88 



There is, I feel, no necessity to arrive at an "ultimate re^me,-' 

 whatever that is. I think that would be premature, as Mr. Eichel- 

 berger stated. 



In the first place, there is no such thing as any ultimate regime; 

 regimes continue to change. In the second place, they are made up of 

 a series of decisions and rules that have to be made over time. 



Tliere is, however, urgency in maintaining options open to us for 

 the future or in preventing the foreclosure of options, and I think 

 that certain steps must be made fairly soon to make sure that this is 

 the case. 



Tliere is also urgency for discussion of the different rules that are 

 required and it is for this reason that these hearings will be so valuable. 



In this context, I offer my remarks. M}^ approacli is primarily from 

 the point of view of economics and what would be economically effi- 

 cient, recognizing, of course, that economic criteria are not the only 

 bases for decisions of rules in law. 



I would like to touch briefly on the criteria tliat we will huve to 

 consider in evaluating the different decisions that have to be made^ 

 and then discuss within a very broad framework the different kinds 

 of alternatives that exist, recognizing that these are an array of alter- 

 natives and not by any means clear cut. 



In terms of the criteria, there are two general ones that I think are 

 important. 



The first is that of economic efficiency. "VVliat kind of rules or deci- 

 sions do we make that will permit the most economically efficient 

 o]->erations on the resources of the sea ? The second is that of accepta- 

 bility. What kinds of rules can be arrived at that vv'ill be acceptable 

 and that will permit a viable and stable regime over the long run? 



In terms of economic efficiency, I cast this in broad terms ; that is, 

 the efficiency not only to the producer but to society as well. And the 

 primary consideration in all of these is the necessity that the producer 

 must have exclusive rights to the resources which he exploits. 



Exclusive rights can be discussed in various terms ; the right to the 

 resource after capture, the right to the resource on the bottom, to a 

 resource area, to exploration and in many other ways. Essentially, 

 however, what is necessary is for an exploiter to have sufficient rights 

 in size and tenure to guarantee an appropriate return on his invest- 

 ment. This is the absolute minimum. 



The second element of the economic efficiency criteria, I think, is 

 the allocation of productive resources. I do not think that the develop- 

 ers of the minerals of the sea should either be penalized or subsidized 

 more than those who are producing the same materials from the land. 

 And in addition, I think it is better to have a monetary basis for dis- 

 tribution and allocation of these mineral resources than some arbitrary 

 basis, such as political force. 



This means that some form of ground rent may have to be paid. This 

 would emulate insofar as it can, the marketplace, and approximate 

 the way the resources of oil on our continental shelf are distributed. 



In addition, I think that in striving for an economically efficient set 

 of rules, we should avoid any incentives to "high-grade" the resource ; 

 that is, to strip off the cream of the crop, and we should also prevent 

 external costs to the extent possible ; that is, the interference with other 

 forms of activity or pollution of the environment. 



