Did John Locke Model Property Rights Correctly?

I have devised an example, which follows property rights rules in accordance to Locke, and yet it strikes me as unjust.

A primitive community lives on a island. Their only source of water is a spring in a large field at the base of the mountain and to it's south. The spring is at the bottom of a depression and the sides leading down into the spring are treacherous and unimproved. Everyone in the community freely visits the spring to obtain drinking water. The land around the spring is uncultivated; no one bothers because of all the traffic to and from the spring.

The water running out of the spring only stays at the surface for a short while before resuming it's underground journey. The soil is very porous being made of volcanic ash, and pumice. It rarely rains but it is very humid on the island due to proximity to the sea. Mists do settle in the evening on the porous rocks at the top of the volcano and the water then drips deep underground. The only reason the water from the spring even comes to the surface is that the basalt bedrock is close to the surface at the spring. This impervious layer of basalt underlies the volcano but extends into the field only a short way before plunging straight down in an underground cliff. The water of the spring follows this path only appearing at the surface for a short while.

One day a castaway from a more advanced market based society is washed up on shore. He is a very technological oriented fellow and knows the basis of many of the improvements humans have made to their lives over the eons. He soon ingratiates himself to his guests with technological improvements. He is accepted into the community, marries a local, and plans on living the rest of his life there, given his options. This island was not on well-trafficked sea lanes so he doesn’t expect any rescue.

One of his first improvements was to pick the steep end of the spring to the north, which no one was using because of easier paths, and to install a stairway and walkway that greatly improved access. Since this area was not owned and he had mixed his labor with it he claimed it as his own. This was in accordance with local custom regarding huts, and gardens so the local chief let it stand. Individuals were allowed to homestead areas of the island, build structures and gardens, and exclude trespassers. The castaway then started charging others a minor fee for use of his walkway and stairs. Since it was so much more convenient everyone started using it.

After a long period it became apparent that the foot traffic had become more concentrated and orderly. This made the field around the spring open to cultivation. So the castaway removed the unwanted vegetation and started to cultivate the fields around the spring. He also installed a platform that extended out over the spring at the same location as his stairs, with a counterbalanced rope and bucket pulley system. This made fetching water even more efficient, as the user would only need to lift half the weight of the water for each bucket, instead of the full weight of the water plus there was no need to walk up and down the stairs. He started charging individuals for each bucket they fetched in this fashion and used the proceeds to install yet more pulley systems.

The spring was located between two villages. One village was to the northwest and one to the northeast. The footpaths originally beaten into the ground pointed directly out in these two directions, however there was also a direct path between the two villages that ran along the north edge of the field at the base of the mountain. Those two pathways had originally curved down towards the southern edge of the spring where the access was originally the best. So the three pathways formed a triangle with the spring on the interior southern corner of the triangle. The castaway had built his access point on the north end of the spring and walkway that served it ran due north into the originally unused ground at the interior of the triangle. His walkway was perpendicular to the village-to-village path. With this new access point the natural foot traffic shifted to the north with the spring now outside the resulting triangle.

The castaway was cultivating more and more of the land around the northern end of the spring. Everyone appreciated his efforts and tended to stay off his gardens but sometimes the beds closer to the northern entrance would get stepped on. This is when the castaway introduced fences. He decided to protect his beds by building a fence on either side of his walkway. Once installed this solved his problems. Everyone was entering his walkway from the open end at north. He extended this even further making additional land around the spring available for his homesteading.

Occasional stragglers would still sometimes walk on his beds, which were the most productive on the island because of the amount of irrigation the castaway could afford to provide. One of his innovations was to let the natives pay for use of his platform by fetching two pails of water, keeping one and dumping the other an irrigation system placed next to the spring. The castaway decided his crops were just too valuable to leave exposed like this, so he fences in the entire area he homesteaded. Since he had homesteaded all the land that was no longer being used for foot traffic this essentially closed off all points of access to the spring except his walkway. He now owned a defacto monopoly on access to the most valuable water resource on the island. No one complained because he didn’t charge monopoly prices and has vastly improved living conditions on the island. It was better for everyone.

The castaway however is lonely for his old life. Living on the island is pleasant but he missed many of the advantages of his original life. One day a ship arrived at the island. Due to an uprising in another area it had become dangerous to take the old shipping routes, plus a newly discovered area rich in resources put the castaways island along a new trade route. The castaway, after long consideration, decided to sell his holdings and move himself and his family back to his native homeland. He sold his lands to a shipping company which needed both the water and the food that this island could provide for the their trade route.

What happened next, was that, the shipping company started charging monopoly prices. Instead of getting one bucket of water for each delivered the shipping company charged the natives one hundred. Since the natives had no other source of water they essentially became the slaves of the shipping company. Which exploited them to the utmost. Not only for water but also for food production.

Life changed for the islanders. Many felt cheated. They liked their original lifestyle and are not interested in working so hard. Not only that but the more intense harvesting of fish, and other resources is destroying the possibility of living as they had, in a renewable fashion. They have had to make tradeoffs that they would not have had to do if they had free access to water. The shipping company started requiring that they pay a portion of the water fees in wood also and this has resulted in the denuding of the forest that once covered the island. Many of the islanders end up having to take jobs with the shipping company in order to survive. Some end up migrating off the island because opportunities that are better elsewhere.

From the perspective of a Lockean system of homesteading and property ownership it seems that at each step in this tale is just

Now the question is. Were the islanders cheated or not?

My position would be that they were. I think ownership over natural resources can be acquired by means other than "mixing ones labor" with them. I believe that mere usage of them can constitute a claim of ownership.

The response to that might be "ownership by whom?". After all, as originally stated no single native claimed ownership of the resource. It certainly wasn't private property. However, think about it more deeply. One could map what was going on to co-ownership instead of non-ownership. This might especially become apparent if the a chief of the two villages tended to be in charge of local justice and administering common assets. You could think of the entire social structure as a kind of cooperative with group ownership. Perhaps they don't elect the chief by voting, but who is to say voting is the only correct means to determine officials, and perhaps no one ever invented that technology. After all voting is a technology. Furthermore, perhaps they can’t dispose of their "shares" like we can with our corporations but otherwise it has quite a few similarities to a corporation if you think about it. There is mutual ownership and yet a single person, or group of people act as proxies in control of the resource for the true owners.

One of the problems I have with this Lockean homesteading of access to the spring is that the natives have been in truth defrauded. The social norms that were in place at the arrival of the castaway were founded on expectations that were violated in a way that was beyond the sophistication of the natives. The closure of access to the spring was an unexpected strategy. You will note that by the end of the story the castaway had not claimed ownership of the spring but only the land surrounding it. He had defacto ownership but not dejure ownership over the spring. Tricky bastard. The natives may have had concepts of private ownership and homesteading as part of their culture, but just never expected someone to use them in this way. They would be outraged against this behavior and frankly I think they would be absolutely correct in their judgment.

So what do you think? Do I fundamentally misunderstand the Lockean conception of property rights? If I have it correct, and this is a flaw, do all other schools of Libertarian thought on property rights also suffer from the same flaw? As far as I know they do. Why shouldn’t we consider other forms of collective ownership valid, that is, forms other than ones based on transferable stocks and contracts?