Vast tracts of publicly managed rangelands in the western United States afford income opportunities to industrial users, as well as abundant opportunities for public enjoyment. The 244 million acres of land within grazing allotments in the 17 western states managed by the Bureau of Land Management and the U.S. Forest Service provided 16.3 million animal unit months (AUMs) of forage to domestic livestock in 1993 (USDI/USDA, 1993). Ranchers paid $28.1 million to harvest the forage, while access to these resources added between $0.6 to $1.5 billion to the capitalized value of permittees' ranches (Torell et al., 1993). However, just as ranching interests displaced traditional users of these lands in the mid-1800s, present day ranchers nervously anticipate a similar wave of conquest by other claimants to the public lands. The ranchers base their concern on continuing abrogation of the property rights associated with the federal grazing permit and on potential increases in livestock user fees. Both actual and anticipated changes in grazing policies already have resulted in changes in western ranch values and may have significant future consequences for users of the land.
This paper offers a perspective on the conflict from the emerging theory of economic property rights. The property rights approach (Barzel, 1989) is broader than earlier treatises dealing with property rights issues in natural resources (e.g., Libecap, 1981). Property rights analysis does not emphasize who owns title to the land but rather describes the set of economic and social relations that establish each individual's position with respect to the use of scarce resources (Furubotn and Pejovich, 1972). The relevant question in the case of the public rangelands is not who holds title to the land, but which actors are influential in resource allocation decisions.
Unlike that of Libecap (1981, 1989), the analysis here considers the claims of ranchers, miners, and other commercial resource users along with the legitimate claims of users who are not in a position to generate income from the resources but who nevertheless obtain significant values from the public lands. Social welfare derives from surpluses generated by both industrial and nonindustrial consumers. Many of the conflicts surrounding public rangeland policy arise from disagreements over the distribution of these surpluses. Many rights that ranchers enjoyed prior to the 1970s were undisputed. However, federal agencies and the courts are beginning to consider the values derived by nonindustrial users in natural resource allocation decisions (Levy and Friedman, 1994). It is generally accepted that delimitation of property rights is a necessary precursor to efficient market transactions (Barzel, 1989). The major treatise of this paper is that the absence of well-defined property rights has been responsible for much of the conflict surrounding public rangeland management.
II. AN ECONOMIC DEFINITION OF PROPERTY RIGHTS
Barzel (1989) defines an individual's property rights over an asset as the ability to consume, derive income from, and alienate various characteristics of the asset. Although legal property rights enhance economic rights, legal rights are neither sufficient nor necessary for the existence of the economic rights. Property rights are not constant but often owe their current state to efforts expended on protection by current users, on capture by others, and on the degree of government intervention in adjudicating conflicting claims from interested parties. Property rights therefore may be in constant flux due to agents' actions.
Transaction costs, or the costs of transfer, capture, and protection of rights, figure prominently in the distribution of property rights. For example, holders of permits to graze cattle on public rangelands have had the right to allow their stock to graze riparian areas. These areas are attractive to cattle because of their ready supplies of water, forage, and shade. …