20 I CHRONICLESnattitudes we and our fellow citizens have towards the creatednuniverse and in the legal framework that governs the use ofnnatural resources. Law and conscience are both importantncomponents of a Godly use of our resources. Therefore wenmust examine both, change those parts that do not promotenwise conservation, and sustain those parts that do.nThe rules, or institutions, governing natural resources arenimportant because people act on the basis of incentives andninformation. The incentives and the information are determinednby social institutions. The social institutions relevantnfor resource management are simply the rules which assignnresponsibility for actions. They determine who can takenwhat actions and who gets a hearing with regard to thosenactions — the system of property rights determines bothninformation and incentives.nThis framework keeps people from imposing costs onnothers without their willing consent and also allows individualsnor groups to be rewarded for being sensitive to thenneeds of others. These private property rights inhere innindividuals although those individuals can grant their rightsnto groups. It is important to remember that we do not reallynown any resources but rather only manage them for God.nProperty rights can be termed private when exclusivity,nliability, and transferability exist. Exclusivity means thenresource owner can receive returns from using the propertynto benefit others and can also exclude others from thosenreturns unless they have paid. A lack of exclusivity will leadnto resource overuse. For instance, there were no exclusivenrights in the American West in live North American bison.nIf one buffalo hunter decided that the magnificent creaturesnwere being killed off too rapidly and would have preferred tonslow down his rate of consumption, he could not capturenthe benefits of such a decision. Because he could notnexclude others from harvesting an animal which he hadnavoided shooting, he had little incentive for conservation.nnnLiability forces the resource owner to bear the costs ofnactions that he takes which adversely affect others. Pollutionnis a prime example of inadequate rules of liability, sincenpollution imposes costs upon others without their willingnconsent. For instance, the problem with air pollution is notnonly that the atmosphere is being used for waste disposal butnalso that the polluters have acted without the prior consentnof those whose air is violated. In such a case the polluter isnnot being held accountable for his actions, and propertynrights are not complete.nTransferability encourages the owner to use his propertynto the advantage of others. If rights to the resource can benbought or sold, the holder may lose wealth if he ignores anynhigher-valued wishes of potential buyers. When a landownernallows erosion, which lowers the productivity of his land,nthe market forces him to bear the costs of such inaction byndecreasing the value of his land. Even if the owner does notncare about erosion, the market enforces concern throughnchanges in land prices. If land is not readily transferable, thenadverse impact of erosion on his wealth is not so immediatenor significant. In some states, rights to water are not easilyntransferable, and owners of water rights will ignore otherndemands for their resource because they cannot sell at anprofit.nWhen property is held by government, it is difficult tonestablish full exclusivity, liability, and transferability. GovernmentalnoflEcials operate as agents for the citizens, and, asnwith all agent/principal relationships, an effort is made tonlimit the actions of agents. However, these limits do notninsure full responsibility, nor do they allow agents to capturenreturns from good actions. If the manager of a public forestntries to sell access rights and pockets the profits, he isncharged with malfeasance. Public managers are supposed tonoperate in the public interest precisely because they do notnhave claims on the returns from the resource. The lack ofntransferable shares means they can more easily ignore thenwishes of others than can private resource owners. It is veryndifficult to set up a reward system so that the personalnrewards of government officials vary directly with the valuenof the resource.nAppropriate institutional design is important — we need ansystem of accountability. Private property entails incentive,nboth negative and positive, to provide this accountability. Inncontrast, bureaucratic management of natural resources hasndemonstrated significant difficulties in maintaining accountability.nHowever, it is not simply a lack of appropriate incentiventhat creates resource management problems. To makencorrect decisions about the use of natural resources, thendecision-maker must have adequate information. Even if allnresource users were well-intentioned and unselfish, a lack ofncomplete information could still prevent a society from thenoptimal use of its resources. To put a natural resource to itsnbest use requires knowledge of the existing stocks, thenavailability of substitute resources, the technology for processingnthe resource (often speculative in an era of progress),nthe demands of consumers for products from that resource,nand predictions about the future. A system of market pricesnbased upon private property rights contains all this informationnand validates it automatically. Equally important, it isnflexible, responding quickly to changes in any one of then