Trespassing Bees in California—Ronald Coase to the Rescue

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Bees are trespassing into California mandarin orange groves, according to the Associated Press. Here's the scoop:

Is it trespassing when bees do what bees do in California's tangerine groves?

That is the question being weighed by state agriculture officials caught between beekeepers who prize orange blossom honey and citrus growers who blame the bees for causing otherwise seedless mandarin oranges to develop pips.

"Both sides are unwilling to give any ground, and both have valid points," said Jerry Prieto, the former Fresno County agricultural commissioner who has spent six months mediating the dispute.

The fight comes amid a worldwide consumer taste shift toward seedless grapes, watermelons and tangerines — at the same time the nation's struggling bee colonies look for winter food.

The California Department of Food and Agriculture is scheduled to issue draft regulations this month that will require beekeepers to register their locations with county agricultural commissioners by March 1 so growers can monitor hives within two miles of their groves. If bees are too close, growers can ask beekeepers to move and hope they comply.

"But they won't have to move," said Rayne Pegg, deputy secretary of legislation and policy for the CDFA.

Absent a method of resolving disputes, Prieto predicted: "This is going to end up in court."

But this situation doesn't have to end up in court or need government regulations. After all, Nobel Economics laureate Ronald Coase explained, absent substantial transactions costs, the initial allocation of property rights does not impede achieving the most economically efficient result. Why? Because parties can negotiate their differences and figure out whose activities are more valuable. The party whose activities earn more can pay off the other party and proceed. (Economist Steven Levitt has a nice explanation of the "Coase Theorem" at his Freakonomics blog.) 

But perhaps the transactions costs are too high in this case. In fact, Economics Nobelist James Meade used exactly this bee situation to try to disprove the Coase's arguments, but as economist David Friedman explained in Reason some years ago it is, in fact, a near perfect example of Coasean bargaining:

Meade offered, as an example of the sort of externality problem for which Coase's approach offered no practical solution, the externalities associated with honey bees. Bees graze on the flowers of various crops, so a farmer who grows crops that produce nectar benefits the beekeepers in the area. The farmer receives none of the benefit himself, so he has an inefficiently low incentive to grow such crops. Since bees cannot be convinced to respect property rights or keep contracts, there is, Meade argued, no practical way to apply Coase's approach. We must either subsidize farmers who grow nectar rich crops (a negative Pigouvian tax) or accept inefficiency in the joint production of crops and honey.

It turned out that Meade was wrong. In two later articles, supporters of Coase demonstrated that contracts between beekeepers and farmers had been common practice in the industry since early in this century. When the crops were producing nectar and did not need pollenization, beekeepers paid farmers for permission to put their hives in the farmers' fields. When the crops were producing little nectar but needed pollenization (which increases yields), farmers paid beekeepers. Bees may not respect property rights but they are, like people, lazy, and prefer to forage as close to the hive as possible.

The fact that a Coasian approach solves that particular externality problem does not imply that it will solve all such problems. But the observation that an economist as distinguished as Meade assumed Coase's approach was of no practical significance in a context where it was actually standard practice suggests that the range of problems to which the Coasian solution is relevant may be much greater than many would at first guess.

So which is more valuable–seedless mandarin oranges or citrus blossom honey? I suspect that what is happening is that the mandarin orange growers and the beekeepers are both hoping the courts/bureaucrats will side with them and thus avoid having to pay whichever party the costs for the externalities they impose. That would mean that one party would get to impose their externality on the other party without having to pay for it, resulting in a overall loss of economic efficiency. Sigh.

One more note: Coasean bargaining is a dandy way to handle those nasty cross-pollenation disputes between organic farmers and farmers who want to grow genetically enhanced crops.  See also Reason's 1997 interview with Coase here

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  1. Ohboy! Let the flood of “commons tragedy” posts begin!

    If all property were common this would not be an problem.

  2. That’s right, because it would all be deserty wasteland by this time due to greed.

  3. Errrrrrrrr . . . I fear we may have yet to reach . . . PEAK TROLL. (sigh)

  4. If the beekeepers already have property rights that place the hives close enough to the trees to yield 1) honey and 2) externalities then what is the incentive for the beekeepers to pay anything, absent government regulation?

    This doesn’t appear to be a case where the hives need to be inside the orchard.

  5. Bees are good for everything (except when they sting you). Deal with a few damn seeds in your tangerine.

  6. Maybe the real issue is the ease with which tangerine growers can lobby government.

    There isn’t enough of a pip problem to justify paying off the beekeepers, but there *is* enough to write a nasty letter to the local congressman?

