Putting Theory into Practice: Market Failure and Market Based Instruments (MBIs)

Stuart Whitten (), Anthea Coggan (), Andrew Reeson and Russell Gorddard ()

No 2007-02, Socio-Economics and the Environment in Discussion (SEED) Working Paper Series from CSIRO Sustainable Ecosystems

Abstract: The use of market-based instruments (MBIs) to provide and protect ecosystem services has gained significant attention in Australia. Despite their popularity, MBIs are not appropriate for the provision of all ecosystem services. Rather, MBIs must be carefully designed given the ecosystem service outcomes desired, while meeting the needs of participants. In this paper we detail the importance of a robust theoretical structure to underpin the selection and design of an MBI. In particular, we demonstrate the role of identifying and analysing the nature of the market failures present, and their implications for instrument design. Our conclusions are illustrated using several regional MBI case studies.

Keywords: Market Based Instruments (MBIs); ecosystem services; conservation (search for similar items in EconPapers)
JEL-codes: Q57 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2007-05
New Economics Papers: this item is included in nep-env
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Citations: View citations in EconPapers (2)

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