Standard economic theory teaches that goods that are non-excludable and non-rivalrous fall under the category of public goods. What this means in layman terms is that goods whose consumption by one individual does not affect the enjoyment of said good for other individuals (non-rivalrous) and goods whose nature prohibits or makes impractical the charging of fees for access to the goods (non-excludable) are goods where the traditional market structure will under-provide the service/good in question.
Therefore, these public goods require non-traditional means of provision, most commonly taking the form of state nationalization and management. By allowing the state to manage the public good, the free rider problem of non-excludability can be mitigated through the imposition of taxation, and public access can be guaranteed to all citizens due to the non-rivalrous nature of the public good.
Here in Puerto Rico, where beaches abound along our island’s coastline, we assign the category of public good to all beaches. State law prohibits private ownership over any beaches, though it is possible to buy property immediately adjacent to these public beaches. Despite allowing for universal access to the beautiful beaches on the island, many issues arise due to this arrangement.
One of the main problems facing our beaches lies in the improper management of these natural resources, manifesting itself in the form of pollution, littering, and the erosion of the natural barriers that beaches provide. State ownership of these resources has not been effective in addressing these concerns, and as a result, the overall quality of our beaches has been declining for a few decades.
In order to understand why this is the case, it is important to understand the principle of the tragedy of the commons. This phenomenon was first popularized by British economist William Forster Lloyd in 1833. The main argument points out how the incentives for individuals to properly maintain and take care of goods and resources that are managed publicly are misaligned. Since the benefits of publicly managed goods do not accrue to those who labor towards them, a race to the bottom ensues, where each individual actor works as hard as possible to extract as much value as they can in the short term while neglecting the long-term management and proper maintenance of the good.
This phenomenon explains why we see our public beaches degrade over time since no one stands to gain from properly managing the beaches. Furthermore, beaches are used almost solely for leisure, and leisure stands in direct opposition to work. Thus, especially in Western cultural contexts, it is completely rational to expect people seeking a day of leisure at the beach to not put in the work necessary to minimize the impact they have on the use of the good without compensation.
It does not have to be this way, however. By allowing private ownership over beaches, firms can employ innovative solutions that balance the marginal costs of proper maintenance for beaches with the marginal benefits consumers extract from expending leisure there. Thus, people can demonstrate their preferences for spending a day at the beach over other leisurely activities, while devoting the necessary resources to ensure that these beaches stay attractive to the consumers.
Nevertheless, many people are resistant to the privatization of beaches, especially here in Puerto Rico. There are fears that privately owned beaches will exclude far too many people from being able to enjoy what our island’s nature has to offer. Other fears center around the notion of price gouging due to the limited supply of beaches. These fears are largely unfounded since there are many examples of privately managed commons being provided to the masses free of charge, such as your average mall.
Regarding the issue of price gouging, there are a plethora of beaches here on our island, allowing for the potential of many different firms, organizations, and individuals exerting ownership over these beaches. This environment of competition promotes a higher quality of services at lower prices, allowing the consumer to discriminate against private beaches that fail to provide adequate value to the consumer at the right price.
By establishing and promoting markets, consumers are given more power in order to affect the good in question, while nationalizing it removes power from the consumer. By privatizing private ownership over public ownership, we ensure and incentivize the creation of innovative solutions to complex problems facing scarce resources, accompanied by proper management that takes into account the long-term quality, alongside the short term enjoyment.