Creating markets to pay for public good offer promise, peril

Nov 03, 2011
Experts from Arizona State University, University of Alaska and University of Minnesota warn that some payment mechanisms to support ecosystems services may be environmentally harmful. Credit: James Elser/ASU

Over the past 50 years, 60 percent of all ecosystem services have declined as a direct result of the conversion of land to the production of foods, fuels and fibers.

"This should come as no surprise," say seven of the world's leading , who met to collectively to study the pitfalls of utilizing markets to induce people to take account of the environmental costs of their behavior and solutions. "We are getting what we pay for."

Their report, "Paying for Ecosystems Service: Promise and Peril," was published in the Nov. 4 issue of the journal Science.

Society pays for the products of agriculture, and forestry, and has developed well-functioning markets for these products, these experts say. However, markets for important such as watershed protection, habitat provision, pest and disease regulation, climate regulation and storm buffering are nearly nonexistent.

"The problem is that many ecosystem services are public goods," says Ann Kinzig, lead author, professor in Arizona State University's School of Life Sciences and chief research strategist with ASU's Global Institute of Sustainability. "Some lie outside the control of any one government, and the science for others is still only poorly understood. There is no one-size payment mechanism that fits all cases."

However, bad payments mechanisms can be worse than no payment mechanisms at all, the study's authors warn, pointing to the lessons learned from four decades of agricultural subsidies. Subsidies encouraged the overuse of fertilizers and pesticides, two of the main reasons for the growing number of dead zones in the world's oceans.

A similar lesson can be found in the first generation of cap-and-trade systems, they say. The first U.S. markets for emission rights collapsed because of faulty design: They failed to take into account the interactions between multiple pollutants across state boundaries.

The scientists' report is timely given the growing enthusiasm for the use of Payments for Ecosystem Services (PES) schemes that allow governments and non-governmental organizations to pay for environmental public goods. For example, carbon sequestration is being paid for through the United Nations' Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries or REDD scheme. The scheme pays countries to not cut down their forests, which in turn puts the breaks on loss of biodiversity, in addition to curbing carbon emissions.

Many existing schemes fall short, the scientists find.

  • Some schemes ignore uncertainties in the science.
  • Some generate markets that are too "thin" (involve too few trades) for prices to track environmental conditions.
  • Some focus on one service only, creating perverse incentives for other services.
  • Many channel income support to particular groups of landholders, rather than signaling the scarcity of ecosystem services.

The authors note too that while ecosystem services that are produced on private lands can benefit from carefully designed payment schemes, many ecosystem services are produced on public lands or seas, or on land and sea areas beyond national jurisdiction.

For such services, different measures of the importance of ecosystem services are needed, they say. The scientists assert that governments need to generate measures that have the same form and status as the measures used to reckon such things as the Gross National Product (GNP). These measures should track changes in the value of publicly owned environmental assets in the same way that society currently tracks changes in the value of buildings, financial stocks or infrastructure.

"Paying for what we need demands that we understand what we collectively lose when we allow the world's ecosystems to degrade," say the authors. "To pay for the services we want, we need to know how much they are worth, how they are produced and by whom. Then we need to design payment mechanisms that will work. Our study indicates how." The study's authors include Kinzig, Charles Perrings, Terry Chapin III, Steve Polasky, Dave Tilman, V. Kerry Smith and B.L. Turner II, experts in economics, business, urban planning and ecology at Arizona State University, University of Alaska and University of Minnesota. The study was supported by the Global Land Project of the International Geosphere Biosphere Programme and the International Human Dimensions of Global Environmental Change Programme, both part of the International Council of Science.

Explore further: US delays decision on Keystone pipeline project

add to favorites email to friend print save as pdf

Related Stories

The grass is always greener

Aug 19, 2011

( -- Recent study of grasslands shows that species variety more important to ecosystem services than previously thought.

Researchers analyze 'the environmentalist's paradox'

Sep 01, 2010

Global degradation of ecosystems is widely believed to threaten human welfare, yet accepted measures of well-being show that it is on average improving globally, both in poor countries and rich ones. A team of authors writing ...

Recommended for you

US delays decision on Keystone pipeline project

Apr 18, 2014

The United States announced Friday a fresh delay on a final decision regarding a controversial Canada to US oil pipeline, saying more time was needed to carry out a review.

New research on Earth's carbon budget

Apr 18, 2014

( —Results from a research project involving scientists from the Desert Research Institute have generated new findings surrounding some of the unknowns of changes in climate and the degree to which ...

User comments : 0

More news stories

China says massive area of its soil polluted

A huge area of China's soil covering more than twice the size of Spain is estimated to be polluted, the government said Thursday, announcing findings of a survey previously kept secret.

UN weather agency warns of 'El Nino' this year

The UN weather agency Tuesday warned there was a good chance of an "El Nino" climate phenomenon in the Pacific Ocean this year, bringing droughts and heavy rainfall to the rest of the world.

NASA's space station Robonaut finally getting legs

Robonaut, the first out-of-this-world humanoid, is finally getting its space legs. For three years, Robonaut has had to manage from the waist up. This new pair of legs means the experimental robot—now stuck ...

Ex-Apple chief plans mobile phone for India

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Filipino tests negative for Middle East virus

A Filipino nurse who tested positive for the Middle East virus has been found free of infection in a subsequent examination after he returned home, Philippine health officials said Saturday.

Egypt archaeologists find ancient writer's tomb

Egypt's minister of antiquities says a team of Spanish archaeologists has discovered two tombs in the southern part of the country, one of them belonging to a writer and containing a trove of artifacts including reed pens ...