Property Rights and Flooding

This was originally posted as a series on Live Oaks in May 2010. Comments have not been migrated.

In response to a post last week, a reader asked:

Why are the property rights of the affected residents any more important than the property rights of the upstream property owners who are flooded through no fault of their own due to increased stream flow from developments yet further upstream? Should the mid-Bayou residents try to sue to force the further upstream property owners to install retention ponds and other flood control devices, when it is not possible to determine which property is truly at fault?

How do you determine whose property rights are more important? Should the reluctance of a few be allowed to destroy the property of many?

These are very good questions. There may appear to be a conflict between the rights of the respective property owners–property owners along a waterway can impact the property of others. But this “conflict” is a mirage, and a proper understanding of property rights provides us with solutions to such problems while simultaneously recognizing and protecting the property rights of all. In other words, it isn’t an issue of the rights of one individual (or group of individuals) superseding the rights of another.

The right to property is the right to own, use, and dispose of material values. Property rights provide the owner with a sanction to use his property as he chooses, so long as he does not violate the mutual rights of others. But what of those situations in which one owner’s use does interfere with another’s use, not through criminal intent, but through negligence or ignorance? More specifically, how do we address situations in which one property owner causes flooding on the property of another?

Before I address flooding in particular, an applicable principle must be discussed. That principle is: “first come, first served”. This principle–with roots in both Roman and English common law–holds that first use of property establishes ownership and specific rights associated with that use. For example, let us say that I own a pig farm out in the country. Nobody lives nearby and the odors do not offend anyone. Years after I started my farm a number of people buy some nearby land and build homes. They soon begin to complain of the odor coming from my farm. My pig farm clearly interferes with their use of their property. Whose property rights should prevail? Should I be allowed to continue my pig farm, or should I be forced to cease operations? The principle of “first come, first served” provides the answer.

My prior use established my right to use my property for that use. In regard to the home owners, the offending odors were clearly evident before they built their home. The “nuisance” existed prior to the construction of their home, and by building a home nearby they “came to the nuisance” (a corollary principle of “first come, first served”). Any harm that they suffer could have been avoided simply by recognizing the existence of a nearby property use that they would find offensive and acting accordingly, and thus their claim that I am violating their property rights is invalid.

To regard their claims as valid would be to destroy all property rights. When purchasing a property, individuals have a responsibility to identify the existing conditions and insure that they are compatible with one’s intended use. Further, one may not use that property in such a way as to interfere with the previously established rights of other property owners.

It is important to understand that this does not create a conflict between the rights of current and future property owners. A future owner may use his property as he chooses, but he may not arbitrarily demand that others cease their prior use–to do so would negate their rights. The current owner has established his rights via his use, while the future owner has yet to do so. The future owner must recognize those existent rights.

In short, if you don’t like the odors that come from a pig farm, don’t build a home next to a pig farm. And if you do build a home next to a pig farm, don’t complain about the odors.

However, let us say that I decide to expand my farm to such an extent that the odors begin to reach a neighborhood that existed prior to my expansion. In this situation, the home owners have a legitimate complaint. When they built their homes no nuisance existed, and my subsequent property use created the nuisance. Their prior use established their rights, and my later use cannot interfere with the use of their property.

By applying the principle of “first come, first served” to property, many disputes over property rights–particularly those regarding nuisances–can be resolved. To repeat: Property rights provide the owner with a sanction to use his property as he chooses, so long as he does not violate the mutual rights of others. Once an individual has established a particular use of a property, he has a moral right to continue his use indefinitely. Individuals who come along later may use their property as they choose, but they may not interfere with the prior owner’s use.

I should add that if I sell my pig farm to another individual, he gains all of the rights of that property. He does not need to tear down the pig farm and go to the back of the line. When I sell ownership in the property, I am selling my rights to that property, and subsequent owners may continue my established use. If they change the use of that property, they do go to the back of the line. And that brings us to the issue of flooding.

Property owners along a waterway (and often far from a waterway) can take actions that create or worsen flooding for other property owners. For example, property owners upstream may develop their land, causing heavy rains to fill a river more rapidly and flood property downstream. Or, downstream property owners may impede the flow of a river, causing it to back up and create flooding upstream.

These can be highly complex situations, and it may be extremely difficult to identify cause and effect. But that does not mean that we throw our hands in the air, declare the situation hopeless, and cede the entire matter to government. It means that we begin by fully understanding the applicable principles and apply them within the context of our current knowledge. This does not require omniscience or infallibility–both of which are impossible of any human being, and even more so of government officials. It does require a recognition and respect for the property rights of all individuals.

To illustrate the application of “first come, first served”, let us assume that 3 men–Tom, Dick, and Harry–own land along a stream. Dick owns land in the middle of the other 2. Let us consider different scenarios, how their property use may impact the others, and how we should apply property rights to those situations.