    In which case, the correct solution for the congressman to make a lot of noise but not actually do anything.

  7. i’m for the bees. does it really make sense to have bee-free zones in an era of unprecedented threats to our bee supply? next time you’re in the produce section of the market, look around you, half of that stuff wouldn’t be there except for this miraculous little insect, and when the produce goes away, you’ll be sorry.

  8. I predict a Bee Bailout.

  9. I agree with Zeb.

  10. Beekeeper 1: Well, sure is quiet in here today.
    Beekeeper 2: Yes, a little too quiet, if you know what I mean.
    Beekeeper 1: Hmm…I’m afraid I don’t.
    Beekeeper 2: You see, bees usually make a lot of noise. No noise…suggests no bees!
    Beekeeper 1: Oh, I understand now. Oh look, there goes one now.
    Beekeeper 2: To the Beemobile!
    Beekeeper 1: You mean your Chevy?
    Beekeeper 2: Yes.

  11. The examples are inapt for comparison to the current situation. In the examples, the beekeepers are not paying for the harm that their activity does to the farmers.

    Or am I missing something here.

    This seems more like a factory whose waste is flowing onto the neighbors land that needs to pay for the damage or to pay for a way to contain the waste flow. However, the demonstration of harm is pretty hard to prove as non-owned bees will also be coming into the farmers orchard.

  12. Geez, it would be terrible if any a’ dese – whadyacallem – africanized bees I read about in da papers got loose near our trees. Hey, dat wouldn’t be so good for your bees, now would it?

  13. Neu,

    You are usually on the right side of things, but your inner Corporatist is showing today.

  14. First you get the sugar, then you get the power, then you get the women.

  15. A full and demonstrated understanding of the Coase Theorem, Say’s Law and Ricardo’s Law of Comparative Advantage (whether he is truly the creator or just the eponym) should be required to graduate from high school in this country. If NASA can observe the laws of gravity it seems the least the Congress and President could do is respect a few fundamental economic principles. Perhaps a mildly educated electorate would actually hold them accountable.

  16. No, no, Warty. In the comics, guys who dress like beekeepers are the bad guys.

    Kevin

  17. Bad bees. Get away from my sugar. Ow. OW. Oh, they’re defending themselves somehow.

  18. That may be so, kevrob, but zookeepers are the ones you really have to watch out for.

  19. This reminds me of the prairie dog case that was brought up a while back…

    Farmer allows prairie dogs on his farm for reasons he sees as valuable (keeps brush down, etc…), and his neighbors complain that prairie dogs are getting onto their land as a result and that he needs to pay them for the damages.

    Thing is, they are not his prairie dogs…he’s just not actively killing them. Should he have to pay them for the harm that his inaction creates (according to their claim).

    What if I open a free range falcon business next door to a free range rabbit farm? Do I have to pay the rabbit farmer?

  20. Neu: This seems more like a factory whose waste is flowing onto the neighbors land that needs to pay for the damage or to pay for a way to contain the waste flow.

    Or how about buying out the neighbor’s property and using it as a waste dump?

    See Coase’s brilliantly counter-intuitive “The Problem of Social Cost.”

  21. Why is the case any different than some farmer’s cow breaking through a fence and eating the neighbor’s crops?

    The fact that bees don’t recognize fences should not be relevant.

  22. Neu: If they are truly “free range” then it would seem that the law of Ferae Naturae might apply.

  23. Not killing praries dogs is fundamentally different than setting out hives in a field.

  24. Ron Bailey,

    I see your point but there are bee’s involved here. When I was 2 I was stung by a bee. Ever since then, I have been like “YO! Fuck Bees!”.
    Pardon my language.

    Inspired by Xeones.

  25. Ron,

    Buying out is one way to “pay for the damage.”

    As for the wondering cattle problem…this is closer to the bees example. You haven’t contained your property, so you can complain about any actions I take to keep your property off my land (with the bees that would be some sort of pest control).

    The question is, do I have a valid claim to make you pay for my pest control method?

    Do you have a valid claim to say that I harming you with my actions?

  26. Perhaps the grove owners could adopt a kid with beesting allergies and sue under the ADA.

    Perhaps I should shut up.

  27. In this case, it’s pretty straight forward that the beekeepers are putting out hives where they know the bees will cross into the neighbors property to gather nectar.

    If the neighbor suffers a financial loss, the beekeepers should be liable.

  28. Thanks, Ron. I really enjoy these posts that deal with economics and I wish Reason had more of them.

    My economics amateur opinion is that at least the theoretical role of government here should be to establish a default set of rules that minimizes externalities relative to what property would have done in its natural state. But property owners and those affected by externalities should be able to negotiate away from the default. So, I think I agree with Neu.

