Surprisingly Social: Private Property and Environmental Management

Transcription

1 Journal of Environmental Law, 2017, 29, doi: /jel/eqw032 Advance Access Publication Date: 8 January 2017 Original article Surprisingly Social: Private Property and Environmental Management Ben France-Hudson* ABSTRACT While scholars express a range of concerns about the use of private property to manage natural resources, an enduring counter-tradition within our idea of private property provides a principled basis for ameliorating or avoiding these concerns. This countertradition, the social obligation norm of property, recognises the intrinsically social function of private property and that private property can impose obligations in addition to conferring entitlements. The New Zealand quota management system for fish and New Zealand Emission Trading Scheme provide illustrations of the presence of this counter-tradition within our law. The counter-tradition also provides a way in which the concerns regarding private property in this space can be addressed, while maintaining the behaviour changing benefits private property offers. KEYWORDS: private property, environmental management, social obligation norm, emissions trading, quota management, New Zealand 1. INTRODUCTION The place of private property in environmental management is a disquieting one. On one hand there is widespread acceptance that private property has a place in the panoply of tools employed to help manage and conserve natural resources. 1 On the other hand, there are a number of significant concerns about its use in this area and support for private property in the environmental management sphere is not absolute. 2 In this article I argue that private property can be used to manage natural resources in a manner which is perfectly appropriate, by explicitly recognising and embracing a long-standing, but generally unarticulated, counter-tradition underlying our idea of private property. This counter-tradition recognises that the function of private property is intrinsically social and therefore private property requires both entitlements and obligations. Best articulated on a normative level with reference to * Lecturer, Faculty of Law, University of Otago, PO Box 56, Dunedin 9054, New Zealand. (Ben.France- Hudson@otago.ac.nz) 1 Neil Gunningham, Environmental Law, Regulation and Governance: Shifting Architectures (2009) 21 JEL 179, David Grinlinton and Prue Taylor (eds), Property Rights and Sustainability: The Evolution of Property Rights to Meet Ecological Challenges (Martinus Nijhoff Publishers 2011). VC The Author Published by Oxford University Press. All rights reserved. For Permissions, please journals.permissions@oup.com 101

2 102 Surprisingly Social theories of human flourishing, this social obligation norm of property provides a principled basis on which to explain the operation of private property within environmental management regimes that adopt the institution. It also provides a way to address the concerns regarding property as tool of environmental management while harnessing the benefits that flow from recognising private property in a resource. It suggests that although these tools may suffer from a range of political and practical problems in implementation, these problems do not include jurisprudential concerns about the appropriate use of private property in this space. Although the practical success of these regimes may be mixed, 3 the observations made here indicate that, from a doctrinal perspective, the use of private property does not necessarily lead to the common concerns expressed about its use as a resource management tool. This article is divided into two parts. The first explores the social obligation norm as a historically obscured alternative to classical liberalism. It begins by introducing and describing the New Zealand Emissions Trading Scheme (NZ ETS) and New Zealand quota management system for fish, which will laterbeusedtodemonstratethepresence of the norm in environmental management regimes that rely on private property. The second part explores some of the concerns regarding private property as a tool of environmental management and the way in which these problems are largely ameliorated by viewing private property from a social obligation perspective. Using examples sourced from the NZ ETS and the New Zealand quota management system it seeks to demonstrate both the presence of a social obligation norm grounded in human flourishing in the current law, but also illustrate that this account of private property can address these concerns. While these two examples are not necessarily more successful than alternative regimes in achieving their desired environmental outcomes, I argue that they demonstrate a way in which private property is being appropriately used to manage resources. 2. THE NEW ZEALAND FISHERIES QUOTA MANAGEMENT SYSTEM AND THE NEW ZEALAND EMISSIONS TRADING SCHEME Both the fisheries quota management system and the NZ ETS are statutory schemes enacted in New Zealand, reliant on a private property right, and designed to preserve or manage specific natural resources. The following section outlines the structure of these schemes, with a particular focus on the proprietary elements that establish the presence of the social obligation norm. The quota management system was first implemented in the mid-1980s, partly as a response to concerns about depleted fish stocks, but also in light of the extensive economic reforms embarked on by New Zealand s government. Heavily influenced by neoliberal economic theory, the goal was to make the general economy more competitive and open to trade by lowering tariffs, dismantling subsidies and adopting free market reforms. 4 Individual transferable quotas fit brilliantly into this theory, and the fishing industry and Ministry of Fisheries used academic policy advice on economic reform extensively in developing the quota management system. 5 3 See the text to (nn ) and (nn ). 4 Graham Scott, Ian Ball and Tony Dale, New Zealand s Public Sector Management Reform: Implications for the United States (1997) 16 J of Policy Analysis and Management 357, Tracy Yandle, Developing a Co-management Approach in New Zealand Fisheries in Donald Leal (ed), Evolving Property Rights in Marine Fisheries (Rowman & Littlefield Publishers Inc 2005) 223.

