Can Bartolus Save the Tiger? Reflections on the use of property rights for land-based biodiversity conservation

Administrative Law in the People's Republic of China

The rapid decline of biodiversity on earth is nearly entirely caused by humanly induced processes, such as overexploitation of species, deliberate habitat destruction, introduction of new and hostile species and ecological mismanagement. As is believed in law and eco nomics that institutions matter for the direction of human behavior, it looks, prima fa cie, worthwhile to explore whether an institution such as private property, so successful for the exploitation of the most varied kind of resources, could be useful for the solution of the biodiversity problem.
On the Uni ted Nations Conference on Environment and Development (UNCED), held on 3-14 lune 1992 in Rio, the problem of the biodiversity loss was widely discussed. In fact, it led to the signing of the Convention on Biological Diversity (CBD), which was signed by more than 150 Nations in Rio in 1992, and to a full chapter 15 in the famous Agenda 21. The main objectives of the CBD include the conservation of biological diversity and the sustainable use of its components. It is interesting to note that sustainable use implicitly implies the definition of some sort of institution(s) and property rights to facilitate with the use of this biodiversity.
Although most paragraphs of chapter 15 of the Agenda 21 deal with the technical analysis of biodiversity loss, the value of biodiversity, the stimulation of scientific research and exchange of data, education of the population and increase of trained personneI, the Agenda 21 drafters were not entirely blind to the institutional side of the problem. Art. 15.11, of section (d) Capacity-building states: "There is need, where appropriate, to: (a) Strengthen existing institutions and or establish new ones responsible for the conservation of biological diversity and to consider the development of mechanisms such as national biodiversity institutes or centers; ( ... ) (c). Build capacity, especially within Govemments, business enterprises and bilateral and multilateral development agencies, for integrating biodiversity concems, potential benefits and opportunity cost calculations into proj ect design, implementation and evaluation processes, as weil as for evaluating the impact on biological diversity of proposed development projects; ( ... )".
The drafters recognize that the conservation of biodiversity can be linked with self-inter ested, profit-oriented action by the integration of the biodiversity concems into the plans of different actors such as private business. Departing from the comrnand and control strate gies, the drafters apparently also had in mind the starting up of economic processes in which actors, motivated by self interest produce unintended consequences, conducive for biodiversity conservation. This is further emphasized in Article 15.5. (d) which implies that the use of 'effective economic, social and other appropriate incentive measures' would encourage the conservation of biological diversity. The Convention on Biological Diversity also fully embraced this idea in Article 11 (Incentive Measures).
To say it with Mandeville, the private vices (self-interested profit-maximisation) should bring about public benefits (biodiversity conservation). Such a Mandevillean process, however, does not occur in practice. Though we do not lack self interest and profit-maximi zation in the world, we remark a biodiversity decline at a very alarming rate. This raises the question whether changes in the property rights structure or the introduction of new types of it on resources, vital for biodiversity, cannot foster such a process. Property right systems can be used as strong incentives as a property right in effect assigns the right to a benefit flow. It can thus be seen as an economic incentive as it uses the existence of 'self interest' . Once we are able to link biodiversity conservation with self interest, the fate of animal and plant species will rest on firmer ground than by relying entirely on the good intentions of governments and international institutions. This article attempts to contribute to such a type of solution.
The problem of biodiversity loss did not escape the eyes of economists. In most analyses inappropriate property rights are pinpointed as a major cause of depletion and extinction. We will not repeat these analyses at length. After a short assessment of biodiversity deeline in section 1, we deal briefly with the shortcomings of the current property rights structures in section 2. In section 3 we analyze the notion of economic value related to biodiversity and species conservation. In section 4 we analyze the theoretical implications of possible markets in biodiversity and the possible failures of it, we compare them with government failures and review some current practices, which come e10se to exchange mechanisms based on property rights, such as the debt for nature swaps. In the same section we deal also with the more precise property rights proposals of Timothy Swanson 4 . In the following sections 5, 6, 7, we explore in a more detailed way the different economic problem, cost categories and trade off, linked with the use of different types of property in a biodiversity conservation strategy.

Section 1: On the End of Species by Means of Human Intervention
In 1859, Charles Darwin published his famous treatise on the "Origin of Species by Means of Natural Selection or the Preservation of Favored Races in the Struggle for Life". Based on observations, mainly on bird species on the Galapagos Islands, Darwin developed in this book his evolutionary explanation for the immense species variety on earth. The main worry of contemporary "Darwins" is different however. They have to research and to publish more on species extinction than on species origin.
Species variety is the main measure for biodiversity. In the biologist's sense of the word this latter notion refers to the natural stock of genetic material within an ecosystem.
5 Genes determine the particular characteristics of an organism. Loss of a species implies irrevo cably a loss of information on the specific capabilities of these organisms. There are currently about 1 to 1.4 million species catalogued. 6 The total number of existing species is estimated to be between 5 and 50 million 7 , but many experts' estimates are around 12 million. 8 This amazing number of species is the result of an evolutionary process, the time-dimen sion of which exceeds our imagination. Earth' s biological history is estimated at 4.5 billion years. During the first 4 billion years, called "deep time", only single cell or multicellular organisms evolved. Our species richness seems to be the result of the last 500 million years, called "shallow time". Over time, species do not only originate, they also extinguish for natural causes. The natural longevity of a species is estimated to lie in the range between 1 and 10 million of years. 9 The destruction of a species means that a particular set of genetic information, which would naturally last maybe some other millions of years, is lost forever. While units of a species are of course a renewable resource, the species itself is non-renew able. The loss cannot be compensated by an increase of biodiversity through genetic manipulation because species, evolved through biological activity and interaction with the ecosystem, contain a unique body of information. 1 0 The decline of biodiversity occurs when the rate of extinction exceeds the rate of specia tion. Speciation is a very slow process, occurring over a time-span of millions of years. Most biologists agree that the rate of extinction on the other hand has risen during the last century at an alarming rate and that everything points to an even faster ri se of extinction rates.
The present rate of extinction is estimated to be 100 to 1000 times high er than in "pre human" times. If all species today listed as threatened become extinct, future extinction rates will exceed current rates by a factor of ten.  From a technieal (non-institutional) point of view the human extinction of species occurs in the following ways: 14 I. Habitat destruction: the species disappears because its "niche" is destroyed. The appro priation of a species niehe often occurs through deli berate conversion of the land for a specialized use. The main example here is deforestation. Often, however, habitat destruction occurs non-deliberately, as a consequence of pollution or ecological mis management; 2. overexploitation of a species: the species is "harvested" at a rate whieh exceeds its regeneration capacity. Once the number of members falls beyond the adequate stock for reproduction, the species disappears. Known examples, threatened with extinction through overexploitation are the African elephants of certain countries: 1 5 order to increase the productivity of crops. The number of varieties of rice in India for instance has fallen from 30.000 varieties to a situation in which 75 per cent of the pro duction comes from less than 10 varieties. 17 Less developed countries are often blamed for their overwhelming share in current species extinction. This is, however, not very fair. Niche appropriation of animal and plant species by humans started about 6000 years ago, with the introduction of sedentary agriculture and domestication of animals in the now developed world. By the fact that the developed world was the cause for the extinction of the members of many species, living in its territory, the remaining members are by definition concentrated in less developed countries, which became by this real "megadiversity" states. Certain areas in the world, such as tropical rainforests, are also known to harbor relatively more species. Climate, moistness and other geographically determined factors can therefore also explain the fact that many developing countries are horne to a vast variety of species. Due to the prevailing high level of species diversity in these countries, conversion activities are bound to result in a very high rate of species extinction. This is why the main part of all so-called 'hot-spots' (high biodiversity ecosystems under the greatest threat of destruction) are located in developing countries. As a consequence, the biodiversity problem evolves wi thin a very antagonistic geopolitical framework. On one side there are the developed "low-diversity"-countries of the North, in which most of the demand for biodiversity l9 is located. On the other side there are the less developed "megadiversity"-countries of the South, which have the supply of biodiversity but are mainly interested in conversion activities, detrimental for biodiversity. In fact, biodiversity is most at risk where human development is the prime objective or even neces sity. In economic terms one could say that the lower the GNP or GDP per capita, the higher the opportunity cost of foregoing development in ()rder to protect species. Unfortunately many hot spots are countries with low to very low GNP per capita. This is illustrated in the following The property rights situation concerning marine species is quite different from the one concerning species living on land. Marine species live mostly under the open access-rule of mare liberum. As a consequence, the extinction of marine species has to be analyzed as a "tragedy of the commons" problem for which, due to very high exclusion costs, private or common property solutions imply many technical problems?' Concerning the species living on land, on which this article fo cuses, the current property rights situation is much more complicated. De jure, nearly all land on earth is under one or another property regime, whether private, common or state property. While private and state property regimes are, from a legal viewpoint at least, quite similar, common property regimes can vary widely with regard to the rights of the members among each other and the decision structures within the community. As a consequence, generalizing statements about common property regimes are risky indeed. The situation is even more complex due to the possibility of wide divergences between the "de jure"-property regimes and "de fa cto" regimes, which have acquired stability over time.
