Defining property rights of the subsoil

Executive sumary

Problem:
Legislation recognizes the property rights over the real state. However, when it comes to the
subsoil, the legislation makes an exception. The alluded legislation states that if in the subsoil
some minerals are found, the State hast the ownership of such substances.
It is the State the one who decides in which way it will exploit these resources. One option is to the
State to become and entrepreneur ant to launch an enterprise and to start the exploitation
himself.
Another way is for the State to decide to whom it will concede the right to exploit and under what
circumstances. In this scenario the State doesnt care about the soil`s proprietor. The state only
cares to what person he will be giving the right and how much he will charge to the beneficiary of
such concession.
Given the high levels of corruption that prevails in third world countries the problem becomes
larger. Corruption creates and environment in which the people interested in the business of
mining exploitation have to bribe government officials in order to get a concession. This is a
tragedy that shifts the scarce resources from the private and productive sector to convince
government officials in spite of invest these scarce resources in generating new businesses.
This system sparks the populist speech of those who claim that these concessions to private
enterprises are given to cronies and that they are exploiting to the poor people and that this is a
proof that unfettered free market is harming our countries.
This document intends to provide a practical explanation and solution to this tragedy by proposing
a law that simply defines that the owner of the real estate is also the owner of the subsoil.

Goals:
1. To explain to the general public how the system actually works and what the consequences of
such a system are;
2. To explain how a private ownership of the subsoil system works in some places that have this
system;
3. To explain how the transition should be towards a free market model of the mining industry in
our countries;

Technical Approach
Practical studies that are accessible both to the general public, businessmen of the mining industry
journalists and other people involved in research and public policies. The studies should include
an ideological aspect that covers the importance of property rights and an empirical study that
shows how the system works and how should be working properly. Finally a law proposal to be
implemented and discussed at Guatemalan Congress.