3 Surprisingly Social 103 Although the basic shape of the scheme has not changed, the quota management system has been modified on several occasions since its inception, with the current iteration governed by the Fisheries Act The purpose of the Act is to provide for the utilisation of fisheries resources while ensuring sustainability. 6 By section 18 the Minister of Fisheries may, from time to time, declare a fish stock subject to the scheme. At this point the Minister must also set a total allowable catch in respect of each quota management stock in a quota management area (section 13). The total allowable catch must be set at a level which will maintain, or replenish the stock at or to a level that can produce the maximum sustainable yield. 7 The Minister may vary the total allowable catch from time to time, by either increasing or decreasing it (section 13(4)). The total allowable catch may be set, or varied, to zero (section 13(5)). Once the total allowable catch has been set the Minister must set an annual total allowable commercial catch for each quota management stock in a quota management area. This is established having regard to the total allowable catch and noncommercial fishing interests (section 20). A proportion of the total allowable catch is set aside to provide for recreational fishing, customary uses, and all other fishing related mortality of that stock (section 21). The remainder is available as the total allowable commercial catch. This represents the total quantity of fish stock that the commercial fishing industry can catch for a given year. The Minister may vary the total allowable commercial catch and may also set it at zero (sections 20(2) and (3)). It must not exceed the total allowable catch (section 20(5)(b)). Individual transferable quotas are generated when a stock is introduced to the scheme. Quotas are expressed as a number of shares in each fish stock (section 42). The total number of quota shares for each stock is 100,000,000. Consequently, each individual quota represents a one-hundred-millionth share of the total allowable commercial catch. Theoretically quotas are allocated in perpetuity and are fully transferable (although there are some limits). Transfers must be registered and registration is backed up by a Crown guarantee similar to that used for New Zealand s Torrens based land transfer system. It is possible to both mortgage quotas (sections ) and lodge a caveat against the register to prevent dealings (see sections ). Consequently, while individual transferable quotas are central to the quota management scheme itself and are clearly designed to operate as private property, as a private property right they are also restricted in a number of ways. The NZ ETS is a much more recent creation, established under the Climate Change Response Act It was implemented to discharge New Zealand s obligations under the United Nations Framework Convention on Climate Change 8 and 6 Both these terms are further defined and include such matters as maintaining the potential of fish stocks to meet the needs of future generations, avoiding or mitigating adverse effects of fish and enabling people to provide for their social, economic, and cultural well-being. See Fisheries Act 1996, s 8(2). 7 This is defined in s 2 and reflects the greatest yield that can be achieved over time while maintaining the stock s productive capability. 8 United Nations Framework Convention on Climate Change 1771 UNTS 107 (opened for signature on 4 June 1992, entered into force on 24 March 1994).

4 104 Surprisingly Social the Kyoto Protocol 9 (the Protocol). 10 An emissions trading scheme was advocated as the preferred method for meeting these obligations on the basis that, among other things, it would provide certainty regarding the total volume of emissions, be easily linked to the international emissions price and international markets, and provide participants with the maximum degree of flexibility by enabling them to reduce or offset their emissions by accessing emissions reduction opportunities at the lowest costs. 11 The result was the Climate Change Response Act 2002, which contains over 250 provisions and is supplemented by 16 sets of regulations, many of which are also detailed and complex. 12 As with quotas, emissions units are designed to be, among other things, traded, held, used as a security and surrendered. 13 The primary obligation for those participants who are required, or choose, to engage with the NZ ETS is to surrender one emissions unit for every tonne of carbon dioxide equivalent emissions that they cause. 14 Participants are required to prepare an annual emissions return (section 65) specifying their activities and recording their emissions or removals for each year. This must contain an assessment of the number of emissions units that must be surrendered (section 65(2)). The Act provides that participants who do not discharge their obligations face a number of potential consequences. There are criminal sanctions for, among other things, failing to collect data, keep records or submit an emissions return. 15 Importantly, there are also penalties for failing to surrender units. 16 In particular, a participant who fails to surrender the units sufficient to discharge their obligations as calculated in their annual emissions return must surrender sufficient units and pay to the Crown an excess emissions penalty of $30 for each unit they should have surrendered. 17 Surrendering the unit means that it cannot be used again or transferred to another participant. The regime is designed to limit the emission of greenhouse gases by harnessing the incentives of private property. To that end, 9 Kyoto Protocol to the United Nations Framework Convention on Climate Change FCCC/CP/1997/7/ Add.1 (1997). 10 Toni Moyes, Greenhouse Gas Emissions Trading in New Zealand: Trailblazing Comprehensive Cap and Trade (2008) 35 Ecology LQ 911, Ministry for the Environment, New Zealand Response to Climate Change (Ministry for the Environment 2005) Alastair Cameron, New Zealand Emissions Trading Scheme in Alastair Cameron (ed), Climate Change Law and Policy in New Zealand (LexisNZ Limited 2011) The effect of ss 18C and 7(2) of the Climate Change Response Act 2002 is to indicate that, with a few narrow exceptions, only account holders are able to transfer or otherwise deal with emissions units. Thus, the Act appears to confer an exclusive right to deal with the units held in the holder s account. See the analysis in Ben France-Hudson, No Property Rights in the Atmosphere in Paul Martin and others (eds), In Search of Environmental Justice (Edward Elgar Publishing 2015) 105, Climate Change Response Act 2002, s 65(4). Interestingly, when the NZ ETS was first introduced as a transitional measure participants were only required to surrender one emissions unit for every two tonnes emitted (see Climate Change Response Act 2002, s 63A). However, this is to be phased out so that by 2019 all participants will have to surrender one emissions unit for each tonne of emissions made over the compliance period (see Climate Change Response (Removal of Transitional Measure) Amendment Act 2016, s 4). See also Cameron (n 12) Climate Change Response Act 2002, s ibid s ibid s 134(2)(b).