The institution linked causes of species extinction, perceived in the economic property rights-literature, are basically threefold: 1) a "tragedy of the commons" problem conceming non-arable land, which evolved from a common property regime to nominal state property but tumed "de fa cto" in an open access-regime; 2) a problem of public management of resources on state property land, due to short time horizons of political office-holders; 3) the possibility of "mining" the resource, due to high discount rates and lower growth rate of the species stock. Swanson 22 feels these causes of extinction can all be seen to flow from, or result in, the same basic root of all species extinction, namely the 'perceived' (dis)incentives for investment in biodiversity.
Pre-colonial property rights regimes in the present "megadiversity"-countries were different for arable and non-arable lands. For arable land one or another kind of exclusive rights on behalf of individuals, families or clans prevailed in order to allow for harvesting. For non arable lands, such as forests, wetlands, steppes, selvas, savannahs and deserts, a common property regime prevailed, in which no individual member or group of the tribe or village had an exclusive right to a part of the territory. Members of the tribe or village had access rights and withdrawal rights from the commons, such as hunting rights, fo od-gathering rights, rights to gather dead wood, rights of mining etc. All these activities, to which village members were entitled, fell under a striet supervision of traditional authorities, who appor tioned the rights according to status, hierarchies and clientelism, but also according insights about the scarcity and regeneration capacity of the common assets which were passed from generations on generations. Because the longer term benefits of conservative exploitation of the common resource accrued to the group, and because of the strong social control within the group and the stability of its composition 23 overhunting, overfishing or any other over use were not quite common in traditional economies.
The colonial administration, departing from the modem western dichotomy of private and state property, pursued often a policy of full privatization of arable lands 2 4 and the nation alisation of the non arable comrnunal lands. This picture did not change very much in the post-colonial era, with the difference however that the vast areas, under a state property regime, were now administered by a weaker and less-experienced political class, more dependent on domestic popular support. This led in general to a collapse of the supervision of these lands, by which they beeame de fa cta open aeeess areas. The loeal eommunities on the other hand, who had lost their traditional eontrol on these lands, are not inclined to put restraints on the use of these resourees by poaehers and squatters. 2 5 If we add to this picture the huge development of foreign trade in some assets of these areas (e.g. ivory, rhino-horn, exotie animals), the low GDP per eapita on average and the growing population pressures in these countries, the eonsequenees are not diffieult to guess: over exploitation of speeies and slash and burn deforestation 26 leading to dramatie habitat destruetion of hundreds of speeies. 27 Destruetion of traditional eommunity eontrol on non-arable land by eolonial and post-eolonial authorities and the failure of these authorities to monitor these lands effee tively, is the first main institutional eause of extinetion of species.
A seeond institutional eause of speeies extinetion finds its origin in publie management of resourees and short time horizon of politicians. Of course publie offieers do not leave all non-agrieultural land unadministered. Some resourees, produeing flows whieh are export able and by whieh hard needed foreign eurreney ean be won, are intensively exploited either by the state itself or by private eompanies, to whieh exploitation rights are granted. As we will explain later, a holder of ar esource, who has the right to disinvest about the resouree, will only disinvest when the returns of eonversion of that resouree are higher than the returns of the growth of that resouree. An owner of a herd of eattle will only decide to kill all his eattle when the return of the monetary eapital, earned by the selling of the meat of the whole herd, is higher than the return he expeets from killing regularly only some animals, while maintaining his herd as basic eapita!. Politicians, whether demoeratically eleeted ones or dictators, do not have full property rights on the resourees they control indirectly through publie administration. As long as they are in office they are able to eapture some of the profits of these resourees. They ean eapture monetary profits for instanee by bribes they reeeive from the private eompanies, to whieh exploitation rights are granted. They ean eapture also political, non monetary benefits by using the profits of resouree exploitation for appointing more publie offieers, for subsidies to loeal industries, ete. In eontrast to the full-owner of a resource, the possibilities for politicians to eapture rents from the resouree are only temporary and non-transferable. Demoeratieally eleeted politieians are submitted to an eleetoral eycle while dictators live eonstantly under the risk of being ousted. At the end of their term they are not allowed to "seil" the stock of the resouree to their sueeessors. As a eonsequenee, politicians have few ineentives to fo llow a eonservation poliey eoneerning the resourees on whieh they have some eontro!. They are rather tempted to "mine" the resouree during their political term in order to eapture as many profits. This "mining" attitude towards the resouree is often expressed in short-term leases 2 5 Ibid . . p. 125. 26 Governrnent subsidies and transmigration policies can also offer strong incentives for slash and burn deforestation in these countries, cf Raodman, op .cit. , note 2, 1998.
27 Swanson,op. cit. ,note 4, for harvesting rights. 28 From the side of politieal authority short-term leases with higher rents are more interesting than long-term leases with lower rents. In this way they eapture more during the running term. From the side of the harvesting eompanies it is also more interesting to have short leases beeause longer leases are burdened with high uncertainty due to the instability of the political regime.
As a consequence, when governments do eare about the exploitation of the resources which are under public control, they often exploit it or let it exploit in ways which eontradiet any notion of sustainable use. The most notorious example in this case is the huge deforestation in tropic forests by timbering activities. Instead of harvesting selectively a certain number of trees and replanting the eut trees, huge parts of the tropical rainforests were simply "mined", causing not only habitat destruction of fauna and flora but also irreversible losses to these very fragile ecosystems. Eeonomists also analyzed the conditions, under which species are extinct even under a regime of private property. We will discuss further, in section 4, in how far these cases ean be put on the same footing as the two first institutional failures. Before, we briefly recapitulate the so-ealled "harvesting" models.
The Gordon-Clark-model basically deals with marine resourees, especially fisheries? 9 This model distinguishes two cases of resource depletion. The first is the lack of a defined property regime putting the resource in an open access situation. We dealt with this situa tion before. In the Gordon-Clark model a second ease is analyzed. Even under weIl defined property rights the owner may have an economic reason to deplete deliberately his resources. This will be the case when the perceived rate of return on the resouree is lower than the rate of return the owner can get by disinvesting in the resource and investing the money elsewhere. The rates of return on conservation are in this case less than the rates of returns on immediate exploitation. This negative perception of the rate of return on conser vation can be explained by the influence of relatively high current prices offered for the resource and high uncertainty about future evolution of these prices (i. e. the decision-maker is likely to think that the prices might fall). This combined with a eertain 'time-preference' (whieh deereases the value of future earnings and is reflected in the discount rate) will of eourse stimulate deliberate (immediate) resource extinction. This is inherent to the formula of Net Present Value (NPV) which is used to calculate the current value of future earnings.  ( 1 999) The NPV will be lower, the lower the pereeived value of future earnings and the higher the time preference (discount rate).
