Over-Index On Property Rights Or Have None
Erosion Is Powerful - It Happens Slowly Then Suddenly
The protection of air rights is essential to ensuring individual liberty and economic freedom, as it allows individuals to use their land without undue interference from the government or neighbouring property owners. - Walter E. Williams, Professor Emeritus of Economics at George Mason University
The right to deal with individual air rights is one of the most fundamental elements of freedom. To own it, sell it, use and permit entry and exit is the very foundations of growth and security. But this can be eroded, and we can’t assume no one will try and take these valuable rights.
What does it mean in a country, and for its people where these rights that we take for granted are not as strong. In many cases, they are crying out for a rule of law like the US or UK. Air rights and property are some of the strongest rights we have, and seeing how they can be misused or removed is why we need to prevent their erosion at all costs.
It’s clear that allowing private air rights to be used or co-opted without just reward our compensation is a negative for society, and not just the owner of the air rights parcels. It curtails the market forces that seek the truth, enable people to buy, sell, permit entry and exit from the airspace they own.
Property Rights Index
In Nigeria in 2021, a former governor of Zamfara State cancelled some land ownership documents and instructed landowners to reclaim their ownership. Then the Gombe State Governor revoked titles in the metropolitan area for "new developmental layouts." This arbitrary revocation of land titles highlights concerns about property rights, which are often at the mercy of state governments in certain jurisdictions. But we would be wise not to assume this could not happen in the United States. Every time someone’s airspace is trespassed by a drone and there is nothing done, those trespassing think they gain rights. Drones have no rights under the constitution but if people don’t assert their rights to consent to drones being in their airspace, allowing them to scale or the air rights owners do not indicate how they want their air rights used they may lose these rights.
Nigeria ranks 117th, the United States 14th and Venezuela 125th (the bottom) globally on the Property Rights Index. The United States had high scores for its legal framework protecting property rights but lower scores due to government expropriation.
The Property Rights Index is an annual report published by the Heritage Foundation and it measures the legal and political environment for property rights in 180 countries. The index evaluates a country's laws, policies, and institutional mechanisms related to property (air) rights, including the protection of private property, the enforcement of contracts, and the resolution of disputes.
As a basket that contains air rights the index is instructive but does not necessarily capture all the complexities of property rights systems in countries with multiple forms of tenure and land-use. The Land Use Act in Nigeria concentrated power in state governors' hands, creating uncertainty about land ownership rights. The individual is not sovereign, unfortunately.
Many governors have used authority granted by the act to acquire property without due process and have converted public land for private use and there have been instances of governors dispossing farmers of their lands.
Nigeria has 910,800 square km of arable land, but only 5% of homes have land titles, resulting in $300-900 billion of dead capital. Properly utilizing these assets would unlock more wealth. Land ownership has been a cornerstone of economic development throughout history and provides financial security and an asset for long-term wealth creation.
Estimated underutilised air rights globally is over $30 trillion. Even small rural towns and individual homeowners air rights are valuable if they can be transacted and accessed by willing buyers.
Contrast with the US where individual property rights and air rights are strong and a market for air rights is poised to leap forward with significant benefits to society. A strong reason to make sure the erosion of rights is not allowed to happen.
Options
A policy called TAMA 38 in Israel allowed the owners of an apartment block to collectively sell air rights over their building to developers in exchange for building improvement and enlargement by a developer. Which is sensible.
In London a similar process happens where air rights owners are looking to improve the roofs of their properties. The property freeholder benefits as the building increases in capacity and so rental yields increase, as does the capital value of the property.
The developer who buys the air rights builds new flats and the volume of new housing in high demand areas increases, benefiting society.
TAMA 38 eliminated the bilateral monopoly between individual owners and the government by turning over the land option to a competitive market for development rights. The market unfortunately was not allowed to fully clear the price as the government owns 93% of the land, leasing it out on long terms to private “owners” who technically are lessees and don’t have the strongest incentive available.
Solutions
Air rights in the United States and other countries are the new frontier, with capital locked and no simple way to access it, until now. The solution to Nigeria’s land problem is surprisingly similar to the solution for the US, UK, Canada, Australia and other locked air rights problems.
Incorporating air (property) rights into a competitive marketplace where numerous buyers and sellers can transact makes it more difficult for gridlock to develop as marketplace liquidity is injected.
Embracing transparency, digitizing air rights, decentralizing the physical marketplace and strengthening individual property rights leads to better outcomes.