For decades, scholarship, inspired by Ronald Coase and advocating greater use of property rights and markets, has focused on important “first generation” issues related to establishing property rights. This article makes two main points. First, it highlights the potential for things to go awry after property rights have been established in environmental resources. In emphasizing that property rights may become misallocated, this article draws on the theoretical arguments recently advanced by Eric Posner, Glen Weyl, and Lee Fennell that private property can lead to allocative inefficiency. Second, this article highlights three categories of explanations for why environmental property rights are not sufficient to promote socially desirable outcomes, with a view towards stimulating more thought on ways that misallocations might be addressed.