    The problems are that even in theory it seems like it would be difficult to establish what exactly should be considered an externality and what shouldn’t and that frequently the people affected by externalities are going to be too diffuse to represented as anything other than “the public.”

    The ultimate practical problem is that these other problems have to be dealt with by the government which is itself loaded with public choice problems. And that’s like some combination of asking the fox to guard the hen house and a retard with a sledgehammer to do brain surgery.

  29. Neu: I was making the point more explicit.

    Naga Sadow: My father had around 40 hives of bees on our farm when I was growing up. Robbing them of their honey was a pain in the ass (and any other part of my anatomy they could reach with their stingers).

    Shawn: It seems to me that reversing David Friedman’s example would work in this case.

  30. Or how about buying out the neighbor’s property and using it as a waste dump?

    That doesn’t happen without government coercion. Before the Coase Theorem can be implemented, government has to set a policy. Either the beekeepers are responsible, in which case they pay the farmers for access. Or they are not, in which case the farmers pay the beekeepers to stay away.

    Both outcomes are consistent with the Coase Theorem.

    Even the railroad/wheat example in freakonomicsblog makes that clear.

  31. bubba: The only “coercive” policy that gov’t has to implement is defining property rights and enforcing contracts for Coasean bargaining to work.

  32. Am I right in concluding that it’s only cross-pollenization with seeding varities that causes a problem with the seedless kind? If so, that suggests that having the bee-keepers who want orange-blossom honey paying to put hives among the trees would stop that problem – it’s attempting to use a free-rider effect by keeping the hives only sort-of close to the seedless and also close to seeding varitials that’s causing the negative externality. In other words, the beekeepers are trying to free-ride by not paying whatever the negiotiated cost would be of putting the hives right in the middle of the seedless groves.

    But i could be wrong.

  33. bubba: Just in case, I was being to vague–both the wheat farmer owns his land, and the railroad own its tracks and trains. Once that’s established they can commence to bargain.
    Similarly, orange groves owned by farmers and bees by beekeepers.

  34. The only “coercive” policy that gov’t has to implement is defining property rights and enforcing contracts for Coasean bargaining to work.

    And I think the question here is whether property rights are/should be defined so that insects owned by your neighbor that cross onto your land are “trespassing”/constitute a “nuisance” such that your neighbor has a duty to pay restitution.

    Not a question with an obvious/intuitive answer, IMO.

    Flip it around – lots of farmers pay good money to have bees brought to their property for pollination season. What if my bees cross over onto your property and pollinate your crops, increasing your yield? Should you be obligated to pay me for the benefit you have received, especially if you did nothing to keep my bees from rendering this benefit to you?

  35. Why the scare quotes, Ron?

  36. Bees are not lazy, Mr. Friedman. They are efficient. Away with your intrusive and inappropriate moral judgments!

  37. RC: Do the growers own their orchards? Yes. Do the beekeepers own their hives? Yes. Transaction costs aside, that’s most of what you need to know for Coasean bargaining to commence. If the bees are a “nuisance” as defined by the property owner, he might bargain to have the bees taken away. If the beekeepers really value access to the blossoms, they can bargain to let their hives stay near the orchards.

    hotsauce: I think “coercion” is scary. 😉

  38. Ron,
    So if own a stereo and blast my music, my neighbors should pay me if they find my music to be a nuisance.

  39. I am probably going to sound breathtakingly naive here, but perhaps the orchard owners could put some kind of mosquito (or in this case, bee) netting over their trees while they are in flower? It it was durable it should last for several seasons and the cost could be passed on to the “seedophobic” consumer. I grant that it would be a PITA for the grove owners, but it seems to be a relatively elegant solution to me.

  40. Um, Naga, bees are awesome.

  41. “Bees may not respect property rights but they are, like people, lazy, and prefer to forage as close to the hive as possible.”
    I protest in the strongest possible terms the slander that bees are Lazy like people. A bee flying 2 miles is like a person flying (by flapping their arms) 500 miles.

  42. dan, people also weigh more than 1,000 times as much as a bee does.

  43. Mo,

    It depends on the defined property rights. If the right to play music on your property supercedes the right to quiet on your property (only one exists), then yes. Otherwise, no.

    Coase’s point is that without transaction costs, it doesnt make a difference which way it is defined. With transaction costs, generally one way makes more sense than the other. In you hypothetical, it makes sense to protect a reasonable property right to quietness. Then, your neighbor can pay you for the right to blast his music.

