Payments for Environmental Services: Revisiting the Theoretical Baseline Assumptions

Philipp Aerni
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Philipp Aerni: University of Zurich

Chapter Chapter 2 in The Sustainable Provision of Environmental Services, 2016, pp 33-64 from Springer

Abstract: Abstract The concept of payments for environmental services (PES) has its theoretical roots in neoclassical welfare economics. The concept suggests that the degradation of environmental resources is linked to the fact that these resources are considered to be for free. By assigning a monetary value to environmental services, sufficient incentives for market players would be created to protect, trade and invest in the provision of environmental services. The implicit assumption that once you assign such a value, a market would automatically evolve with buyers and sellers of the environmental service does however hardly work in practice because it is based on a comparative-static rather than a dynamic understanding of sustainability. This chapter illustrates that a flourishing market of environmental goods and services cannot be merely designed and funded by an external agent. It requires instead active local entrepreneurs that generate revenues through innovation.

Keywords: Ecosystem Service; Environmental Service; Negative Externality; Environmental Good; Positive Externality (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:csrchp:978-3-319-19345-8_2

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DOI: 10.1007/978-3-319-19345-8_2

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