Partial enclosure of the commons

• We model an institutional regime called “partial enclosure of the commons”.
• Part of a mobile natural resource is owned and the rest is competed for by an open access fringe.
• We find that partial enclosure is Pareto Improving and increases resource stocks.
• The best areas to enclose have high resource productivity, but may have low economic productivity.
• We illustrate the theory with an example from fisheries with spatial property rights.

We examine the efficiency, distributional, and environmental consequences of assigning spatial property rights to part of a spatially-connected natural resource while the remainder is competed for by an open access fringe. We refer to this as partial enclosure of the commons. We obtain sharp analytical results regarding partial enclosure of the commons including: (1) While second best, it typically improves welfare relative to no property rights, (2) all resource users can be made better off, (3) positive rents arise in the open access area, and (4) the resource maintains higher stocks. Under spatial heterogeneity, we also characterize spatial regions that are ideal candidates for partial enclosure — typically, society should seek to enclose those patches with high environmental productivity and high self-retention, but whether high economic productivity promotes or relegates a patch may depend on one's objective.