    Okay, lets put some numbers to this.

    Assume no transaction costs.

    Your neighbor is blasting music. It would cost $1000 to build a sound proof wall between your properties.

    Situation A – he has the right to blast the music:
    You can spend $1000 to build the wall or maybe just pay him $800 not to blast it.

    Situation B – you have the right to quiet:
    He can spend $1000 to build the wall or maybe just pay you $800 to allow him to crank the volume.

    Either way, the same amount of money is going to get spent. The property rights law just determines who gets to spend it.

  44. I just wanted to point out here that David Friedman’s case in his article isn’t exactly the same as what’s going on in California.

    He points out that farmers pay beekeepers for them to put hives in their field, or beekeepers pay farmers to let them put hives in their field.

    In this case, the beekeepers simply have their hives NEAR the fields. This makes for a much more complicated arrangement. Now we’re talking about your right to have something in your property that hurts your neighbor’s property. And are the individual bees really the beekeeper’s property, and how is this determined (since individual bees in the field might actually be wild)?

    Not that Coasian bargaining doesn’t apply, I just feel like people might be talking past each other. My thought is that what we really need here is a clarification and definition of the property rights in question.

  45. I note that everybody also forgets that the honey is beeing stolen!!! Stop the expropiation of honey! And those wooden boxes are not true hives, but bee prisons!!!
    Bees should be free to set up their own buzzineses, limited partnerships, and corporations and sell their own honey.
    And voting rights…

  46. Tyler,

    My thought is that what we really need here is a clarification and definition of the property rights in question.

    I think that is the point. The property rights in question are, well, in question. They arent clearly defined right now. Once they are, Coasean bargaining seems pretty straight forward.

  47. fresno dan

    And voting rights…

    We already gave chicks the right to vote, we dont need anymore pro-socialism voters.

  48. I would suggest a scenario where the bees are the property of the beekeeper. But if they are trespassing, the farmer has the right to defend his property.

    This means he can do something like NeonCat said, and put nets over his trees. Or, it might be in his interest to set up a bunch of bee-traps or bug-zappers.

    So either the farmer ends up paying costs to defend his property, or the beekeepers compensate the farmers for not setting up traps. Actually, this would allow for many solutions that could be found between the two. Most likely they would end up coming to an agreement that is best for everyone including the consumers.

  49. Maybe the real issue is the ease with which tangerine growers can lobby government.

    Yup. It’s hard to blame the growers though, because the lobbying is cheaper than the competing. The problem isn’t the lobbyists, the problem is that giant neon sign outside of D.C. and every statehouse saying “Government power for sale! Cheap!”

  50. In summary:

    The migrant beekeepers head to CA to pollinate the almonds which REQUIRE honeybees for pollination.

    When the almond season ends, the migrant beekeepers move the hives near citrus groves so the bees can collect nectar to feed themselves and produce a produce with a high market value (citrus blossom honey).

    In the past, citrus growers have tolerated the beekeepers because the oranges benefitted from the improved pollination (oranges do not require bees for pollination).

    At the current time, the bees actually harm the production of seedless varieties of citrus.

    So, the beekeepers move the bees where they will access the citrus and cause financial harm to owners of the citrus orchards.

    Is this not an obvious case where the bee keepers are liable for the harm?

  51. If the bees are a “nuisance” as defined by the property owner, he might bargain to have the bees taken away. If the beekeepers really value access to the blossoms, they can bargain to let their hives stay near the orchards.

    I realize that Coase doesn’t really care who pays what to who, but in the real world it makes a big difference, both practically and morally. That’s where the actual definitions of nuisance or trespass come in. If my bugs aren’t a nuisance or trespass as defined by law, then you don’t have any way to make me pay for the “damage” they cause, and I have no reason to bargain with you.

  52. Is this not an obvious case where the bee keepers are liable for the harm?

    The point of the Coase Theorem is that the harm to the orchards may be less than the gain to the bees. If that is the case, then the most economically efficient solution is to have the beekeepers pay the growers so that both are better off.

    Would that governments and courts tried to seek these solutions first rather than resorting to absolute compulsion or prohibition first.

  53. RC Dean: Morally, yes. Practically, no (unless you mean the practical difference of a pure wealth transfer).

    If my bugs aren’t a nuisance or trespass as defined by law, then you don’t have any way to make me pay for the “damage” they cause, and I have no reason to bargain with you.

    Yes you do have a reason to bargain, because the farmer will pay you to get rid of the bees. And if he won’t pay you enough, keeping the bees is the more efficient outcome.

