This chapter explored the idea of leveraging property rights to enable either better decision making by stakeholders, usually by changing the ex ante information and incentives, or by re-allocating rights as originally suggested by Coase. We explored Hardin’s (in)famous ‘Tragedy of the Commons,’ from the economic perspectives of rivalry (aka subtractability) and excludability. We explored the impacts of observing the three states of rivalrous, non-rivalrous, and anti-rivalrous against both excludable and non-excludable, yielding six types of goods or services. Traditional property concepts, such as rules of first capture or first mover, could lead to inefficient use of resources. Demsetz's theory is that property rights could emerge, sua sponte, internalising externalities that follow from open access; that property rights enable communities to re-balance the impacts of Pigou’s externalities. Demsetz’s theory does not necessarily imply the establishment of private property rights. Again, the issues of rivalry and excludability came into view. Cooter and Ulen advocated that if property rights could be granted for various natural resources, including wildlife, it would benefit the efforts to protect and conserve those resources.

This book covers the fundamental principles of environmental law; how they can be reframed from a rational actor perspective. The tools of law and economics can be brought to bear on policy questions within environmental law. The approach taken in this book is to build on the existing consensus in international environmental law and to provide it with new analytical tools to improve the design of legal rules and to enable prospective modelling of the effects of rules in pre-implementation stages of evaluation and deliberation. The Pigouvian idea of environmental injuries as economic externalities. The core idea of Pigou’s model is that manufacturing costs that are excluded from the decision-making process will inherently not be reflected in the decision making of producers, and thus, manufacturing costs will be incorrectly perceived as lower than they actually are. The key is to ensure better decision making and to prevent environmental injuries by ‘internalising’ the cost externalities. Rational actors, forced to bear the costs of the injuries resulting from their production activities, will set optimal levels of production inclusive of minimising the costs of pollution injuries via reducing the incidence of those pollution injuries

Law and Economics literature since Calabresi has held that the goal of tort law is to reduce the costs of tortious acts across the whole of society, inclusive of the costs of risk avoidance, of victim damages, and of the institutional costs borne by society at large; so public welfare is best served by reducing the costs across the whole of the system. Law and Economics literature, based on its decision-making paradigm, views torts in two categories: (i) ‘unilateral’ torts when only the tortfeasor is able to make decisions regarding how to encounter the risky activity, and (ii) ‘bilateral’ when both the tortfeasor and the victim are able to make decisions regarding how to encounter the risky activity. The literature also recognises that some behaviours that lead to risk are noticed by the court in evidence but that other behaviours are not taken into account. The accounted-for behaviours are called ‘precautionary’ and the not-accounted-for behaviours are called ‘activity’ and both are measured in ‘levels’. Robustness depends on context for unilateral versus bilateral risks. The Law and Economics model of civil liability is powerful as it enables policymakers to forecast the impacts of their potential liability rules in advance.