Work

Cost-effective provision of environmental services: the role of relaxing market constraints

Year: 2010

Type: article

Abstract: ABSTRACT Ferraro and Simpson (2002) argue that when markets are competitive, payments for environmental services (PES) are more cost-effective in achieving environmental goals than more indirect approaches such as subsidies to capital. However, when eco-entrepreneurs face non-price rationing in input or output markets, as is typical for credit in developing countries for example, we show that interventions which relax constraints can be more cost-effective than PES. One corollary of this is that such indirect approaches are preferred to PES by interveners (e.g., donors) and eco-entrepreneurs alike. Both of these outcomes are more likely when constraints are severe. This has implications for schemes with dual environment and poverty alleviation objectives.

Source: Environment and Development Economics

DOI: 10.1017/s1355770x09990167

Authors: BEN GROOM, CHARLES PALMER

Institutions: SOAS University of London, ETH Zurich, Institute for Environmental Decisions

Language: English

Topic: Conservation, Biodiversity, and Resource Management

Subfield: Global and Planetary Change

Field: Environmental Science

Domain: Physical Sciences

SDG: No poverty

Open Access status: bronze

Funder: Economic and Social Research Council