The purpose of this research is to analyze the effect of insecure ownership or property rights on the use of natural resources in the developing world. One cause of ownership insecurity is volatile political and legal regimes. Several empirical studies will be undertaken to explore the relationships between measures of political volatility and natural resource development and extraction. Models are developed to identify the effect of insecure ownership on incentives to develop resources, on investment in extraction capital, and on the timing of resource recovery. The empirical studies will focus on the pattern of deforestation that results from commercial logging, the incentive to invest in plantation forests, the mix of commercial products obtained from forests, the extent of fossil fuel exploration in developing countries, and the rate at which fossil fuel resources are extracted. Data on the stability of political institutions, across countries and over time, are used to indicate ownership security. In addition, the effect of ownership insecurity on the frequency and structure of transactions involving natural and environmental assets will also be analyzed. The transactions to be studied are debt-for-resource swaps and contracts involving exploration and development rights for fossil fuels.
