Market Incentives Open The Skies

Private Property Owners Open A New Ecosystem

In a recent poll of Americans, they were asked - if a commercial drone operator wants permission to fly over your home, in your airspace, what price would you accept for the use of your air rights?

51% said between $0.01 and $1.00 per hour, 14% said they would offer it for free, 35% said they would not permit it without more information. In a town where drone delivery is to be carried out, there is only one efficient way to do this without trespassing - the market.

This information is dispersed across individuals and can harnessed through a system for air rights and market prices. Decentralized knowledge enables individuals to make decisions that lead to efficient resource allocation.

Clearly, there is a reason to bring market forces to coordinate air rights owners and drones. Market forces are the key to helping private air rights (real estate) owners and commercial drone entities open the low-altitude economy for the benefit of society. The drone entities’ main focus needs to be on how to fly safely and legally in our local communities not on how to erode decades of property rights and freedoms.

"If we can agree that freedom essentially means that the individual is in all circumstances allowed to use his knowledge for his purposes, limited only by rules applying equally to all... the preservation of a spontaneous order turns chiefly on the protection of private property." — Hayek

Wealth Transfer

Without action, the transfer of wealth of highly valuable air rights from millions of ordinary American landowners and real estate companies to corporations without compensating them for losing those rights could happen. Trillions of dollars appropriated and the wealth transferred.

A way for landowners of all sizes to give consent, and the drone industry to get the consent to be in private airspace a system of coordination is the best tool.

Markets are vital in coordinating property rights and property users, ensuring that resources are allocated efficiently through price mechanisms and incentives. Prices reflect the relative scarcity of resources and convey essential information that helps individuals make informed decisions. For example, when the price of air rights increases, it signals that air rights have become scarcer and more valuable and various trading strategies can happen.

The price mechanism allows individuals to adjust their use of resources without needing full information about the entire economy. When prices rise, it signals scarcity; when they fall, it signals abundance. This decentralized decision-making process ensures that resources are efficiently allocated, not by central command but through the interplay of supply and demand.

This is also a win for federal authorities as they don’t need to worry about private air rights and how private property owners trade them - the market takes care of it.

The FAA can concentrate on making sure Unmanned Aerial Vehicles (UAVs) are good actors and safe to fly. As their values state: “Safety is our passion.” This avoids the situation of difficult and costly legal cases under many laws including Section 1983, 42 U.S.C. § 1983 - Civil action for deprivation of rights.

Drone Legal Cases Continue To Build

The drone industry is getting in its own way. We can see this by the ever-increasing amount of legal issues they are bringing on themselves, many of which are avoidable.

Most criminal cases are prosecuted under state laws equivalent to reckless and careless endangerment. Another category of prosecutions deals with trespass and violations related to exporting technology linked to military drones. There are cases around privacy, the discharging of firearms to shoot unwanted drones out of private airspace, and unwarranted searches with some concerning implications for freedom.

“Persons have a reasonable expectation of privacy in their property against drone surveillance, and therefore a governmental entity seeking to conduct drone surveillance must obtain a warrant or satisfy a traditional exception to the warrant requirement.”

DJI's legal issues mainly involve class action lawsuits or patent infringement cases where they are either the plaintiff or the defendant.

There are various civil drone lawsuits, which include a wide range of issues, such as Equal Protection Clause challenges against state drone laws, injuries caused by drone operators, product liability, and breach of contract disputes, among others.

In 2024, the U.S. District Court for the Northern District of Texas filed a criminal complaint against Jason Carvell Banner, accusing him of violating National Defense Airspace. The complaint alleges that on October 19, 2023, Banner operated a drone in restricted airspace near a Major League Baseball game in Arlington, Texas. The Department of Transportation Office is handling the investigation, with assistance from the FBI and the FAA. United States v. Fengyun Shi, an individual was charged with taking pictures close to a military installation with a drone.

There will always be bad actors but if all actors have a way to get the permission to be in private airspace mistakes leading to prosecutions will lessen. Civil liberties must not be sacrificed when it comes to drones, which is why it is so important for private property owners to express how and when they want drones to be in their airspace. It helps everyone in the ecosystem to move faster, safer and scale.

“He had a right to shoot at this drone, and I’m going to dismiss this charge.”

Judge Ward - Boggs v. Merideth

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Market Coordination

Private air rights owners in the main will allow drones into their airspace for some level of compensation we can see from the research. This would eliminate many of the legal cases regarding private property, trespass and constitutional violations by drone operators. This is how to move the industry forward, and companies need not spend their time and resources unnecessarily in courts.

Air rights owners acting in their self-interest contribute to the economic well-being of society as a whole, enabling the drone industry to flourish and receive rewards for it.

The alternative is we have a central command and control unit that comes and takes individuals’ rights without recourse and real estate owners who own the air rights must hand over the private keys to their airspace. This is what is proposed by some, which is a concern.

Without a market, there is a tendency to overuse and deplete resources. This could mean a situation where a homeowner’s airspace is continually trespassed and the owner gets nothing and cannot do anything, but markets work. A market establishes and assists in enforcing air rights which incentivises participants to manage the resources sustainably.
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