New study on Payments for Ecosystem Services
This month’s special edition of the journal Ecological Economics focuses on Payments for Environmental Services: Reconciling Theory and Practice. Of particular interest in this edition is an article reporting on a study which developed a framework for deciding when payments are a suitable tool for delivering ecosystem services.
Ecosystems provide vital services to humans, which are public goods, but private landowners often own the physical structures of ecosystems; so policies are needed to encourage landowners to provide the desired ecosystem services. The study identifies five types of policy tools for providing ecosystem services on private land: prescription (regulations), penalties (taxation), property rights (alteration to protect ecosystems), public information (used to change landowner behaviour) and payments for ecosystem services (PES), which compensate landowners who supply ecosystem services on their property.
The study focuses on PES, proposing a framework for deciding when payments are a suitable policy option for delivering ecosystem services; this framework takes into account the attributes of the ecosystem services provided by a particular area of land, including the concepts of rivalry, excludability and the extent of the distribution of the service.
The study also suggests that creating a ‘monopsony’ (a market with only one buyer) can provide an effective way of delivering ecosystem services, because it is relatively easy to calculate the willingness of a buyer to pay by measuring the benefit of the service to an organisation or individual’s well-being. For example, a hydroelectric company could pay upstream landowners to manage their land in order to reduce the amount of silt downstream. The authors also suggest that bundling of ecosystem services could be a useful approach for implementing PES for complex ecosystems which provide many services: the services can be bundled together and multiple sources of funding can be found to support them.
Original Article: Kemkes, R.J., Farley, J., Koliba, C.J. (2009). Determining when payments are an effective policy approach to ecosystem service provision. Ecological Economics. Doi:10.1016/j.ecolecon.2009.11.032.
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