Building elegant Conservation Economies with Web3 — Fanfire.

In modern institutional economics, property rights endow owners with protection from expropriation, the entitlement to buy and sell what is owned, the right to extract utility from what is owned, and (arguably the most notable) the ability to exclude others from sharing in the benefit of what is owned.

In a nutshell, excluding others as a method of protecting your right is its main function. However, thanks to the power of economics and a nifty phenomenon known as Harberger Tax, the latter is not dependent on the former.

Protecting your property rights is possible without excluding others, in fact, it is more efficient (increasing economic welfare to society). It is also not necessary to compromise security of tenure to make property rights more accessible and open. Enter, Ronald Coase.

The Coase Theorem dictates that where there are perfectly competitive markets (with negligible transaction costs) and an efficient set of inputs and outputs, the most efficient outcome (equilibrium) will be chosen. (In reality, such perfect economic conditions are extremely unlikely ouside idealised models, resulting in the Theorem being used to explaining inefficiencies as opposed to providing real solutions.) This all changed with Web3 and Harberger Tax.

In short, Harberger Tax holds that owners must set a ‘next selling price’ of an asset owned - the owner will then pay a tax on this price. As Rational Choice Theory predicts, any rational actor will set this high enough to be de facto exclusionary, but also low enough to minimize tax. Individuals now have both a personal and social incentive to have “always on sale” (non-exclusionary) property rights - as nicely described in Simon de la Rouviere‘s blog.

Suddenly it is possible to channel this tax into any beneficiary and let market functions play out, automatically benefitting a cause.

“…strike a balance between pure private ownership & total commons ownership in order to increase general welfare of society.” — Simon de la Rouviere

Being at the forefront of Web3-based enablers, Fanfire, with its remarkable team of ‘OG’ blockchain devs, have seamlessly integrated previously idealised economic principles into real-world solutions. One of these solutions is based off of Harberger Tax and how it can substantially benefit sanctuaries and their conservation efforts; by allowing the public to ‘support conservation’ by ‘trading in conservation’ — cleverly incentivizing patronage using econ101.

Welcome to the world of Web3, where real-world problems are addressed using out-of-this-world tech.