Values, Payments and Institutions for Ecosystem Management

Values, Payments and Institutions for Ecosystem Management

A Developing Country Perspective

Edited by Pushpam Kumar and Ibrahim Thiaw

Using a selection of authoritative and original contributions, this timely book explores the uncertainty surrounding the impact of decisions undertaken to manage ecosystem services worldwide. Invariably, the policies designed and implemented to manage forests, wetlands, and marine and coastal environments often involve conflicts of interest between various stakeholders. This has added an additional layer of complexity in the context of developing countries where institutions and governance are weak or absent. Economic valuation and the subsequent design of innovative response tools such as payment for ecosystem services (PES) have the potential to offer far greater transparency. In the case of LDCs, the identification of suitable institutions for executing these tools is also of vital importance.

Chapter 5: Revisiting the relationship between equity and efficiency in payments for ecosystem services

Unai Pascual, Roldan Muradian, Luis C. Rodriguez and Anantha K. Duraiappah

Subjects: development studies, development economics, economics and finance, development economics, environmental economics, environment, ecological economics, environmental economics, management natural resources, valuation

Extract

This chapter addresses the relationships between the economic efficiency and distributional implications of market-based incentive mechanisms, and more specifically of payments for ecosystem services (PES). We point out that the mainstream interpretation of PES as a mere market-based instrument to internalize environmental externalities overlooks the complex interactions, including power relations, that take place between agents, and determine both equity and efficiency outcomes. We propose an approach that gives emphasis to the roles of (1) uncertainty, as perceived by agents in setting up PES schemes, (2) the institutional context required to set up the payments and services, and (3) the notions of fairness held by different agents, e.g. providers, beneficiaries of the ecosystem services and intermediaries. Some of the most important questions to be answered are the following: What are the key factors conditioning the relationship between equity and efficiency in PES schemes? What is the role of social perceptions about fairness in the performance of PES? What is the contribution of social science, and economics in particular, to our understanding of the relationship between efficiency and equity in PES?

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