must maintain a scientific research station in the Antarctic and be unanimously accepted by existing members. A survey of resources and possible management regimes is provided by Peterson, M. J., “Antarctica: The Last Great Land Rush on Earth,” International Organization 34, 3 (Summer 1980)CrossRefGoogle Scholar.

³⁴ This estimate is based on a recent U.S. Geological Survey report quoted in Mitchell, Barbara and Kimball, Lee, “Conflict over the Cold Continent,” Foreign Policy no. 35 (Summer 1979)Google Scholar. See also Wassermann, Ursula, “The Antarctic Treaty and Natural Resources,” Journal of World Trade Law 12, 2 (03–04 1978)Google Scholar.

³⁵ See El-Sayed, S. Z. and McWhinnie, Mary A., “Antarctic Krill: Protein of the Last Frontier,” Oceanus 22, 1 (Spring 1979), p. 13Google Scholar. A resource survey is provided by Everson, Inigo, The Living Resources of the Southern Ocean, FAO/UNDP, Southern Ocean Fisheries Survey Programme, GLO/SO/77/1 (Rome, 09 1977)Google Scholar.

³⁶ Problems of managing the Antarctic marine ecosystem are analyzed by May, R. M. et al. , “Management of Multispecies Fisheries,” Science, 20 07 1979Google Scholar.

³⁷ For a criticism of the Draft Treaty see Mitchell, and Kimball, ,“Conflict over the Cold Continent,” p. 136Google Scholar.

³⁸ About 1500 slots are available in the geostationary orbit given current technology. These are not equally valuable. Demand will be greater for slots located so they can serve western Europe and North America. The United Nations Committee on the Peaceful Uses of Outer Space estimates that 200 satellites will be in geostationary orbit by the year 2000. See “Physical Nature and Technical Attributes of the Geostationary Orbit,” a study prepared by the United Nations Secretariat, A/AC. 105/207 (29 August 1979). Before disappearing, SATCOM III was expected to provide communications services worth $1.2 million annually. If this is representative of the other 200 satellites expected to be in geostationary orbit, they would provide services worth $240 million annually. See Wihlborg, Clas G. and Wijkman, Per M., “Outer Space Resources in Efficient and Equitable Use: New Frontiers for Old Principles,” Journal of Law and Economics 24, 1 (04 1981)CrossRefGoogle Scholar.

³⁹ Alternative methods of allocating user rights to the orbit-spectrum resource are compared in Wijkman, Per M. and Wihlborg, Clas G., “Global Use and Regulation of Space Activities under the Common Heritage Principle,” in Matte, N. Mateesco, ed., Space Activities and Implications: Where from and Where to at the Threshold of the 80's (Montreal:McGill University, Centre for Research of Air & Space Law, 1981)Google Scholar.