Description

Abstract: The use of market-based approaches to provide and protect ecosystem services in has gained significant attention in Australia. Unfortunately the novelty of market-based approaches has seen them proposed for all manner of environmental problems for which they may or may not be appropriate. In this paper we detail three emerging MBIs in Australia, representing a typology of market-based approaches, and the factors we consider critical to their success. In particular, we focus on the analysis that underpins effective market-based instrument design and implementation. Market-based approaches to ecosystem service provision are not about a market for every service, or the case of right market, right time, right place, but rather the careful selection and design of an appropriate instrument given the ecosystem service outcomes desired, while meeting the needs of participants.

Contents:

1. Introduction 2. Background 2.1. Poor Provision of Ecosystem Services 2.2. Markets for Ecosystem Services 2.3. Market Typology: price based, quantity based and market friction based 3. MBI Design Tools and Considerations 3.1. Market Potential Heterogeneity 3.2. Market Failures 3.3. Deciding on the appropriate MBI 3.4. Mechanism Design 4. Case Studies 4.1. Wimmera Auction for Salinity Outcomes — A price based MBI 4.2. Case Studies Two and Three 5. Discussion 6. References