identified and excluded from free consumption, they can be charged for their consumption and part of their benefit can be extracted to the right owner.
At present, land managers in the GBR cannot identify beneficiaries from improved land management nor can they exclude beneficiaries from the benefits of improved land management until payment has been made for the provision of land management that reduces TSS onto the GBR. 11 If it is too costly to exclude beneficiaries from the supply of a good it is also impossible to extract a charge for the provision of this good resulting in weak financial incentives for potential suppliers to provide the good above the level of private benefit. At the same time, land managers have clearly defined, excludible rights and clear market signals in relation to some goods, such as the value of cattle production, but not others.
Divisibility is the ability to separate the bundle of property rights in space and scope. Divisibility allows property right owners to manage the sub- components of a resource separately or to divide up and sell separate pieces of the resource. If institutions allow the divisibility of a private property right, the value of this right is greatly enhanced. Credit trading, for example, capitalises on the ability to create property rights for different outcomes from the same piece of land which can be traded in different markets.
Transferability is the final property right characteristic essential for exchange in a private property market-based regime. Transferability of rights grant the ability to sell the property right to others( Whitten & Bennett, 2005).
Buyers and sellers have complete information
Efficient and effective markets also require information to function. Buyers of a product need to know who is selling, what they are selling, how they will use it and how much it is worth. Likewise, a seller of a good needs to be able to define what they are selling as well as understand what the cost to them is of selling the good. In some cases, this information exists but is asymmetrically held( meaning one of either the buyer or the seller has more information than the other). In the case of land management to generate a reduction in TSS, investors in land management improvements and sellers of these actions need to know how many units of TSS reduction different land management actions produce, buyers need to know what this is worth to them, and sellers need to know what they would accept in compensation to undertake this land management change.
There is zero cost to exchange
An exchange in a market will only occur if the benefit of the exchange to both parties outweighs the cost of exchange. The cost of exchange is affected by how well property rights are defined and the ease for buyers and sellers to find each other in the market and make the exchange. At present, it is too costly for those that benefit from reduced TSS on the GBR to find and purchase land management changes from graziers who can provide this service. Likewise, it is also too costly for land managers to find and negotiate with individuals who might be willing to purchase changed land management activities from them. Property rights would need to be defined and allocated
11
The inability to exclude beneficiaries from the supply of a good is also discussed in the literature as a public good.
Landholders driving change: Exploring new incentives | 33