Moran and Pearee however remark that the harvesting model for land based species is more eomplex 30 . In the Gordon-Clark-model about fishery the resouree owner has only an inter temporal ehoice about harvesting (immediate disinvestment to zero, gradual disinvesting, etc.). The resouree owner is not interested in alternative uses of the spaee. Except in special cases such as the construction of a marina, the marine environment is only useful for growing fish. With regard to land based resourees the owner has not merely a choice on the timing of the cultivation of resourees, but also a choice between eompeting uses of the land, on which the resouree is eultivated. An owner of a large rainforest traet, cultivating some tropical kinds of wood, can eonvert the forest into cropland or into pasture land, which results in the extinction of the resouree and many other speeies.
As a consequenee, high priees for the resouree can, in this case, have the effeet that the resouree is maintained and that the land, on which the resouree grows, is not eonverted. In the ease of marine resourees such as fish, the effeet of high prices ean result in harvesting the entire resouree. To conclude about the Gordon-Clark-model, classical private property on land, in the Bartolus-Blackstonean sense, does not guarantee the eonservation of the species living on this land. The owner will extinct the species on his land: a) when he does not consider it as aresource, but rather as a cost, harmful for the growing of wh at he does eonsider as a resouree (e.g. large mammals devastating crops or killing caule); b) when he estimates the returns of alternative land use, which involves habitat destruction of the speeies, higher than the land use which is compatible with the species' habitat; c) when he estimates the rate of return on immediate disinvestment in the species' stock higher than the rate of return of the species' growth.
It has to be remarked however that this logic of eeonomie extinction applies for common property as weil. The only differenee between common property and individual property lies in the number of owners: more co-owners or just one owner. The co-owners of a property right have, as the private individual owner, the right to exclude all other non-co owners, but not other eo-owners? 1 When a sufficient number of eo-owners -this depends of course on the prevailing "constitution" within the co-propert/ 2 -has high discount rates (high time preference) and perceives high returns on immediate disinvestment, they will exploit the species to extinction just as an individual owner would do. The only difference will consist in the higher transaction costs, to be made for reaching a decision. This latter point does not allow us to say that common property is more conductive to species conser vation, because also a switch from for instance a conversion policy on land to a conserva tion policy would imply more transaction costs than in the case of individual property.
It might, historically and empirically, be tme that traditional common property holders were more inclined than modern individual owners to conserve species. 33 This however is not related to the common or individual character of the property regime. Rather to other factors: religious respect for species and their habitats; a time horizon wh ich is longer due to the fact that the fu ture owners of the resource would probably be the off-spring of present co owners; the absence of markets in the species or of markets in the flow of species (e.g. ivory) or of markets in the resource, the mining of which destroys the habitat of other species. Under the same conditions, individual property would have led to the same level of species conservation.
Section 3: The economic value of biodiversity In section 4 we will explore the potential of more biodiversity protection through property rights, contracts and markets, and possible problems with this strategy, such as market and entrepreneurial failures.
Before expanding on such a strategy, we have to give some attention to the potential of economic value, inherent to biodiversity and species conservation, because it is theoreti cally possible that markets in biodiversity are missing, not because they fai! or because the entrepreneurs fail, but simply because nobody, except maybe small and eccentric minori ties, perceives any benefit in it.
The potential is great though as many different benefits can be attributed to (the conserva tion of) natural resources. The direct use value refers to marketable products springing from biodiversity existence and conservation. This can involve minor forest products such as nuts, rattan, latex, animals "harvested", medicinal plants already recognized as such on the market. Direct use values offer the best chances of being measurable from market and survey data.
The indirect use value refers to the ecological function the conservation measure may per form into a wider ecological system. A tropical forest might help protect watersheds so that removing forest cover may result in water pollution and siltation, depending on the alter native use to wh ich the fo rest is put. Barnes 35 gives the example of mangroves in Sarawak, Malaysia. Conservation of these mangroves is important for the exploitation of fisheries. Furthermore they function as constant protection areas, making highly expensive civil engineering works to combat constant erosion unnecessary. Source: Kahn (1995, 363) The option value relates to the amount that individuals would be willing to pay to conserve biodiversity for future use. Option value is like an insurance premium to ensure the supply of something, which might be useful and the availability of which would otherwise be uncertain. Pearce 38 for instance proceeds in the fo llowing way to estimate the option value of plants: 1. The probability that any given plant species gives rise to a successful drug is between 1/10.000 and 111000.
2. The number of plant species, likely to be extinct in the next 50 years is estimated at 60.000, meaning that 6 to 60 species with significant drug value could become extinct.
3. In the 1980's about 40 plant species accounted for the plant based prescribed drug sales in the U.S.A. Total prescription value of all plant-based drugs being 11.7 billion US dollars annually, each species represents a value of 290 million US-dollars on average.
4. If we take on average that 30 plant based drugs will be lost from species reduction we arrive at an annual loss far the USA of 8.8 billion US-dollars and for all OECD-coun tries perhaps 25 billion US-dollars.
The value derived refers only to the loss of the plant' s average prescription value. As seen above, there are many different types of value to nature. The above value should therefore be seen as an absolute minimum. It should also be mentioned that these figures assurne that substitutes would not be fo rthcoming in the event that the plant species did become extinct.
The existence or passive use value relates to valuations of the environmental asset unrelated either to current or potential fu ture use. Existence value is revealed in the mere knowledge of the conservation of a species. According to Moran and Pearce, the willingness to pay for wildlife and other environmental charities is represented to some extent by a vicarious consumption of wildlife video and TV -programs. Studies suggest that many peop1e are even willing to pay, especially far the conservation of unique species, substantial amounts for the mere prolongation of its existence. 39 The bequest value is the benefit, individuals derive from the mere knowledge that they or their children may be able to visit or enjoy biodiversity in the future. 40 All the above estimates are of course based on many speculative variables. Especially the option value estimates are highly contested. 41 Such estimates would be on firmer grounds if markets in biodiversity were better developed. However, the importance of these estimates, made by a wide group of economists and ecologists, is that there are important potential market opportunities for biodiversity, waiting for entrepreneurial activity. If markets in biodiversity are not rnissing due to a lack of potential benefits, they may be rnissing or be underdeveloped due to the different types of failures, distinguished in eco nornic theory. Neo-classical theory emphasizes that market failures may exist, i. e. "an imperfection in a price system that prevents an efficient allocation of resources". 4 2 The classical list of neo-classical market-railures includes monopoly, negative externalities, public good-problems and asymmetrie information. Austrian econornists on the other hand do not recognize the existence of market failures as such. If efficiency, leading to "produce the maximum level of satisfaction possible with given inputs and technology ,, 43 , is not reached within markets, the market process itself is not to be blamed as "the ability of each market system to promote efficiency is always lirnited by the institutional setting". 44 The problem is therefore mainly referred to as institutional failures. Such failures can be mani fold: bad definition of property rights, lack of proteetion of property rights, legal impedi ments to free transfer of property rights, lack of enforcement of contracts, distortion of incentives by sub si dies or price regulation, unstable monetary constitutions, etc.
Beside these institutional failures the Austrian econornists distinguish entrepreneurial failures. These are the failures by (actual and potential) entrepreneurs (any econornic agent who seizes a profit-making opportunity 4 5 ) to make use of new information in the market in order to bring about a new coordination of plans and to capture the benefits of this coordi nation. Strictly spoken, entrepreneurial failures do not invite to political decisions (changes in the legal system, changes in econornic policy) but to econornic action by entrepreneurs.