5 Surprisingly Social 105 emissions units are exclusive private property rights designed to allow participants to discharge liabilities and to be traded within a market. 3. PRIVATE PROPERTY AND ENVIRONMENTAL MANAGEMENT It is now accepted that well-defined private property rights, such as those created by the quota management scheme and the NZ ETS, are a central feature of any marketbased system of natural resource management. Based on Hardin s theory of the tragedy of the commons 18 the idea is that by allocating private property in the form of tradeable environmental allowances 19 resource users will have incentives to use resources in a way that rationally secures long-term sustainability. 20 Over the past 30 years many different tradeable environmental allowance regimes have been established across a diverse range of resources. 21 However, although tradeable environmental allowances have a range of significant benefits, 22 there remains unease about their use. The basis for this anxiety is grounded in a classical liberal world view and the fact that the idea of private property underpinning these tools entails privilege, but not obligation. The concerns are exacerbated by copious evidence suggesting that the classical liberal approach to private property can lead to very negative environmental consequences. 23 Leopold concisely articulated the issue in his classic A Sand County Almanac 24 where he noted that our Abrahamic concept of land (and by extension private property) was one that entailed privilege but no obligation 25 and that private property is often a key driver of environmental destruction. The general tenor of criticisms regarding the use of private property as tool of environmental management is that private property, and in particular the classical liberal account of private property, is misleading, deficient and contributes significantly to environmental harm. 26 Critics have observed that the way in which this conception of private property operates can lead to: the imposition of environmentally 18 Garrett Hardin, The Tragedy of the Commons (1968) 162 Science Carol Rose, Expanding the Choices for the Global Commons: Comparing Newfangled Tradable Allowance Schemes to Old-Fashioned Common Property Regimes (1999) 10 DELPF 45, Gerd Winter, The Climate is No Commodity: Taking Stock of the Emissions Trading System (2010) 22 JEL 1, Tom Tietenberg, Tradeable Permits in Principle and Practice (2006) 14 Penn State Env L Review 251, The benefits of using tradeable environmental allowances to manage the environment include: providing environmental protection at a minimum cost; generating incentives for ongoing environmental improvement; giving more flexibility and thereby promoting a wider range of responses from producers and consumers; and, directly promoting the economically efficient allocation of scare resources (see Benjamin Richardson, Economic Instruments and Sustainable Management in New Zealand (1998) 10 JEL 21). 23 For a review see: Prue Taylor and David Grinlinton, Property Rights and Sustainability: Toward a New Vision of Property in David Grinlinton and Prue Taylor (eds), Property Rights and Sustainability: The Evolution of Property Rights to Meet Ecological Challenges (Martinus Nijhoff Publishers 2011). See also: Eric Freyfogle, Ownership and Ecology (1993) 43 Case W Res L Rev 1269; Joseph Sax, Property Rights and the Economy of Nature: Understanding Lucas v South Carolina Coastal Council (1993) 45 Stan L Rev 1433; Lynda Butler, The Pathology of Property Norms: Living Within Nature s Boundaries (2000) 73 S Cal L Rev Aldo Leopold, A Sand County Almanac: and Sketches Here and There (OUP 1949). 25 ibid vii, Peter Burdon, What is Good Land Use? From Rights to Relationship (2010) 34 MULR 708, 714.

