Markets for Ecosystem Services - A New Report

Developing markets for ecosystem services can help contribute to improved ecosystem function in a cost-effective manner. The global economy is highly dependent on a variety of services provided by nature. Protecting these services was a key priority for decision makers at the Rio environmental meetings. This new study highlights the possibilities of using markets as a policy tool to improve the supply of ecosystem services.

The study ”Using markets to supply ecosystem services: How to make it happen” is written by environmental economists Scott Cole (EnviroEconomics Sweden), Linus Hasselström and Tore Söderqvist (Enveco) and Fanny Engkvist (FORES) and identifies the challenges and opportunities associated with using markets as a policy instrument to better protect ecosystem services. The report was presented at the Rio +20-meeting earlier this summer.
"Although all ecosystem service may not be suitable for markets, several of them have a lot of potential. The most suitable are those for which changes in service flows are not only easy to measure, but also lead to a clear and measurable effect on social welfare. Examples of such services include biodiversity as well as nature's ability to regulate air quality, water quality, and climate," says Linus Hasselström.
 
The authors' main conclusion is that so-called regulatory compliance-driven markets have the most potential for protecting ecosystem services in a cost effective manner. These markets rely on the establishment of an environmental objective by politicians - e.g., how much of a particular ecosystem service should be protected - which then leads to a scarcity of the service. These types of markets provide incentives that reward those who improve the supply of ES and make it costly for those who damage them. Compliance-driven markets have led to the development of so-called habitat or conservation banking systems in the US and Germany, among other places.
 
You can view the report here.
 
Contact
Martin Ådahl (VD)
martin.adahl@fores.se  
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