When we apply these three eategories of failure (market, institutional, entrepreneurial) to the problem of biodiversity and speeies conservation, we perceive four cases of failure, which may explain the rnissing or underdevelopment of markets in biodiversity.
In the first place we refer to the problems, caused by the open access-regimes and by the regimes of public ownership, dealt with in section 2. These are clearly institutional failures, in the sense of Austrian econornic theory. Of course also neoclassical economists would agree that these property regimes are sourees of inefficiencies, though the notion of institutional failure, as theoretieally opposed to market failures is of Austrian origin.
Suppose, however, that a "right minded" world government would be able to eliminate all institutional failures, caused by the mentioned inappropriate property regimes. Would this lead to full efficiency with regard to biodiversity and species eonservation? To fo eus the question somewhat sharper: according to the Gordon-Clark-model, discussed in section 2, private owners, too, will extinct species when the Net Present Value of Conservation is lower than the one of conversion and subsequent species extinction; should all these con version decisions then be eonsidered as efficient?
The answer has to be no, beeause also other types of failure may hinder efficient outcomes in this regard.
Secondly, we have to mention a market failure, i. e. a public-good-problem, leading to suboptimal demand for biodiversity. These problems are plausible with regard to the existence and bequest value of biodiversity. Entrepreneurs may be reluctant to take actions as the profits or benefits will be available to all, where as they alone would have to bear the costs of "uncovering" the value. Although recent literature seems to agree that it is probably better to define some biodiversity aspects as common-pool resources (beeause the deriva tion of certain values from biodiversity, such as the direct use value of fishing can not be seen to be non-exclusive nor non-rival), the resulting problem is very similar as enforce ment of exclusiveness for instanee, remains very difficult.
Thirdly, markets in biodiversity may not work beeause trans action costs may be prohibitive. In our threefold taxonomy of failures prohibitive transaction costs may cause rather entre preneurial failures or rather institutional failures.
Entrepreneurial failures when prohibitive levels of information and negotiation costs are at the base of missing markets in biodiversity. This is very plausible. Transaetions concerning biodiversity will have an international character as they will regard exehanges between agents in poor megadiversity countries and agents in rich low diversity countries.
Information about the numerous latent opportunities of realizing profits on direct and indirect use values, on option values, on existence and bequest values (see previous sec ti on) is still very imperfeel. The obstacles to negotiate between agents of different cultures, living in totally different economic conditions can be enormous. These obstacles ean only be superseded by innovative entrepreneurial action, as was the case with pharmaceutical companies such as Merck and Company and with eco-tourist companies.
Prohibitive transaction costs must be -and this is our fourth case of failures -qualified as institutional failures when they regard prohibitive levels of risk of non-execution of con tracts. This failure is also very plausible in the case of biodiversity. The performance of contracts concerning biodiversity will be mainly located in the poor megadiversity coun tries thernselves, not particularly famous for their efficient and stable legal systems. Cor ruption of the judiciary, poor institutions for execution of contracts, unstable legal regimes all make up for very high risks of non performance. The development of markets in bio diversity would require an absolute priority of institutional improvement in this respect.
Finally we have to mention a failure, which does not fit in our previous categories, but might be an important limit for markets as a tool of species conservation. It is very likely that not all relevant biodiversity values will be captured in market prices, 4 6 so that either too few contracts pro vi ding species conservation, are concluded, or that vested conserva tion practices are given up for land conversion or harvesting the stock. 4 7 None of the failures, however, analyzed before, are conclusive against the establishment of a scheme of biodiversity property rights (BDPR) which would constitute an institutional framework for markets in biodiversity and species conservation.
Neoclassical theory on market failures does not imply the elimination of markets and their underlying property rights structure. This theory only requires "correction" of markets in order to cure their failures. As a consequence the mentioned public good problems leading to suboptimal demand, might justify rnarket intervention (subsidies, regulation) but neither elimination of existing markets nor prevention of emerging markets. P1ease remark that we leave the discussion on the existence of real market failures and governments' abilities to solve these by government intervention aside. 4 8 Also the last failure concerning the capture of biodiversity values by rnarket prices, may call for government intervention (e.g. sub sidizing conservation efforts) but not for prevention of markets.
The development of a biodiversity market in biodiversity property rights would mean a radical reversal of the command and control approach, still prevailing in environmental policy. 4 9 This latter approach involves mainly the imposition of the "correct" environ mental behavior on consumers and producers by means of regulation. On the international  ( 1 999) level a command-and-control-approach involves, however, some additional difficulties, compared with the national level. By lack of a world state, imposing its regulation on its world citizens, an international command-and-control-approach must often take the form of an exchange between the governments of the rich, developed, but mainly low-diversity countries and the governments of the less-developed but mega-diversity countries. The former demands that the latter impose a regulation on their subjects. The flip-side of the commitment by the megadiversity state will be almost always the payment of subsidies, which the LDC-government is then able to use for agricultural and industrial development.
In this way, the LDC-government is compensated for sacrificing other development opportunities, necessitated by the regulation.
The command-and-control approach has been the subject of many critiques from econo mists. They point to the huge information costs for government in order to find out the "optimal" regulation, to the huge enforcement costs and last but not least, to the pernicious effects of political markets and pressure-groups. 50 As a consequence most economists advocate mixed strategies, called market based regulation (e.g. taxation, trading systems). Some economists even advocate a complete free market system, entirely based on property rights contracts and liability. 51 On the international level the problems of a command-and-control approach accumulate. The enforcement costs are high due to the additional layer of the local LDC-government. The regulation-demanding governments have to control the local regulation-supplying government and the latter has to control its subjects. This problem calls for decentralisa tion, especially of monitoring and enforcement activities.
Governments in many (southern) megadiversity states have a reputation of being unstable, which may involve frequent renegotiations of the biodiversity agreements. Finally, Southern megadiversity states mostly lack strong indigenous pressure groups, pushing for a strict appliance of environmental regulations. It is tme that the agreed regulation creates an artificial pressure group, i. e. the people who have an interest in the money flows to be received from the regulation-demanders. However, these also have an incentive to cheat, by doing as if the regulation is really enforced while it is not, and at the same time collect the money.
It is tme that a biodiversity property rights system also involves govemmental action, though of a different kind. Governments have to agree among each other on the integration of new types of property rights, protecting biodiversity, into their private law-framework 50 Ibid. 5 1 Terry L. Anderson / Donald R. Leal, Free Market Environmentalism, San Francisco, Pacific Research Institute for Public Policy, 1991. and to enforce the legal claims, based on these property rights. Should the govemments of megadiversity states be compensated for these legal charges? In principle, they should not, because the real money flows, compensating for giving up development, conversion and exploitation-opportunities, will occur between (mainly) private, non-govemmental parties (with the exception of govemments selling license fees for conservation friendly exploita tion). The costs of a legal change and the costs of enforcing the new biodiversity property rights should be covered in principle by taxation as is the case for the protection of tradi tional property rights. One can expect however, that in future negotiations on such legal changes, at least some LDC-govemments will use their threat power in order to collect side payments from the govemments of the industrialized world.