6 106 Surprisingly Social arbitrary boundaries which reinforce the idea that people are separate from nature; 27 the treatment of resources as detached entities that can be turned into objects of human wealth through hard work and perseverance with little regard to the broader consequences of resource use; 28 and the creation of pathologies which fail to give recognition to the connections between resource use and ecosystem health. 29 Underlying each of these points is the unifying observation that the individual autonomy celebrated by classical liberalism elevates individual self-interest over the needs of the community. The privileging of self-interest over other values denies the interconnected nature of individuals, the communities in which they are centred, and the environment in which they live 30 and drives a range of unsustainable and negative environmental behaviours. 31 For example, Burdon has recently illustrated that the pervasive use of toxic products by industrial land owners is driven, in part, by the fact that where regulations are weak, land owners have no incentive to do anything other than act in a way that satisfies their own preferences. 32 Babie has used climate change to illustrate the same point. 33 In his view, the agenda-setting 34 focus of private property in the classical liberal tradition is a prime culprit for the behaviours that cause climate change. 35 He suggests that climate change is a problem made possible by the concept of private property, and made real by its idea. 36 These sorts of critiques have become a key theme of the literature on environmental law and are of particular concern where private property is used as a tool of natural resource management. It leads to an overall question: how can we possibly trust the solution to environmental problems to the institution that causes all the problems in the first instance? An Alternative View of Private Property The answer to this question lies in the fact that our tradition of private property is actually plural. Although it is not as well recognised there is an alternative countertradition within our idea of private property. This second tradition is much older than its classical liberal counterpart, although scholars only began to identify and describe it in the early 1990s. 38 Since that time a number of people have attempted to 27 Freyfogle, Ownership and Ecology (n 23). 28 Sax (n 23). 29 Butler (n 23) Terry Frazier, The Green Alternative to Classical Liberal Property Theory (1996) 20 Vt L Rev 299, Taylor and Grinlinton, Property Rights and Sustainability (n 23) Burdon (n 26). 33 Paul Babie, Private Property: The Solution or the Source of the Problem (2010) 2 Amsterdam L Forum 17, Paul Babie, Idea, Sovereignty, Eco-colonialism and the Future: Four Reflections on Private Property and Climate Change (2010) 19 GLR 527, ibid. 36 ibid Babie, Private Property: The Solution or the Source of the Problem (n 33) Carol Rose, Property and Persuasion: Essays on the History, Theory, and Rhetoric of Ownership (Westview Press 1994) and Gregory Alexander, Commodity and Propriety: Competing Visions of Property in American Legal Thought (University of Chicago Press 1997).

7 Surprisingly Social 107 describe this counter-tradition using different examples and language. 39 More recently, efforts in this vein have been loosely grouped under the name progressive property by scholars in the USA. 40 While an overview of this literature is beyond the scope of this article, in essence the movement rejects the classical liberal notion that at the core of private property is an idea of exclusion aimed at promoting individual autonomy. Instead, it recognises that a social obligation norm lies at the heart of private property which imposes varying obligations on owners. Scholars argue this is important because the norm is inherent in our idea of what it means to own private property. 41 It follows that when the law (in its broadest sense) imposes a restriction on the way an individual can use private property, it is simply identifying a restriction that is already inherent in our idea of ownership. It is not imposing an external, and therefore potentially illegitimate, obligation upon an individual s bundle of rights. While a restriction on the use of property may be imposed by a normative, common law or legislative mechanism, in each case the restriction is the practical expression of an integral aspect of the private property right itself. The key observation of progressive property scholars is that the values underpinning private property can result in owners of property owing obligations to the community generally. 42 Explaining the normative basis for these obligations is a key task of progressive property scholarship today. Generally speaking, the obligations themselves can be grouped under one theoretical umbrella ; a social obligation norm. 43 Although the overall objective of this literature is to articulate a detailed and workable account of the basis for the social obligation norm and to identify how it works in practice, by far the most developed and compelling account is the human flourishing theory of property developed by Gregory Alexander and Eduardo Pe~nalver. 44 Their argument is that private property rights are inherently relational and owners have a number of responsibilities to both other owners and non-owners. Building on Aristotelian notions that to be human is to be both social and political they argue that dependency and inter-dependency are intrinsic facets of what it means to be 39 For example, early discussions of the counter-tradition termed it property as propriety (see Rose, Property and Persuasion (n 38) and Gregory Alexander, Property as Propriety (1998) 77 Nebraska L Rev 667) while more recent accounts have termed it the social obligation norm of property (see Gregory Alexander, The Social-Obligation Norm in American Property Law (2009) 94 Cornell L Rev 745). 40 Gregory Alexander and others, A Statement of Progressive Property (2009) 94 Cornell L Rev 743; Eric Freyfogle, Private Ownership and Human Flourishing: A Critical Review (2013) 24 Stellenbosch L Rev 430. It should be noted that scholars beyond the United States are also contributing to this effort. See, for example, a special edition of the Property L Rev ((2014) 3 Property L Rev) considering research methods in property law containing contributions from scholars throughout the world. 41 Gregory Alexander, Ownership and Obligations: The Human Flourishing Theory of Property (2013) 43 Hong Kong LJ 451, ibid. 43 ibid. 44 Gregory Alexander and Eduardo Pe~nalver, Introduction in Gregory Alexander and Eduardo Pe~nalver (eds), Property and Community (OUP 2009); Gregory Alexander and Eduardo Pe~nalver, An Introduction to Property Theory (CUP 2012); Gregory Alexander and Eduardo Pe~nalver, Properties of Community (2009) 10 Theo Inq L 12; Gregory Alexander, Pluralism and Property (2011) 80 Fordham L Rev 101; Gregory Alexander, The Complex Core of Property (2009) 94 Cornell L Rev 1063; Alexander, Ownership and Obligations (n 41).

