Property Rights and Natural Resource Curses: Micro Evidence from a Tribal Fishery
Abstract: We a study a U.S. federal court ruling that had major impacts on the structure of property rights in—and the distribution of revenue from—Washington state’s commercial fisheries. Known as the “Boldt Decision”, the 1974 ruling affirmed the right of Native American tribes to 50 percent of the fishery based on treaties signed in the 1850s. The ruling was an unexpected (but not undeserved) windfall for impoverished tribes because they had caught less than six percent of the salmon in the 25 years preceding 1974, and because half of the fishery revenues in 1973 amounted to $10,189 per tribal member. We find that the ruling conveyed limited long-run economic benefits to tribes, however, in part because it failed to re-create the efficient system of riparian property rights used by Pacific tribes at the time of the treaties. Instead, the post-1974 tribal fishery evolved to mimic the economically wasteful “rule of capture” and capital-intensive mobile fishing regime that is prevalent in non-tribal fisheries throughout the industrialized world. Our theory describes how individually rational decisions leads to rent dissipation and possibly a resource curse, and our empirical analysis identifies symptoms of a curse using data on fishing activity, schooling decisions, and income growth.