On ce such legal changes are mutually agreed upon and integrated by national acts into the domestic legal orders, market exchange processes will develop, in which the agents of the demand side (eco-tourist-companies, conservation-groups, pharmaceutical industry) will buy Biodiversity Property Rights (BDPR) from local holders (individuals, funds, compa nies, communities). In these processes, govemments do not acts as players in a "biodiver sity game", trying to obtain specific biodiversity results, but as arbiters of the biodiversity game, monitoring the compliance of the mIes of biodiversity game. To put it in terms of political philosophers such as Oakeshot and Hayek, biodiversity concems would be brought under a nomocratic, instead of a teleocratic mle. 52 The market-solution, based on BDPR's, would have, at least, two striking advantages in comparison with the command-and-controrapproach on the international level. First, there is the classical argument for markets in that they bring about a better co-ordination between the plans of the agents on the demand side and the agents of the supply-side. Through the international bidding process for BDPR the willingness to pay and to seil will be revealed leading to more optimal levels of biodiversity protection. The second advantage concems the incentives of the involved agents to enforce biodiversity protection. Because BDPR's distribute claims on biodiversity to directly interested parties (sometimes self-interested, sometimes common-interested), the number of effective watch-persons will be multiplied. Instead of domestic police prosecutors caring (or not caring) for the enforcement of the regulation, we will have holders of rights, going to court and to the press, when their rights are violated.
In how far do such markets work already? As is the case for environmental policy in general, the harvest of market solutions is quite poor. The most market-like method currently in practice are the debt for nature-swaps. These swaps involve an exchange process going beyond a mere intergovernmental relationship. Proposed by Lovejoy some twenty years ag0 5 3 the swaps imply the following exchange: A NGO buys from a bank in a creditor country, a part of the debt of a debtor country; in exchange for remission of the debt the debtor country grants titles to tracts of land impor tant for the proteetion of biodiversity. Since the banks who hold the debt view their pros pects for full and timely repayment as problematic, the NGO can purehase the debt for a fraction of its face value. Kahn mentions discount rates between 70 and 95 per cent! 54 Swanson remarks however that swaps in practice do not reflect this original idea. The swap does not lead to the acquisition of property rights on land by the foreign NGO. Most often, domestic environmental trust funds are established through the swapo This domestic fund in turn tri es to obtain land titles or other ways of biodiversity proteetion from the government.
An example of such a fund is the Indonesian Biodiversity Foundation, established in 1994 and starting with a capital of 5 million USD US aid money and now capitalized at 40 million USD by virtue of a grant agreement between the governments of Japan, the US and Indonesia. 55 Another example is the swap made by the NGO Conservation International which bought 650,000 USD worth of Bolivian debt from Citicorp Bank at a highly dis counted price. The debt was "swapped" in exchange for promises from the Bolivian government to conserve an area of some 9 million hectares of rainforest. Later on, the Bolivian government granted some land titles to the indigenous Chimane Indians. 56 Swanson rightly criticizes these swap practices as they do not bring about a direct meeting between the preferences of the global community and these of the indigenous land holders, who make the crucial decisions. These swaps also lack the character of contractual con ditionality, because they involve a one time payment for a large sum to the Fund, which afterwards decides what to do with it. 57 The original 'incentive' idea of swaps can be lost through this. Another example refers to a market in carbon credits and forestry but can easily be linked to biodiversity conservation. In an attempt to reduce greenhouse gas emissions at least cost, the international community introduced so-called 'flexibility mechanisms' (Joint Imple mentation, Clean Development Mechanism and Emission Trading) in the Kyoto Protocol on Clirnate Change. These tools should make trading of carbon credits between different countries possible. As the greenhouse effect is seen as a global problem, the physical loca tion of carbon reduction projects is of less importance. A firm in America could for example receive carbon credits in return for funding a project in Africa which is certified to enhance emission reduction. As forests are great captivators of carbon dioxide, they tend to be referred to as 'sinks' for carbon and likely beneficiaries for project funding. However, forests are also important ecosystems and habitats which implies that protecting forests means proteeting biodiversity -a great surplus. While the rest of the world was waiting for more details on the mechanisms for implementation of the flexibility mechanisms, Costa Rica started selling its first carbon credits in January 1997. When asked what Costa Rica promised in return for the carbon credits it sold, Michael J. Walsh, Senior Vice President of Environmental Financial (the organizing financial company), replied that "Costa Rica is promising to protect the forests in perpetuity to assure the captured carbon remains stored". In other words, financing is provided for large-scale forest conservation in return for certi fied carbon credits. Costa Rican biodiversity is sure to benefit.
In the existing literature on biodiversity conservation some market like proposals were also made. Katzman and Cale 5 9 proposed the establishment of tripartite foundations with repre sentations of the host state, donor groups and multilateral organizations. These foundations would then negotiate with governrnents, local authorities and communities so called "con servation easements", implying limits to the economic uses of land. Schneider 60 proposes the development of indigenous legislation allowing for "transferable burning rights". In this way the right to clear forest can be bought away by intra-state organizations with extra stock resources. The most elaborate proposal is made by Swanson. 6 1 The BDPR-scheme, he proposes, is based on analogies with zoning laws and with franchise agreements. These legal institu tions are characterized by the involvement of a third party, representing the public interest (the zoning authority, the authority determining the restriction on the franchise agreement). Concerning biodiversity protection this would lead to: I. the development of a Global Land Use Plan; this plan, developed by international institutions, would constitute a general statement of the range of land uses to be con served; 2. the setting up of a Land Use Agency (LUA); which has to select the land uses, most threatening to biodiversity, and to construct packages of land use restrictions. About these restrictions Restricted Land Use Agreements are worked out (RLUA); The proposals of Swanson are market-like on the supply side. The biodiversity rights, granted in the RLUA's, are allocated through a bidding procedure by the host states. On the demand side, however, the Swanson proposal remains very centralist. A gIobaI and mono polistic agency, the LUA, is supposed to represent the demand for biodiversity rights. Experience has taught us though that the more decentralized authority and management is, the more likely it becomes for the conservation schemes to be successful. Moreover, in our opinion Swanson has, perhaps, a too optimistic view on the operation of such a LUA. There is ample evidence that zoning authorities, with which Swanson compares his future LUA, are submitted to the same government failures as other public institutions. 62 The LUA risks to become a theatre of confrontation between various pressure groups, not only conservationist ones, but also lobbying groups with stakes in highly non-sustainable exploitation of resources. The RLUA's, the LUA put on tender would get the character of compromises, reflecting the political power balances at the moment and providing few guarantees of global efficiency.
With some modification, Swanson's LUA could act as an effective intermediary in genuine biodiversity markets. In the first pI ace, the LUA should not be granted any monopoly power. If the LUA were set up by international institutions such as the World Conservation 6 1 62 Secondly, the LUA should not only register the bids from host states, bidding for money in exchange for the offered RLUA's, it should also register bids from the demand side (eco tourism, pharmaceutical industry, conservationist groups) offering money in exchange for BDPR's, granted in RLUA's. Furthermore, the institutional setting could be such that the RLUA's can be defined not only by the host states but also by smaller communities of that host state. If the communities living in the area affected, conclude the RLUA' s themselves and receive fu!! financial benefits, they have every reason to ensure eomplianee with the RLUA' s. If not, a principal-agent problem eould oceur unless a large share of the funds is directly allocated to the affeeted communities as monetary compensation. 63 Swansons' LUA eould then operate in both ways. Either as a mere intermediary, bringing two eontraetual parties together, i. e. the host state or an agent of the host state (a Fund, a eommunity, an individual) and the party, interested in biodiversity (travel agencies, phar maeeutieal company), or as a trustee of the agents, interested in biodiversity. In the latter ease the LUA would aet as a contraetual party towards the host state.
Thirdly, the LUA should also act as a legal entrepreneur, spending large efforts to the design of BDPR's and the contraetual obligations about them. In aecordanee with the variety of contexts in which RLUA's have to fit, different frameworks of eontraets and rights should be worked out and offered to potential parties as a framework for partieular eontracts. This task of the LUA ean be eompared with the funetion of the International Chamber of Commeree, whieh worked out the framework of international maritime eon tracts such as C.I.F. and F.O.B.
In the next session, we develop some eeonornic eonsiderations about such BDPR's and BD-eontraets.
