Who pays for ecosystem services?
I just attended an excellent symposium on ecosystem services that WWF and The Natural Capitol Project convened. It was a thought-provoking discussion of one of the emerging concepts of modern conservation: natural ecosystems provide services humanity needs, like clean drinking water, carbon sequestration, and spiritual inspiration. My own research fits nicely in this category, for I seek to understand how rapid urban growth affects a few ecosystem services. Recognition of ecosystem services as a key object of study has also clarified the root cause of many environmental problems: most ecosystem services are entirely external to the market. In other words, things like clean drinking water are usually considered as a free resource, without monetary value.
The specific theme of this symposium was payment for ecosystem services, which goes by the cute name PES. This is really being pushed by environmental groups right now, and with good reason. We’re simply happy to bring these ecosystem services into the market system, where they presumably will be more likely to be considered by decision-makers. For once, our actions are backed by economists, who see this as a special case of Pigovian bargaining, which says that if the total transfer payment is equal to the value of the ecosystem service, then an efficient market will be realized.
Interestingly, this theory does not specify who pays. To economists, this is “merely” an equity concern, as one person at the symposium put it. In many international treaties, environmentalists have fought hard to ensure that it is polluters who pay for the cleanup of what they pollute. However, in many of the other emerging markets in ecosystem services that were all the buzz at the symposium, like water, conservationists seem to have dropped this demand. I think this is a bit dangerous, although perhaps appropriate in the case of water, and conservation groups should articulate a clear rationale for who pays for ecosystem services. Our goal must be an efficient and equitable system, to the extent that is politically feasible.
The specific theme of this symposium was payment for ecosystem services, which goes by the cute name PES. This is really being pushed by environmental groups right now, and with good reason. We’re simply happy to bring these ecosystem services into the market system, where they presumably will be more likely to be considered by decision-makers. For once, our actions are backed by economists, who see this as a special case of Pigovian bargaining, which says that if the total transfer payment is equal to the value of the ecosystem service, then an efficient market will be realized.
Interestingly, this theory does not specify who pays. To economists, this is “merely” an equity concern, as one person at the symposium put it. In many international treaties, environmentalists have fought hard to ensure that it is polluters who pay for the cleanup of what they pollute. However, in many of the other emerging markets in ecosystem services that were all the buzz at the symposium, like water, conservationists seem to have dropped this demand. I think this is a bit dangerous, although perhaps appropriate in the case of water, and conservation groups should articulate a clear rationale for who pays for ecosystem services. Our goal must be an efficient and equitable system, to the extent that is politically feasible.