8 108 Surprisingly Social human. 45 In order to have access to the things that characterise a rewarding and well-lived life, each individual must have the resources and skills to flourish. In order to flourish the individual must be able to develop a number of key capacities. Although they candidly admit that the precise capacities necessary for human flourishing can differ greatly between analysts they suggest there are four that are uncontroversial:... (1) life, a good we take to include subsidiary goods such as health and security; (2) freedom, which includes identity and self-knowledge; (3) practical reason, which Aristotle defined as the capacity of deliberating well about what is good and advantageous for oneself, and (4) what Nussbuam calls affiliation, a good that encompasses subsidiary goods such as social participation, self-respect, and friendship. 46 The importance of developing these capacities lies in the fact they allow us to make meaningful choices among alternative life horizons. 47 Individuals must be able to distinguish between different alternatives and carefully deliberate the consequences of each, which can only be done by participating in the community and learning from the example of others. 48 Consequently, membership in society is a prerequisite to flourishing. 49 It flows from this that our dependence on the community means we are morally obliged to promote the flourishing of others in the community as well. As Alexander notes: My affirmation, as a rational moral agent, of flourishing as a good has normative consequences. If I value my own flourishing, then to avoid self-contradiction, I must value the flourishing of others as well. 50 On a more practical level, the ability to flourish is also dependant on the satisfaction of essential physical needs as well as access to sufficient resources to enable the individual to set priorities without complete dependence on others. 51 The ability to make choices between differing life horizons requires a large degree of institutional support. Private property rules are one type of institutional mechanism used to further this goal. 52 If the ability to flourish depends on access to resources, then property rights are inevitably engaged, because it is property rights that help to identify which people have claims against which resources. 53 Consequently, if both property and community are necessary for humans to flourish then the individual s obligation to advance the flourishing of other members of the community leads directly to an idea of private property in which the collective community interest 45 Alexander, The Complex Core of Property (n 44), It should be noted, the theory also builds on the work of Kant, Gewirth, Nussbaum and Sen among others. See Alexander, The Social-Obligation Norm (n 39) Alexander and Pe~nalver, Properties of Community (n 44) Alexander, The Social-Obligation Norm (n 39) Alexander and Pe~nalver, Properties of Community (n 44) ibid Alexander, The Social-Obligation Norm (n 39) at ibid Colin Crawford, The Social Function of Property and the Human Capacity to Flourish (2012) 80 Fordham L Rev 1089, Carol Rose, Property in All the Wrong Places (2004) 114 Yale L J 991, 994.

9 Surprisingly Social 109 may take priority over the private interests of the individual. 54 Importantly, this empowers the state to make demands of individuals as the private property right itself contains the source of the obligation to the community. 55 Consequently, when we see the state articulating obligations held by property owners, or limiting what they can do with their property, we are not seeing an illicit interference with the owner s private rights because the state is only requiring private owners to uphold their moral (and by extension, legal) obligations. 56 The precise parameters of these obligations are extremely contestable and vary both between different societies and also over time. Alexander suggests that owners are morally obliged to provide those benefits that the society reasonably regards as necessary for human flourishing. 57 Accordingly, we would expect the state to act in any situation where the ability of members of the community to flourish is threatened. Thus, the goal of the social obligation norm is explicitly redistributive and the state may compel some level of redistribution in order to ensure that all members of the community have access to the resources necessary to participate at some minimally acceptable level in the social life of the community. 58 In summary, the argument is that the common good is best achieved when individuals have the capabilities and resources necessary to flourish. As humans we are dependent on others; even freedom (ostensibly the most self-contained of the capabilities) is entirely dependent on a social context in which the individual must depend on others. Importantly, this account of private property does not deny the core values that many see private property as serving. Autonomy, personal security, selfdetermination and self-expression are still acknowledged as being among the primary aims of our private property regime. 59 However, the human flourishing account emphasises that all of these goals are actually intrinsically social. A person cannot be autonomous if they have no resources. Likewise, self-determination does not occur in isolation; it is very dependent upon a community for its ultimate expression. Selfexpression requires that there is someone else listening. 60 Importantly, responsibility is a further value that private property can be seen to serve. 61 This value has two strands. First, it recognises that one goal of a private property regime is to instil individuals with a sense of personal responsibility. Looking after what one owns is a key attraction of the institution of private property that is particularly relevant to the sphere of environmental management. Crucially, 54 Christopher Serkin, Affirmative Constitutional Commitments: The State s Obligations to Property Owners (2013) 2 Brigham-Kanner Property Rights Conference J 109, Alexander and Pe~nalver note that while it may be possible for communities to provide the necessary capabilities for human flourishing without the need for coercive state intervention, since the advent of modern capitalism this has been beyond the ability of individual communities. See Alexander and Pe~nalver, Properties of Community (n 44) Serkin (n 54) Alexander, The Social-Obligation Norm (n 39) Alexander and Pe~nalver, Properties of Community (n 44) ibid. 60 Rose, Property and Persuasion (n 38) Gregory Alexander, The Public use Requirement and the Character of Consequentialist Reasoning (2014) Cornell Law School Research Paper No < accessed 2 August 2016.