  54. Yes you do have a reason to bargain, because the farmer will pay you to get rid of the bees. And if he won’t pay you enough, keeping the bees is the more efficient outcome.

    Gotcha.

  55. It looks like there are 3 important factors:
    1. Do the beekeepers gain more than the orange growers lose or vice/versa?
    2. Is some sort of defensive netting against the bees cheap or expensive?
    3. Who has the property rights, the beekeepers or the orange growers?

    That creates 8 cases, when looking at them and applying coasean bargaining to the situations in a transaction cost free environment, it looks like, from a “fairness” perspective that the rights should belong to the orange growers. Effect on the economy is the same either way. If the beekeepers make more money than the orange growers lose, its going to happen regardless of law or direction of payments. It wont happen if the opposite. Also, it turns out there is no need for the netmaker to get involved as long as negotiations go smoothly.

    However, especially if you consider transactional costs, it seems giving the orange growers the property rights makes the most sense. In the cases that they lose more than the beekeepers make, they just dont allow it. In the opposite cases, they accept a payment from the beekeepers and they are both better off.

    I think orange growers negotiating payments from beekeepers to set up nearby is better than having them pay to keep people away.

  56. The most obviously awesome solution is to hire illegals and arm them with flamethrowers. Instead the government is just going to build a tall fence with razor wire on the top around the orchards, as if the bees can’t climb over the fence or dig under it.

  57. Is this relevant?

    Seems like it is to me.
    But that’s just me.

    http://www.sciencemag.org/cgi/content/short/323/5911/272

    A simple general principle has emerged from theoretical and experimental studies of common-good producer-nonproducer interactions: For producers to be selected and maintained, they have to be the privileged recipients of the common good (1-18). Producers may become privileged recipients by virtue of kinship or spatial proximity or discrimination through reciprocity or some distinctive feature (1-5, 9, 10, 14).

    In this work, we considered the scenario in which producers and nonproducers are distributed heterogeneously into subpopulations of varying composition, some starting with higher and some with lower fractions of producers. As each of these subpopulations grows, its fraction of producers falls. Yet, it is possible for the overall fraction of producers to rise. This phenomenon, usually analyzed in terms of kin selection or group selection (3), can be distilled into an elementary mathematical feature known as Simpson’s paradox (5, 19, 20) (Fig. 1). Because the global producer proportion is a weighted sum of the subpopulation proportions, when there is sufficient covariance between growth rate of a subpopulation and its fraction of producers, a counter-intuitive behavior of the whole population can be observed: Producers increase overall.

  58. it looks like, from a “fairness” perspective that the rights should belong to the orange growers

    It seemed the opposite to me.
    Since the beekeepers’ bees provide a public good that goes far beyond their honey production, it seems this positive externality has to be taken into consideration. The default position should be that bees are allowed to trespass to promote the public good they provide. The orange grove owner can pay them to stay away if it is causing a significant enough problem.

    But that’s just me.

  59. From above:

    FERAE NATURAE

    Seems applicable to the bees.

    I am thinking beekeepers don’t own bees, just hives/boxes. They just hope the bees utilize them. The bees are free agents and so the farmer would have to make the bargain with… the bees.

    In other words, it is the farmer’s problem, and he has no claim against the beekeeper.

  60. I am coming down on Neu’s side here.

    I don’t think that a property owner has a right to greater property rights than he would possess if he were all alone on the North American continent.

    If you were all alone, with the entire continent to yourself, and you planted crops in the middle of Kansas, bees would fly on to your property, and you would not be entitled to any compensation.

    Demanding compensation for events that would occur, to some degree, even if you were the sole property owner on the continent seems absurd to me. It’s like demanding that the Man in the Moon pay you compensation because his moonlight falls on your property.

  61. I asked a ex-farmer friend of mine (he grew up on/worked on a dairy farm) about this last night. My exact question was “Are honey bees mini-cattle?”

    He was amused.

    He agrees with Neu and Fluffy that bees arent mini-cattle (you arent responsible for the damage they do to your neighbors crops like you are with escaping cattle).

    Good enough for me.

  62. Orange growers raising bats was suggested as a defense.

  63. Ron,

    The problem with Coase’s “The Problem of Social Cost” is that it is not “brilliantly counter-intuitive”. Rather, it is not only counter-intuitive, but counter-intuitive for a reason: It is all wrong.

  64. Fluffy,

    I don’t think that a property owner has a right to greater property rights than he would possess if he were all alone on the North American continent.

    Huh?

    Property rights seem to be predicated upon the existence of other people…otherwise what’s the point?

  65. I’m all for the bees!

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