From Plows to Horizontal Fracking: Anticommons and Unintended Consequences of Land Privatization
Abstract: Land contains multiple natural resources that are efficiently managed at different spatial scales, either concurrently or over time. We model the use of two such resources under common land ownership, individually owned parcels, and hybrid regimes. The model shows how enclosing the commons for one resource can create anticommons problems for another. We provide empirical tests in the context of American Indian reservations, which are mosaics of private, tribal, and fragmented ownership interests due to U.S. government allotment policies during the late 19th and early 20th centuries. Using spatial data of historical and modern resource endowments, we show how the policies intentionally enclosed commons to agricultural land but inadvertently fragmented land interests over oil and gas shale deposits that are efficiently extracted by horizontal drilling spanning two miles. Based on a detailed case study of Fort Berthold reservation – which sits atop the highly productive Bakken oil field – we find evidence that deposits under parcels surrounded by neighboring tribal lands are more fully exploited than are deposits under parcels surrounded by neighboring allotted and privatized parcels. The results show how subdividing land can inadvertently raise the transaction costs of spatially coordinated resource use and impair resource utilization.
