Private storage of common property

Many resources extracted under the rule of capture are not utilized immediately but are stored instead for later use: oil is stockpiled; fish are frozen; groundwater is bottled; rivers are dammed; land, deforested as the way to establish title, remains uncultivated. We examine the positive and normative effects of such storage. Privatization of common property through storage may eliminate inefficiencies altogether but the accelerated extraction it induces may also exacerbate them-even if rapid extraction does not reduce ultimate recovery, Once storage commences, extraction accelerates until the open access reserves are drained. In limiting cases, these speculative acquisitions are instantaneous, the naturally occurring analogue of policy-induced "speculative attacks" studied in the international finance literature. When some reserves are privately owned while others are open access, the order of extraction no longer follows the progression from lowest to highest per-unit cost first noted by O.C. Herfindahl [in "Extractive Resources and Taxation" (M. Gaffney, Ed.), Univ. of Wisconsin Press, Madism (1997)]. Instead, the common property may be extracted in its entirety before any private reserves a-re extracted even if it has the higher per-unit extraction Cost. (C) 2001 Elsevier Science (USA).