Tragedy, property rights, and the commons: investigating the causal relationship from institutions to ecosystem collapse

Do private property rights mitigate overexploitation of common pool resources, and if so, under which circumstances? In this paper, we examine the effects of private property rights on the status of marine fisheries by combining data on ecological, economic and institutional characteristics into a panel data set, spanning over 50 years, 170 exclusive economic zones and 800 species. To address the inherent endogeneity problem of policy implementation, we employ both a difference- in-differences (DiD) and instrumental variable (IV) strategy. Results from both estimations suggest that property rights lower the probability of a fish stock collapsing, but the effect varies with country and species characteristics. Specifically, we find evidence suggesting that property rights are more effective when ownership is transferable, the general level of ownership protection is strong, trade openness is high, the regenerative capacity of the resource is high, and the species value is high.