Seetion 5: The parties in the contract and the monitoring problem In the Swanson proposals the BD-supply party is the host state. This is a clear position, though doubtful on effieiency grounds. As we put earlier, involving the host state as a "player" in the game, and not as an arbiter, implies huge monitoring eosts due to the double 63 See below in seetion 5.
layer. 6 4 A consistent market approach should therefore open up possibilities to deal imme diately with non-governmental agents in megadiversity countries. Within the legal systems of the western world, parties in a contract are either individuals (single or joint) or corpo rate entities. As mentioned already before 65 Southern, megadiversity countries still rely a lot on community based legal systems, in which common property remains important. Moreover, the territories in which these customary communities live are often the most crucial for biodiversity preservation. These comrnunities cannot, however, be placed in the dichotomies (private-public, joint-corporate) of western legal thinking. The situation is often even more complex when settIers, coming from more populated and urbanized areas penetrate within the traditional territories of indigenous peoples. The territory, which con stitutes as a whole the habitat of animal and plant speeies, is then populated by people with widely different cultural backgrounds and life-styles.
As a consequence, the contractual partner in a BD-contract will be of a different character according to the homogeneity of the group, inhabiting the biodiverse territory. When this territory is still ethnically homogeneous and when traditional or non-traditional bodies exist, whieh represent the loeal population, these bodies should be eonsidered as the con tractual partner. Examples of non-traditional bodies, set up in order to cope with the problems, caused by the influx of colonists, are the Federacion de Centros Shuar of the Shuar Indians in Ecuador, the Quichua Indian Federation of the Napo (FOIN) in Ecua dor. 66 By relying on the "social capital" within these bodies, the enforcement of the BD contraets would become a lot easier. The traditional authorities would receive the rents from the contract, which they can distribute among their people. The fact that non-respect for contracted BDPR's could stop the rental stream, provides a strong incentive towards these authorities to supervise the behavior of the members and to punish eventual poachers and squatters. Beside this monetary ineentive, traditional emphasis on honor and respeet for commitments, will provide additional strength to the eontract.
The suecess of BD-contracts and BDPR is however dependent on the involvement of a1l people who are significantly affected by the restrictions. In case of strong penetration by non-native colonists, legal or illegal ones, it is necessary to involve them too. Because these colonists live often in rather atomized conditions, involving them in the BD-contract could lead to high, prohibitive transaction costs. In such a case it looks preferable to develop corporate bodies, in which the indigenous communities, as the individual settlers as weil, can become shareholders. The shares could be distributed, for instance, according to the portion of land they contro!. The shares would then entitle them to a portion of the rents of the BD-contracts, the corporation is able to conc1ude.
The quality of shareholder in this corporation provides a self-interest-incentive to all iocal inhabitants, especially to the ones, non-submitted to traditional authorities. Non-respect of the BDPR's leads to the decrease or entire disappearance of the rental stream of money, which is of course reflected in the yields from the shares.
Such corporate bodies would also foster the co-operation and integration of settlers and indigenous people. The institution of the corporation would create a forum far dialogue and repeat playing. Moreover, settlers, inc1uded in the corporation would rather side with indigenous people than with new settiers, non-respectful for the BDPR's of the contract. This integration-function of the corporation implies also that shareholdership should be tied to the habitation of the concemed territory. Transfer of land to thirds should also inc1ude transfer of the shares in the corporation. A split between the quality of inhabitant and shareholder would create additional monitoring costs and a loosening of social integration.
Section 6: The Structure of biodiversity property rights Contracts conceming biodiversity-conservation imply basically two reciprocal obligations: an obligation from the side of the local entity (community, corporation, individual) in the megadiverse country (the biodiversity supplier, BDS), i. e. granting a biodiversity property right on land (BDPR); an obligation from the side of an entity, interested in biodiversity conservation (the biodiversity demander BDD), i. e. paying a compensation far the opportu nity costs of the local people, as a reward for the restrietion implied by the BDPR.
We first foeus on the legal characteristics of the BDPR. In the eivil law tradition ownership ("proprihe", "proprietad", "Eigentum" , "eigendom") is defined as the power to use a good, to enjoy the yields of it, to alienate or to destroy the good (ius utendi, jru endi, abutendi). In the law and eeonomics literature the notion property has a much wider meaning. Ostrom defines it as a right, definin� actions that individuals can take in relation to other individu als regarding some "thing". 7 The legal notion of ownership can then be translated, in law and eeonomies terms, as a bundle of property rights. Ostrom distinguishes five PR's relevant for the use of eommon-pool resourees. We ean eonsider these five PR's as the eomponents of all ownership rights on things. She distin guishes: aeeess: the right to enter a defined physieal area and enj oy non-subtraetive benefits (e.g. visiting as eeotourist, making video-pietures of animals); withdrawal: the right to obtain resouree units as produets of a resouree system (e.g. eateh exotic animals, harvest wild plant speeies); management: the right to regulate internal use patterns and to transform the resouree by making improvements; exclusion: the right to determine who will have aeeess rights and withdrawal rights, and how those rights may be transferred; alienation: the right to sell or lease management and exclusion rights.
A full and non-eneumbered owner in the eivil law tradition has initially all these property rights plus the right to "deeompose" his ownership in different rights, granted to thirds (iura in re aliena).
68 Through this deeomposition-proeess it is possible that thirds aequire rights on the good, whieh allow more physieal eontrol on the good and have more market value than the remaining rights for the owner. The owner always retains by definition a residual right on the good, i.e. the right to do everything with the good, which is not excluded by the restrietions following from the rights, eonveyed to thirds.
The question is then whieh property rights should be included in a BDPR and which should be left to the loeal BDS-party. The answer will of eourse depend on the specifie eontext of the biodiversity eontraet. Some general remarks ean be made however.
First, eonsidering the question who should retain the residual right of ownership: the loeal supplier (BDS) or the (mostly) foreign demander (BDD).
It should be clear that, in ease there are no eonvincing reasons to grant the residual right to the BDD -and sueh reasons may exist -the residual right should remain in the hands of the loeal BDS-party. The reasons for this are mainly politieal. Obtaining ownership rights in a foreign eountry and reducing the loeal population to leaseholders or usufruetuaries, is soon regarded as a form of neo-eolonialism. Most megadiversity countries were a eolony of one of the eountries, from whieh the fu ture BDD-parties will originate.
A reason to grant to the BDD-party the residual right and to split off from it eertain strietly defined development rights to the loeal BDS-party, may be the eomplexity of the proteetion of species, habitats and ecosystems. If the biodiversity situation in a particular area is complex, it may be impossible to determine in advance the restrictions which are necessary to protect the ecosystem. If the BDD-party acquires only specific property rights, such as for instance access and some withdrawal, it might find out later that more radical restric tions are necessary to protect the ecosystem. In this case it has to renegotiate the BDPR's, which may be a costly process. When the ecosystem has a particular value, for instance because it contains the last members of a species, the BDS and BDD-parties are caught in a bilateral monopoly-situation, which can induce the BDS-party to behave strategically in a hold up-game. This might lead to a breakdown of the relationship. It may be safer in this case to award the residual rights to the BDD-party and to grant strict development-rights to the BDS-party.
The flip-side of such an arrangement would be, however, that the BDS-party will be sub mitted to "moral hazard". Because all residual value of the land accrues to the BDD-party, the BDS-party will extemalize his behavior to the residual owner by being less careful towards the protected elements in the area. Both elements, i. e. negotiation costs and "moral hazard" have to be balanced, and if the balance is not clearly in favor of BDD as a residual owner, political prudence indicates that BDS should retain the residual rights.

