Working Paper: NBER ID: w29889
Authors: Frederik Noack; Christopher Costello
Abstract: Credit markets and property rights are fundamental for modern economies, but they also have implications for the commons. Using a dynamic model of competitive resource extraction, we show that improving property right security unambiguously increases conservation incentives, but the effect of credit markets on resource extraction effort hinges on the security of property rights. We test these predictions using data on global fisheries, credit markets, and the largest-ever marine property rights assignment. We find that property right security reduces resource extraction, while credit market development increases resource extraction under insecure property rights but reduces resource extraction under secure property rights.
Keywords: Credit Markets; Property Rights; Resource Extraction; Commons
JEL Codes: H0; Q01; Q2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Improving property right security (P14) | Increased conservation incentives (Q24) |
| Improving property right security (P14) | Reduction in resource extraction effort (L72) |
| Credit market development (O16) | Increase in extraction rates for resources under insecure property rights (P14) |
| Credit market development (O16) | Decrease in extraction rates for resources with secure property rights (P14) |
| One percent increase in credit to the private sector (E51) | 0.94% increase in extraction for insecure property rights (P14) |
| One percent increase in credit to the private sector (E51) | 0.41% decrease in extraction for secure property rights (P14) |