The market for natural resources can allocate resources to their highest valued uses as long as private property rights are well defined and enforced.

Question

Quizplus · Accepted Answer

When private property rights are well defined and enforced, individuals have the incentive to use their resources in the most efficient and productive way possible, leading to an allocation of natural resources that reflects the highest valued uses for society. This is because individuals will only be willing to pay for the resources they value the most, leading to a market-driven allocation of resources that reflects these preferences. In contrast, if property rights are uncertain or poorly defined, individuals may not be willing to invest in the resources they control and may not be able to use them in a way that reflects their highest valued use, leading to misallocation and inefficiency.

The Market for Natural Resources Can Allocate Resources to Their