10 110 Surprisingly Social responsibility also encompasses the responsibility that individuals owe to others. This means that it is sometimes necessary for an individual to temper their use of what they own, in order to cater for the interests of others. The roots of this tradition, where private property is accompanied by obligations to the community, stretch far deeper into our cultural past than the relatively modern advent of classical liberalism. 62 Although the classical liberal account of private property now tends to be pervasive it did not begin to be a feature of property law jurisprudence and political theory until the 17th and 18th centuries. 63 Conversely, the idea that property can privilege the community over the individual has existed in our Western historical tradition for much longer. 64 A few examples illustrate the depth and extent of the social obligation norm of property. Aristotle argued that private property is desirable because it helps to promote the development of human potential and virtue. 65 Aristotle considered that the normative function of private property was to facilitate and develop virtue. 66 While Aristotle identified a wide range of virtues 67 the two key virtues regarding property were moderation and liberality (ie being generous). Aristotle noted that one could only act moderately when private self-contained action (and resources) gave a person the option to be immoderate. Moreover, one could not be generous (that is liberal) if one had no possessions. 68 Moderation and liberality could only be fostered by private property, because only private property afforded a means to achieve these ends. 69 Aristotle placed private property in a broad ethical and political setting and stressed its central role in how individuals develop. The teachings of St Thomas Aquinas built on Aristotelian notions, albeit that they were penned from an explicitly Christian worldview. 70 The most important development made by Aquinas was clarification of the notion that private property as an institution contains both duties and limits. Aquinas taught that the holding of private property could best be justified on the basis of natural law, and as such, it must conform to both divine law and God s purpose, which placed limits on the ability of man to put goods to use. The limits were informed by general Christian principles, the good of the community in general, and natural law. The Christian virtues included charity, generosity, sharing and stewardship, which were deployed to lay the material foundation for the duty of charity or to limit the accumulation of wealth or the practice of usury. One compelling account of private property within medieval Europe argues that prior to the 17th and 18th centuries, private property was viewed as a key bastion of 62 ibid Alexander, Property as Propriety (n 39) See Rose, Property and Persuasion (n 38), Alexander, The Social-Obligation Norm (n 39) and David Lametti, The Concept of Property: Relations Through Objects of Social Wealth (2003) 53 UTLJ Here Aristotle was critiquing Plato s discussion in the Republic arguing for a regime of common property as a normative mechanism aimed at serving a vision of the common good. See Plato, Republic (CJ Emlyn- Jones and William Preddy eds and trans, Harvard University Press, 2013) and Lametti (n 64) Lametti (n 64) Iseult Honohan, Civic Republicanism (Routledge 2002) Lametti (n 64) ibid ibid

11 Surprisingly Social 111 what was considered proper or propriety in nature, 71 so that property was seen as a way of achieving the proper ordering of society. For example, owning land conferred a measure of hierarchical governing authority. 72 As Windeyer notes, the feudal relation of lord and tenant was far more than simply a system of land tenure. Formal obligations of service and fealty were imposed on the tenant and duties of protection and defence were imposed on the lord. 73 Private property on this worldview could properly consist of whatever resources one needed to play one s part in achieving the good order of the broader community. Thus, at least in theory, the monarch held property in the form of his or her royal domains and ought not to tax his or her subjects as the income from the domains should enable him to live of his own. 74 In turn, the members of the aristocracy (or municipalities) had their own lands on which they as sub-rulers needed to maintain the proper order and so on. Thus, the massive landholdings of aristocratic Europe were seen as necessary to enable each aristocrat to play their proper roles in governing society. 75 Moreover, where the King s income failed to cover all of the expenses of governance he had to ask his subjects for additional funds, rather than simply taking their property lest he deprive his subjects of the means by which to maintain the proper social order. 76 Although freehold ownership of land is often viewed as the paradigmatic example of private property ownership, emblematic of the idea that owners are able to deal with property in any way they choose, this interpretation is relatively modern. Historically, the fee simple occupied a relatively modest place in the common law, with the intricate and overlapping proprietary rights to land, commons, woods and waters seen as more important. 77 Moreover, it is abundantly clear that ownership of land has never been accompanied by absolute rights. Indeed, evidence of limitations on what one can do with land goes back centuries. For example, the common law of tort dates to the 12th century, and can sometimes impose limitations on the way in which a person uses his or her land; providing, of course, that the plaintiff can demonstrate a substantial injury in economic terms. 78 Similarly, state attempts at intervention began very early in our legal history. Densely populated London, for example, put restraints on burning sea coal as early as the 13th century See Rose, Property and Persuasion (n 38). 72 ibid WJV Windeyer, Lectures on Legal History (2nd edn, The Law Book Company of Australasia 1957) Rose, Property and Persuasion (n 38) 60 citing Roger Lockyer, Tudor and Stuart Britain (Longman 1964) Michael Robertson, Liberal, Democratic, and Socialist Approaches to the Public Dimensions of Private Property in Janet McLean (ed), Property and the Constitution (Hart Publishing 1999) Rose, Property and Persuasion (n 38) See Sir William Holdsworth, An Historical Introduction to the Land Law (OUP 1927) and Marvin Perry and others, Western Civilization: Ideas, Politics, and Society: Since 1400 (11th edn, Cengage Learning 2016) Scott Hamilton Dewey, Why Regulation?: The Shift from Traditional Remedies to Regulatory Statues in Environmental Law (1992) Professor Harold Hyman s Seminar on Legal History, < stract¼ > accessed 2 August Carol Rose, Property Rights, Regulatory Regimes and the New Takings Jurisprudence - an Evolutionary Approach (1989) 57 Tennessee L Rev 577, 586.