Section 7: Leases, sales and other types of transfers
In the civil law tradition a sharp distinction is made between so called personal rights (creances, Forderungsrechte) and real rights (droits reels, sachliche Rechte). A personal right only reflects a relationship towards the other contractual partner, the promisor. A real right reflects a relationship towards all others, who have an obligation of mere non-inter ference.
In this dichotomy the tenant only has a personal right, not a real right. Owners and usu fructuaries on the other hand have a real right on the good.
The question is where we should pi ace the BDPR's, granted in the biodiversity contracts, within this dichotomy. Or should we transcend in this case the dichotomy as such and create a legal relationship "sui generis"?
Let us first look to the nature of the BDPR. To qualify the BDPR's as contractual obliga tions (or as personal rights) implies two other characteristics: I) the limited "opposability" of the BDPR; 2) the flexibility of BDPR's. As contractual obligations are only enforceable towards the partner in the contract the BDD-party has, in case of infringement of its BDPR, only a claim against the BDS-party and not against thirds, who may have bumt the pro tected rainforests, caught the protected exotic birds, poached the protected mammals. Also when thirds have legal claims on the land encumbered with BDPR's, the BDD-party has to act through his partners in the contract or sever the contractual bonds if his partner refuses to act.
These consequences of the nature of contractual obligations (personal rights) have been attenuated in many civil law countries by allowing tenants for instance to act immediately against thirds, who infringe the rights of the tenants. These attenuations are, however, not logic and move the rights of the tenants closer to the statute of real rights. Gradually, the rights of tenants acquired nearly all characteristics of real rights (e.g. obligation to register and opposability against the third acquirer of the real estate), by which they became, but for the name, "real" real rights. It seems advisable not to opt for such amalgams in the case of BDPR's and to conceive a consistent framework for them.
To conceive BDPR's merely as contractual obligations, with their opposability limited to the other contractual partner, might impair the effectiveness of these rights considerably. Due to the international and novel character of these biodiversity-contracts, monitoring costs and litigation costs could be very high and often prohibitive. When the BDD-party has only a claim against the BDS-party for infringements by thirds, the BDS-party might collude with thirds and later on claim relief for an Act of God. Such a collusion would be difficult to prove, while the notion of Act of God can be easily interpreted in ways which are favorable for the BDS-party, i. e. the local party.
If BDPR's are recognized as real rights, opposable to all thirds, at least the problem of collusion is eliminated. The BDD-party is then entitled to claim damages and injunctive relief directly from the encroaching party.
It is tme that real rights miss the flexibility of contractual obligation because real rights are submitted to the principle of a "numerus clausus". This latter principle means that contrac tual parties are not allowed to create freely new "real rights". For this "numerus clausus" principle an important economic reason can be invoked. As real rights are opposable to thirds, i. e. also to the buyer of a good encumbered with other real rights, transaction costs, more specifically information costs, could become very high. In case of free creation of real rights, the third acquirer of a good might be obliged, in order to know the value of the residual rights, he purchases, to analyze a multitude of unique rights, encumbering the good. This lesser flexibility does not constitute, however, a serious argument against areal right character of a BDPR. It must be possible that the international legal agency, which elaborates BDPR-schemes and BD-contracts 69 distinguishes the major types of measures for biodiversity protection and the corresponding real rights for it.
So for instance one could distinguish: Easements (servitudes) or restrictive covenants: e.g. easement not to hunt some species; easement not to drain wetlands; easement not to build in certain habitats; easement not to introduce hostile plant or animal species; Access or use rights: rights to use certain safari ways for eco-tourism, rights to access to fo rests and fields for plant sampling, animal watching, nursing of animals; Ownership rights: ownership rights to certain species in an area; this of course would involve techniques of proper earmarking and identification.
On ce these real biodiversity rights are worked out, they can be integrated in the legal order of different countries, and submitted to a system of proper registration.
Flexibility is, however, not really impaired by these real rights, for it is of course always possible for the BDS and BDD-parties to provide for additional contractual arrangements.
A next question concerns the obligations of the biodiversity-demand-party (BDD). We may assurne that this obligation will mostly consist of a monetary payment, although also some obligations in kind, such as technical assistance to farmers, the construction of roads, the promotion of local products on international markets, etc. cannot be excluded. This all will depend on the particular preferences of the contractual parties and the particular context of the contract.
An important question however concerns the time-conditions of the payment: should it be one lump-sum payment as is mostly the case in a purchase, or should it be a payment on installments or rents as is the case in rental agreements. Swanson 70 argues strongly in favor of the payment of arent, in order to increase the compliance-rate of the contracts. Indeed, the payment of a rental stream to the BDS-party puts the parties in the biodiversity-contract in the position of "repeat players". Each party can retaliate by non-compliance when the other party did not stick with its commitments: the BDD-party stops his payment when the BDS-party does not respect the BDPR' s of the other party; the BDS-party stops respecting the BDPR's in case of default from the other side. The self-enforcing character of such periodic performances will compensate to a large extent for the high monitoring costs with most BD-contracts and for the unreliability and corruption of the court system in so me megadiversity states. This will form a strong disincentive to 're-nationalise' land or species on which BDPR's were vested.
The periodicity of payments however, entails also certain costs. The BDS-party may be interested in a BD-contract in order to invest in some development infrastructure (railways, roads, irrigation, dams, housing). In case of a periodic payment, the BDS party is only able 70 Swanson, op. cit. , note 4, p. 128.
to get this capital by borrowing it and to pay the loan off with the rental stream of the BDD party. In this case the monitoring costs would shift to the lending company, for non-com pliance from the BDS-party stops the rental stream from the BDD-party by which repay ment-chances of the loan become very minimal. Transaction cost will become unacceptably high.
Tbe effectiveness of such deals depends, however, strongly on the reliability of the banking system within the megadiversity state and on the ability of the BDS-party to negotiate successfully such deals. Often, neither the first nor the second seems to be the case. Tbe local banking system is often unstable, due to inflationary press ures of the govemment, while the local communities, acting as BDS-party, are quite inexperienced in dealing with banks.
Consequently, unless an experienced intemational lending agency such as Tbe World Bank takes on the role oflocal borrower, it may be more efficient in so me circumstances to pay a lump-sum price to the BDS-party instead of a rent. Tbis will be the case: Tbese cost considerations indicate that the legal framework for biodiversity-contracts should leave the choice to the parties. On the BDS-side there is the choice between BDPR real rights and mere contractual obligations; on the BDD-side there is the choice between periodic rental payments and a lump-sum payment of a price. The optimal solution can vary according to the cost perception of the involved parties.
As a general contractual module to which parties in a biodiversity-contract can refer in order to save trans action costs, 71 something which is a mixture of the vesting of an ease ment, combined with usufruct or emphyteusis, would be preferable.
The rights of the usufructuary, of the emphyteutic lessee and of the owner of the dominant land are a11 three real rights, which have a long term character and which are submitted to a registration system.
We advocated already before the "real rights" character of the BDPR's. The long term character of a BDPR is necessary due to the essen ce of the notion of sustainable use itself.
Most often the preservation of species and their habitats and their recovery necessitates a long term planned land use. Easements are in principal eternal but can be abrogated by the concerned parties or be forfeited by the court when they are not useful anymore. A usufruct lasts for the life of the usufructuary but another term can be fixed in the contract. Usua11y a usufruct is vested for a long term. Emphytheusis finally is vested for a period between ten to hundred years (art. 1197 Code Civil Quebec) or between twenty seven to ninety nine years (Belgium).
The easements can be used in the biodiversity contract for all cases, in which the BDS party simply has to refrain from some uses or in which he has to perform some maintenance works.
The use-rights, conferred by the usufruct ("biofruct"?) or by the emphyteusis ("biophyteu sis"?), will allow the BDD-party to make sustainable use of protected parts of the land.