Scenario 1: Dick owns a home on his land, while the land owned by Tom and Harry is undeveloped and unused. Neither Tom nor Harry may do anything with his land that later interferes with Dick’s ability to use his home. Tom, who is upstream, may not develop his land and cause so much water to fill the river that Dick’s house floods. Harry, who is downstream, may not block the river and cause so much water to back up that it floods Dick’s house. Dick’s prior use of his property prohibits the others from interfering with that use. The same would apply if Dick used his land for crops—the others may not take actions that would harm or damage the crops.

Scenario 2: Dick is still the only property owner who has developed his land. On occasion, a heavy rain causes his land to flood, with the water sometimes entering his home. He decides to build a levee to prevent this from occurring. During a heavy rain, the levee causes Tom’s land to flood and he claims that Dick has violated his rights. But what use has Dick denied Tom? If Tom is using his land to grow corn, and the flood destroys his crop, his claim is legitimate. If Tom is not using his land then the flood has denied him nothing–no value was destroyed or harmed.

Scenario 3: None of the men have developed their property. Harry decides that he would like to create a small lake on his property and partially blocks the flow of the stream. While he creates the desired lake on his property, he also permanently floods a portion of Dick’s land. In this case, Dick’s rights have been violated. Though he was not using his land for any human value, the newly formed lake denies him the ability to ever do so. His property has been permanently altered by Harry’s actions, and this has occurred without Dick’s consent. Just as one cannot steal a neighbor’s car because it has been sitting in the driveway for months—i.e., is unused—one may not “take” a neighbor’s property by permanently flooding it.

To set the context, this discussion was originally motivated by the efforts of the Harris County Flood Control District (HCFCD) to purchase homes along Hunting Bayou for the purpose of widening the bayou. Many home owners are reluctant to sell. When I challenged this, a reader asked why the rights of a few—the reluctant home owners—should supersede the rights of the many—those whose homes will be protected from future flooding.

Despite appearances, and the wording of my reader’s questions, there is no conflict between the rights of the respective property owners. Rights pertain to action—the freedom to act without interference from others. Only the use of force can prevent an individual from acting as he chooses; it is only through the use of force that an individual’s rights can be violated.

The reluctant home owners are not using force. They are simply refusing to provide their consent. They are not compelling those who might benefit from the HCFCD project to stay in their home, nor are they prohibiting those potential beneficiaries from taking other actions to protect their property. In the absence of force, it is a gross misrepresentation (to be kind) to claim that the reluctant home owners are violating anyone’s rights.

HCFCD however, is violating the rights of taxpayers throughout its jurisdiction. Those taxpayers are forced to pay for HCFCD projects, regardless of their individual judgment, consent, or potential benefits. And, while it is unclear how HCFCD will proceed if the reluctant home owners continue to refuse to sell their homes, the use of eminent domain to seize those properties is likely. In short, it is a government agency that is engaged in the violation of rights, not the home owners.

Flood control is not a proper function of government. HCFCD should be abolished. Any flood control efforts should be undertaken by private individuals and businesses. Further, those who take actions that damage the property of others should be held accountable.

As discussed yesterday, if an individual develops his land in such a way that it will cause bayous to fill more rapidly, and thus flood homes, then he must take efforts to prevent this from occurring. He must build retention ponds, decrease the size of his development, or take other actions to mitigate the damage. If his efforts are insufficient, then he would be responsible for the resulting damages.

Some may find this problematic. The developer could complete his project, collect his money, and ride off into the sunset long before damages occur. The damaged parties may find it difficult, if not impossible, to sue the developer. If we drop the context, this would certainly seem to create an unjust situation.

A responsible business does not invest millions of dollars into a project without giving considerable thought to the consequences. A responsible developer would not buy land, clear it, build infrastructure, and attempt to sell that land without identifying and addressing potential liabilities. If he did not do so, the market would devalue his development and he would have difficulty selling the land to builders. In addition, he may find it impossible to purchase insurance.

In this context, insurance companies play an unheralded role. Because an insurance company must pay when damages occur, they take great strides to reduce the likelihood of damages. The insurance company’s desire to profit—to collect premiums and not pay claims—will motivate it to require the developer to take reasonable efforts to mitigate the possibility of future damages. The insurance company would refuse to insure a project that stood a strong likelihood of massive future claims.

This does not mean that the developer or the insurance company must be omniscient or infallible. This is an impossible standard. It does mean that they must examine the known facts and judge them accordingly. Despite the best efforts of these businesses, flooding may still occur. But the same is true of our current rights-violating system.

The principle of “first come, first served” provides us with clear guidelines in regard to new development. But what of existing development? What of areas that are heavily developed and prone to flooding, such as neighborhoods around White Oak Bayou, Braes Bayou, and Hunting Bayou? Can we apply the principle of “first come, first served” to these situations? This will be my topic for tomorrow.

These scenarios hardly exhaust the possibilities. And some situations may be much more complex, with hundreds or even thousands of property owners impacting the situation. Government has a legitimate and proper function in this regard: to identify and define the respective rights of the property owners, as well as what would constitute a violation of those rights.