12 112 Surprisingly Social The penalty for contravention was death. 80 While further research on these issues is required, they do suggest that the counter-tradition of property as a social obligation norm has been, and remains, present in our idea of what it means to own land. I argue that this remains true, even under a dominant view of private property based on classical liberalism. Both state intervention in land use and the law of torts have remained a feature of the common law, notwithstanding the rise of classical liberalism. As is true of the other examples outlined above, classical liberalism did not arise in a vacuum. Its rise reflected a response to the political absolutism that accompanied the rise of the modern nation-states 81 and the philosophy was central to the constitutional struggles across a number of nations during the 17th and 18th centuries. 82 The promotion of individual freedom and the move to a market driven economy were undoubtedly crucial in the establishment of our commodious lifestyles. However, accepting that private property s sole functions are to satisfy individual preferences, protect the individual from state interference, and promote increases in aggregate wealth, is both historically incorrect and likely to lead to ongoing problems, such as environmental destruction. As Burdon has noted, where regulation is weak, land owners have little reason to act contrary to their own interest, resulting in over-use of toxic products by industrial land owners. 83 The classical liberal myth also provides a relatively impoverished view of what private property can do and how it actually operates. While private property can promote autonomy and increases in wealth, the examples explored here suggest it can, and does, do much more; sometimes at the expense of those ideals. Under the quota management system, for example, the total allowable commercial catch can be set at zero, which will obviously have a deleterious effect on the value of quotas. However, the Fisheries Act allows the ongoing sustainability of the fisheries 84 to be privileged over an individual s current autonomous use of their right. Recognising that private property can do more than simply satisfy individual preferences may provide a mechanism by which we can harness private property s beneficial aspects while avoiding some of its more perverse outcomes. These examples also illustrate a number of points that are important to a modern understanding of private property, and which remain central to the social obligation norm of property. The historical incidents of the concept indicate that private property does not necessarily have an unlimited scope, and can instead be seen as subject to the imperatives of the polity. 85 This resonates strongly with the idea of property as a norm of social obligation. Private property, while private, is a means by which greater public and ethical purposes can be served. 86 It is also important to stress that this counter-tradition within property did not fade away with the ascendance of 80 Daniel Cole, Pollution and Property: Comparing Ownership Institutions for Environmental Protection (CUP 2002) George Smith, The System of Liberty: Themes in the History of Classical Liberalism (CUP 2013) ibid (n 32). 84 Fisheries Act 1996, s Lametti (n 64) ibid 22.

13 Surprisingly Social 113 classical liberal thought over the past 300 years. Indeed, a central purpose of this article is to demonstrate the presence of this counter-tradition within our current law. German constitutional law provides a fascinating modern example. The German idea of property starts from the presumption that private property comes with obligations. Article 14 of the German Federal Grundgesetz (Constitution (or Basic Law)) contains a civil rights guarantee of ownership, a statement that the content of property rights will be set out in legislation, a qualified power of compulsory acquisition, and a statement that ownership carries with it obligations. 87 Article 14 states: Article 14 (Ownership, Inheritance and Expropriation) 1. Ownership and inheritance will be guaranteed. Their meaning and limitations will be defined in legislation. 2. Ownership creates obligations. Its use shall at the same time serve the common good. 3. An expropriation is permissible only for the common good. It is to be permitted by legislation, or on the basis of legislation, which arranges the manner and measure of compensation. The compensation is to be determined by just weighing of the interests of the common good and of the private party... The Constitution is also underpinned by a commitment to the principle of human dignity (Menschenwürde) that must be seen as existing in both social and economic contexts. 88 It creates not only a Rechtstaat (a state governed by the rule of law) but also a Sozialstaat (social welfare state). Underlying this is the idea that the government has the responsibility to provide for the basic needs of all its citizens. 89 Modern day Germany views its responsibilities as not only to provide a social welfare backstop for those in need, but also to redistribute wealth for the benefit of the common good. The general German presumption is that the overall social wellbeing of the community improves if, and as far as, everyone shares in the fruits of what society can produce. 90 The Basic Law reflects these cultural values. The most extensive development of the obligations referred to in Article 14(2) has occurred in cases where owners have claimed compensation under Article 14(3) for expropriations. The cases have usually occurred in the context of government planning or environmental regulation. 91 Very briefly, in developing the law the courts have indicated that where a citizen has an obligation to ensure the environmental quality of their property, Article 14(2) can preclude a right to compensation for what would otherwise be a governmental interference with private property Translated and cited in Murray Raff, Environmental Obligations and the Western Liberal Property Concept (1998) 22 MULR 657, Gregory Alexander, Property as a Fundamental Constitutional Right? The German Example (2003) 88 Cornell L Rev 733, ibid ibid Raff (n 87) ibid.