When a payment by lump sum is recommendable, a combination of bio-servitudes and bio fruct is the most adequate. When payments on installments are recommendable, a combina tion of bio-servitudes and bio-emphyteusis is the most adequate.

ConcIusion
We explored the idea in how far the classical property rights system, as developed in the civil law tradition, can be used to help biodiversity conservation. This idea is rather new. Most strategies to save species are still based on the command-and-control-approach, extended then to the international level through international fora, such as the United Nations Conference on Environment and Development (UNCED). Agreements and con ventions are negotiated which basically reflect a regulation for money-exchange. Taking 71 Gerrit De Geest, Economische Analyse van het contracten-en quasi-contractenrecht, Antwerpen, MAKLU, 1994. into account the diverse criticisms on regulatory policies from the side of economists, it seems worthwhile to research if and in how far market solutions can be developed, which realize the meeting of biodiversity supply and demand through an exchange process between non-governmental instances and in which governments act more as rule-keepers than as main players.
In practice some market like institutions evolved already through the debt for nature movement, in which debts were exchanged for forested land tracts.
These solutions evolved, however, under the pressure of political circumstances, to a system of sub si dies to indigenous funds.
The proposals of Swanson are very interesting because they imply the use of the market mechanism from the supply side, i. e. the host-states, which will offer possibilities of bio diversity protection for a certain price.
Although a step in the right direction, the proposals of Swanson are incomplete from a market perspective because they neglect the market dynamics from the demand side and because they put too much reliance on the host states.
We argued that the lack of a genuine market in biodiversity may find its source, not only in many government failures, but also for a part in an entrepreneurial failure, especially one of a legal kind. This can be corrected by setting up an institution which would work out general models of biodiversity contracts and of biodiversity property rights. Such an insti tute would also negotiate with the different governments to integrate some general models of contracts and property rights in their legal order.
About a possible international property rights framework we elaborated the following observations.
First, the framework should give the notion of community a large pI ace, because co m munities will be, either acting on their own or acting in a corporation with other inhabitants, the most current contractual partner.
Second, the framework should elaborate a series of so-called real rights with a general opposability in order to maximize the enforcement possibilities of the biodiversity property rights.
Third, the residual rights should go, as a rule, to the local communities, while the biodiversity interested NGO's should only have "derived" rights (iura in re aliena). The reverse should be the exception when insecurity about future biodiversity measures prevails.
Fourth, the payment should be in installments when monitoring costs are high, when the local court system is unreiiable and when the local community is not eager for direct investments. In the opposite case, lump sum payment should be preferred. The best type of a biodiversity contract would be a mixture of the vesting of easements ("bioservitudes"), of usufruct ("biofruct") and emphyteusis ("biophyteusis").
The current lack of biodiversity proteetion has its roots in a strongly diverging perception of the value of it, in the developed low-diverse North on one hand and the 1ess developed megadiverse South on the other hand. In the Northern countries the care for species conser vati on often reflects the general mentality of "I like it, but I don't like to pay for it". People wear T-shirts with pandas and rhinos, but ask from their governments that other taxpayers in their own country and especially the poor and "too numerous" farmers in the LDC carry the burdens of their feelings. Bureaucratic elites adore such inconsistencies between prefer ences and the unwillingness to pay for it. It offers them the platform to increase taxation and regulation, in other words, their own power.
More reliance on a property rights scherne, constituting the institutional framework of a market, would largely turn the responsibility for biodiversity conservation to the individual herself. If people really care for biodiversity, nothing prevents them to step into schemes of exchange with communities in the LDC and to negotiate concrete and specified measures of species conservation. The property rights scheme creates the institutional platform for a dialogue between people from very different cultures and with very different needs. Such dialogues will in many cases fai!, but they will succeed in other cases and pave the way for a large network of biodiversity exchanges.
Biodiversity protection through contracts is in a way a kind of Foster Parents for Nature, for Mother Earth in all her richness.
FinaHy, the development of an international framework of property rights for biodiversity should occur in fuH respect for the diverse legal cultures it will certainly meet in its expan sion.
While the notion of individual property was a tremendous tool of liberalization in the West, 72 it was often a tool of oppression and social disintegration, when used by colonial powers in order to break u� traditional communities and to obtain cheap land for the colo nists from the motherland.

By Ingwer Ebsen
As a strong and weIl organised administration has been characteristic for the People's Republic of China for the past decades, this contribution on the development of "an" administrative law refers only to the changes that followed the end of the cultural revolu tion and the beginning of the reorientation of the Chinese economy. This reorientation had a strong influence on the relationship between the State and the developing private sector: First, the instrument of law was chosen as primary means to shape the new administrative process. The privilege of a political party to be above the law has explicitly been removed. Second, a private sector of the economy developed out of the political-administrative system of the economy. The developments regarding both the legal changes and the inde pendence of the private sector are still in the process. However, some elements of the remarkable changes may already be discussed.
The article emphasises the changes within the organisation of the administrative, gives an overview over the areas of administrative law covered during the last two decades and looks at the judicial control of the implementation of administrative law. This last part includes aspects of administrative and judicial procedure, access to courts and liability of the state for acts of public authorities and officials. Finally, a brief outiook on expected developments is given.

Can Bartolus Save the Tiger?
Reflections on the use of property rights for Iand-based biodiversity conservation By Boudewijn R.A. Bouckaert and Britt Groosman The variety of life on earth (biodiversity) is beIieved to be more at risk now than ever before. The rapid decline of biodiversity is nearly entirely caused by processes induced by humans, such as overexploitation of species, deIiberate habitat destruction, introduction of new and hostile species and ecological mismanagement. This paper aims to investigate whether market solutions operating through specific (private) property rights systems might be better suited to prevent these types of destructive behaviour than traditional command and-control regulation.
Tbe underlying thought is that private property rights provide an incentive for efficient exploitation and allocation of scarce resources because the right of the owner to capture the benefits accruing from the resource pro vi des an incentive to invest in the resource.
Tbe paper proposes a market solution on the basis of Biodiversity Property Rights (BDPR) with at least two parties, the local supplier (BDS) and the demander (BDD). Stress is placed on the need for the contractual framework to be adjusted to differing circumstances and required incentives. Tbe paper further focuses on the legal characteristics of the BDPR and the obligations of the BDD-party and BDS party.
South Africa's Refugees Act 1998

By Tamru Melese
Until only a few years ago, Southern Africa has been one of the two regions, besides the conflict-ridden Horn of Africa, that produced the majority of refugees in Afri ca. Most of the refugees in Southern Africa were the product of the white-minority apartheid regime in South Africa.
Its aggressive destabilization of neighbouring countries in the region, particularly Angola and Mozambique, fo rced several hundred thousand people to tlee their hornes. With the dramatic political changes that have taken place in the region over the last few years, Southern Africa ceased to be a major refugee-producing region. Since the first all-races democratic eJections in 1994, South Africa is being tlooded with requests for asylum.
Tbe post-apartheid South Africa made substantial progress towards establishing a legal system based on respect for the human rights. Based on the new democratic Constitution, South Africa ratified several international treaties on human rights. In order to bring the country in line with its international, regional and constitutional obligations, to provide for the reception into South Africa of asylum seekers, to regulate applications for recognition of refugee status, and to provide for the rights and obligations tlowing from such status, the post-apartheid South African government has committed itself to the development of a refugees act. Accordingly, the Refugees Act 130 of 1998 has been enacted on December 2,

1998.
Tbe Act sets c1ear guidelines, in acknowledging international human rights instruments and in keeping with principles of the 1951 Geneva Convention and the 1969 OAU Convention.
As a result, the refugee definition in the Refugees Act is generous, and inc1udes the key provisions of the above mentioned conventions. Tberefore, the definition of the Act acknowledges the individualized refugee status determination procedures as weil as a