Back to the Basics: Improved Property Rights can Help Save Ecuador's Rainforests

Georgetown International Environmental Law Review, Summer 2004 by Hite, Kristen

I. INTRODUCTION

Conservation is a long-term investment, and strong property rights are the principal means by which this investment is secured. Without sufficiently strong property rights, the more immediate returns of short-term unsustainable resource exploitation trump the benefits of long-term sustainable land uses. If local users are unable to capture benefits from conservation initiatives, environmental protection measures, however noble, ultimately fail. This paper seeks to illustrate how insecure property rights lead to unsustainable land management, while more secure property rights allow local users to capture the benefits of conservationminded sustainable development. Ecuador will serve as a case study for this theory through an analysis of property rights in the eastern Amazon region and the resulting implications for rainforest conservation. Following this brief introduction, Part Two of this paper distinguishes sustainable forest management techniques from unsustainable uses. Part Three discusses the need for fortified property rights, as current property laws have proven insufficient to ensure conservation measures due to non-exclusive property rights, inequitable distribution of these rights, and weak enforcement. Part Four considers specific marketbased conservation measures that can be implemented once stronger property rights become institutionalized.

Common land use theories hinge on a number of actors with competing property interests. A strong system of property rights functions best in market economies that allow property owners to profit from the use of their assets while being held liable for actions that impose losses on others.1 A strong private property system rests on long-term investments by private individuals and is affected by market dynamics.2 In the United States, land management depends upon a strong system of property rights, legal remedies ensuring effective enforcement, and a properly functioning market. This paper seeks to illustrate land use management challenges in an alternative system of weaker property rights and legal remedies, as in the case of Ecuador. Under this weaker system, traditional land management practices compromise sustainable development efforts because the benefits of conservation are not captured, while the costs of unsustainable development are not fully internalized. Until property rights can be made exclusive, equitable, and enforceable, investment in conservation will likely prove unsuccessful in mitigating high deforestation rates.

Despite tremendous conservation efforts in both the private and public sectors, deforestation rates continue to rise. Ecuador mirrors the overall trend in South America, where natural forest loss is calculated at upwards of sixteen million hectares per year, an increase in the rate of destruction between the 198Os and the 1990s.3 Despite international conservation efforts and facial legislation to the contrary, tropical forest cover decreased an estimated 34% from 1981-1990 in Ecuador alone.4 High deforestation rates throughout the Amazon have mobilized tremendous international conservation efforts to save the world's most famous rainforest. Unfortunately, these efforts may prove futile until property rights are sufficiently strengthened.

Due to inconsistent laws and conflicting management systems, Ecuador's property system is insufficient to ensure the long-term investment security necessary for conservation. Conflicting laws create enforcement problems, as enforcing one law can often lead to violation of another. Cultural conflicts in land management compound the problem, as the contemporary private property regime has been superimposed over historically indigenous common-property regimes.5 These conflicts create a lack of exclusive ownership, thereby providing perverse incentives to maximize short-term gain. This paper addresses the need for equitable, exclusive, and enforceable property rights within Ecuador's property system. Recommendations follow to encourage more sustainable land management in situations where private property rights and legal enforcement mechanisms may be less institutionalized than in the U.S. system.

Successful land-use planning relies upon property expectations that can be pursued and fulfilled in the long-term for both a nation as a whole and for its constituent parts.6 An effective land use policy should encourage the creation of markets whose participants incorporate the costs of unsustainable management and whose landowners capture the benefits of sustainable management. When the monetary benefits of sustainable land use exceed the net benefits from conversion, the market will yield sustainable use.7 If the net present value of long-term management exceeds the value of present development, then an owner will manage land sustainably, provided there is some present flow of income and consumption while investing in future wilderness-use returns.8 However, where sustainable uses cannot meet local communities' needs for their livelihood, individuals will defer to unsustainable uses.9 With an average annual per capita income of just over U.S. $1000, Ecuador's estimated 500,000 Amazonian residents could be fully employed as conservation stewards for U.S. $500 million annually.10 Providing even a fraction of this service fee would probably be sufficient to increase benefits derived from sustainable uses (agroforestry, ecotourism, etc.) to exceed unsustainable uses (conversion to pastureland, clearcutting, etc.). The principal barrier to effective conservation efforts lies in weak legal remedies and insecure property rights." Harmonizing legislation and increasing enforcement mechanisms could effectively provide governmental assurance that private conservation efforts will be effective. In this manner, provided property rights are sufficiently secure to enable those engaged in the conservation market to benefit from their efforts, rainforest conservation can prove both effective and profitable.