14 114 Surprisingly Social Compensation will only be available where the infringement exceeds the obligations the owner already has. The German Federal Constitutional Court (Bundesverfassungsgericht) has indicated that a citizen is a person living within, and dependent upon, society. Citizens are not simply autonomous and egocentric individuals. It follows that the rights of owners are malleable and must be placed within the broader and integrated setting of the environment in which the private property is located. The test developed by the Court considers what the reasonable thoughts of a rational, but economically minded, person would be when considering the potential uses of property in light of the property s overall social and environmental context (and in the absence of any already extant legal regulation). 93 The German Constitution provides a good example of the state s role in regulating property as a two-way street. 94 In circumstances where the positive obligations imposed on property owners no longer benefit the community, the state has a responsibility to intervene and change the parameters of ownership. A regulation that is acceptable at one point in time may lose acceptability as the needs of both the community, and the property owner, change. As a result, the state has an ongoing obligation to assess and, if necessary, alter the balance of rights and obligations in relation to particular objects of property. 95 However, this does not mean that the state s power is limitless. Instead, there are inherent limitations on the state s ability to intervene, which must be assessed by the same criteria that allows state intervention. Both are assessed by reference to what is necessary to facilitate human flourishing. 96 That the operation of private property may be grounded in normative goals beyond individual preference satisfaction is a critical observation. In addition to the theoretical implications it provides a principled basis for the resolution of the dichotomy between private property s utility as a tool of environmental management and the fact that it can also be the root cause of environmental problems. Importantly, it also provides an explanation for the way that tradeable environmental allowance regimes are structured and how the private property they rely on operates in practice. As the above examples demonstrate, our tradition of private property is longer, and more complex, than that suggested by a simple focus on the way private property meets an individual s needs. This is particularly important in the environmental sphere, where there are significant concerns in situations where an individual s ability to use their property is in conflict with goals of environmental protection. 4. THE CONCERNS AND SOCIAL OBLIGATION S RESPONSE Concerns about the privileging of one to the detriment of the community manifest themselves in a range of interrelated ways in relation to tradeable environmental allowances such as individual transferable quotas and emissions units under the NZ ETS. In particular, there is a perception that once something is recognised as private 93 ibid 678. For a practical example see the Gravel Extraction Case (1984) 14 Agrarrecht Serkin (n 54). 95 ibid Alexander and Pe~nalver, Properties of Community (n 44) 148.

15 Surprisingly Social 115 property a range of, not necessarily positive, consequences will follow. Moreover, there is an apprehension that there is a fundamental tension between the desire for growth (driven by markets and the private property on which they rely) and the finite limits of the environment. In exploring these concerns I argue that the social obligation norm can, and does, acknowledge and cater for the needs of the community, while also recognising other values. 97 It follows that the concern that private property will drive a range of unsustainable and negative environmental behaviours 98 is not a given. The following examples demonstrate the types of structures that can be used to successfully avoid this tension. Not only do the quota management system for fish and the NZ ETS provide evidence of the social obligation norm in our law, but they also demonstrate that, if we choose, the contours of a private property right can be moulded so that protection of the environment can become a primary objective. 4.1 The Consequences of Calling Something Private Property A key concern surrounding tradeable environmental allowances involves the idea that once you call something private property there is an expectation that certain consequences will follow. 99 Once private property is employed to manage any system of resources (be they natural or otherwise) it brings with it an approach, history and gestalt of its own. When hard cases occur decision-makers will, by training and necessity, rely on the approach to private property with which they are familiar. However, the classical liberal paradigm does not fit comfortably with the purpose for which private property is used to manage environmental resources. Trade and the satisfaction of individual preference is the ultimate goal of a property regime within the classical liberal paradigm. Conversely, using property in the environmental context focuses on a very different objective. It seeks to reserve a portion of a resource from the normal commercial pressure in an attempt to secure sustainability and ecological protection. The problem is that when issues become evident after a private property scheme has been adopted it can be extremely difficult to adapt because of prior institutional choice. 100 Private property is a language that comes easily to lawyers and courts and once referred to can become entrenched. Eventually, addressing conflicts between the classical liberal operation of private property and environmental reality becomes extremely difficult. This is a particular problem in relation to tradeable environmental allowances regimes because, in theory if not in practice, these regimes must restrict the use of a resource to a level that is compatible with the sustainability of the whole complex network or ecosystem in which the resource is embedded. To achieve the goal of resource conservation it will also require a large degree of flexibility in order to adjust to changing information and policy priorities. However, the classical liberal approach to property tends to run counter to these sorts of objectives and may have real impact on the degree of flexibility available to decision-makers if private property is 97 Frazier (n 30) Taylor and Grinlinton, Property Rights and Sustainability (n 23) Carol Rose, Liberty, Property, Environmentalism (2009) 26 Social Philosophy and Policy 1, ibid.