This chapter describes the theoretical relations between pollution and property and provides a framework for the analysis that follows in subsequent chapters. Sections 1 and 2, respectively, rehearse and critique the conventional but too simplistic notion that environmental problems are at bottom property problems. In fact, the structure of property rights and environmental problems are both largely consequences of other factors, most notably transaction costs, which in turn are substantially determined by institutional and technological circumstances. Section 2 illustrates this point by describing an ideal, frictionless economy, in which well-defined property rights are clearly not a precondition to optimal environmental protection. In a world of zero transaction costs, the optimal level of environmental protection would be attained regardless of the existence and initial allocation of property rights. This is not to argue, however, that the structure of property rights is irrelevant to environmental protection. As I will show in section 3, where I take readers from the ideal world of perfect markets and costless transacting to the real world of imperfect institutions and costly transacting, the structure of property rights can significantly influence environmental performance, and has done so throughout history. Section 3 introduces the “tragedy-of-open-access” model and discusses one of its most important but often overlooked implications: that all means of averting the tragedy, including regulatory measures, are property-based.