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A hybrid Coasean and Pigouvian approach to Payment for Ecosystem Services Program in West Lombok: Does it contribute to poverty alleviation?

Diswandi Diswandi

Ecosystem Services, 2017, vol. 23, issue C, 138-145

Abstract: The Payment for Ecosystem Services (PES) concept is mainly based on Coasean economics theory that emphasizes the creation of a voluntary or market-based transaction for ecosystem services. Alternatively, many PES practiced in developing countries are based on Pigouvian economic theory allowing government intervention such as through regulation, tax or subsidy. A hybrid PES approach that compound Coasean and Pigouvian theory was developed in West Lombok Indonesia leading to a new policy paradigm that combines elements of both a voluntary market-based and mandatory policy-based system. This study aims to assess how the hybrid PES program contributes to poverty alleviation. By employing a participatory econometrics approach, this study found that the hybrid PES system does not contribute to poverty alleviation in short-term. It is possible that this PES program contributes to poverty alleviation in long-term.

Keywords: PES; Ecosystem services; Community forestry; Poverty alleviation; Participatory econometrics approach (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:ecoser:v:23:y:2017:i:c:p:138-145