Designing Payments for Ecosystem Services

This Policy Series by James Salzman brings attention to a rapidly developing phenomenon—payments for ecosystem services (PES). Salzman, the Samuel F. Mordecai Professor of Law and the Nicholas Institute Professor of Environmental Policy at Duke University, explains when and where ecosystem services can be provided by voluntary markets rather than government actions. The key to understanding how PES work is rooted in the basis of any voluntary market transaction—gains from trade. One party agrees to take action because another party offers an incentive. Both parties benefit. A beekeeper, for example, brings her hives to an orchard to provide pollination services for a fee. But Salzman explores the less obvious services such as forests at the top of a municipal watershed that act as a filter providing clean water to people below. Salzman states that we receive many environmental benefits for “free,” which provides little or no incentive for people to pay for them or for entrepreneurs to provide them. Because price signals that alert individuals about scarce resources in traditional markets are absent, ecosystem services are taken for granted—until they stop providing benefits. Then the cost of remediation or building infrastructure, such as a water treatment plant, makes their value obvious. For decades the solution to environmental protection has been government action. Today, knowledge about environmental processes combined with increased environmental sensitivity provides opportunities for entrepreneurs to find innovative ways of developing markets for ecosystem services

The Organization for Economic Cooperation and Development’s Role in International Law

The Organization for Economic Cooperation and Development (OECD) has played, and continues to play, an important and largely unrecognized role as a lawmaking body. The OECD occupies a unique space in the international lawmaking field, in large part because it was not established with lawmaking as a priority. In a small number of cases, however, it has played a significant role in crafting the emerging architecture of global governance. Case studies of the hazardous waste trade, the Bribery Convention, and the OECD Guidelines for Multinational Enterprises are presented to demonstrate a clear pattern. A topic of major concern arises on the international stage, such as hazardous waste trade, bribery, or corporate conduct. Efforts within the United Nations or other international organizations to draft an agreement are unsuccessful. The OECD proceeds on its own and provides an agreement that serves as the basis for future negotiations in fora with wider membership. The keys to this approach are opportunism and path dependence. The OECD serves as an advantageous forum to host negotiations, in part because of its significant technical expertise, in part because of its membership of like-minded countries, and in part because of its closed proceedings. This can be a very effective strategy to provide the tracks on which the train of international agreements proceeds. But it does not always work. A case study on the Multilateral Agreement on Investment explores the OECD’s greatest failure in international lawmaking

A Policy Maker’s Guide to Designing Payments for Ecosystem Services

Over the past five years, there has been increasing interest around the globe in payment schemes for the provision of ecosystem services, such as water purification, carbon sequestration, flood control, etc. Written for an Asian Development Bank project in China, this report provides a user-friendly guide to designing payments for the provision of ecosystem services. Part I explains the different types of ecosystem services, different ways of assessing their value, and why they are traditionally under-protected by law and policy. This is followed by an analysis of when payments for services are a preferable approach to other policy instruments. Part II explains the design issues underlying payments for services. These include identification of the service as well as potential buyers and sellers, the level of service needed, payment timing, payment type, and risk allocation. Part II contains a detailed analysis of the different types of payment mechanisms, ranging from general subsidy and certification to mitigation and offset payments. Part III explores the challenges to designing a payment scheme. These include the ability to monitor service provision, secure property rights, perverse incentives, supporting institutions, and poverty alleviation

Thirst: A Short History of Drinking Water

From earliest times, human societies have faced the challenge of supplying adequate quality and quantities of drinking water. Whether limited by arid environments or urbanization, provision of clean drinking water is a prerequisite of any enduring society, but it is a daunting task for drinking water is a multi-faceted resource. Drinking water is most obviously a physical resource, one of the few truly essential requirements for life. Drinking water is also a cultural resource, of religious significance in many societies. A social resource, access to water reveals much about membership in society. A political resource, the provision of water to citizens can serve important communication purposes. And finally, when scarce, water can become an economic resource. As recent conflicts in developing countries make clear, managing and mediating these many facets of drinking water is no easy matter. Understanding a society\u27s ability to provide clean drinking water to its citizens, examining how it recognizes the different natures of this vital resource, provides a unique prism on the society\u27s organization, equity, and view of itself. In seeking to understand better how societies manage such a critical resource, this article considers three questions. How have different societies thought about drinking water? How have different societies managed access to drinking water? And how have these changed over time? These questions are, of course, interrelated. How we think of water, whether as a sacred gift or a good for sale, both influences and is influenced by how we manage access to drinking water. While not an obvious issue to us in 21st century America, management of drinking water as a resource -- who gets it, when they get it, and how much they get -- matters a great deal. Written for a symposium celebrating the scholarship of Carol Rose, this article synthesizes research to date from an ongoing book project on the history of drinking water. Using a case study approach, we journey on a wide-ranging geographical and historical tour, briefly exploring drinking water management in societies across five continents, from 5,000 years ago up through today. Along the route, we find that something as seemingly simple as drinking water washes clear a society\u27s views toward the role of government, norms, and the market

Presidential Exit

The biggest problem that we\u27re facing right now has to do with George Bush trying to bring more and more power into the executive branch and not go through Congress at all, and that\u27s what I intend to reverse when I\u27m president of the United States of America. Why is @BarackObama constantly issuing executive orders that are major power grabs of authority? President Trump signed the 30th executive order of his presidency on Friday, capping off a whirlwind period that produced more orders in his first 100 days than for any president since Harry Truman. The rash of executive orders underlines Trump\u27s focus on reversing as much of the Obama administration\u27s policy agenda as he can

‘No Net Loss’ - Instrument Choice in Wetlands Protection

While not a high priority issue for most people, the public has long recognized the general importance of wetlands. Since President George H.W. Bush\u27s campaign in 1988, successive administration have pledged to ensure there would be no net loss of wetlands. Despite these continuous presidential pledges to protect wetlands, in recent decades, as more and more people have moved to coastal and waterside properties, the economic benefits from developing wetlands (and political pressures on obstacles to development) have significantly increased. Seeking to mediate the conflict between no net loss of wetlands and development pressures, the U.S. Environmental Protection Agency (EPA) and Army Corps of Engineers (Corps) have employed a range of policy instruments to slow and reverse wetlands conversion. Through the 1970s and 1980s, the EPA and the Corps relied on prescriptive regulation that discouraged development of wetlands and, even if a permit for wetland filling were granted, required on-site mitigation of destroyed wetlands to ensure no net loss. To defuse the growing political pressure for substantial change to this 404 Permit process for developing wetlands, however, since the 1990s the agencies and state governments have promoted a market mechanism that seeks to ensure wetlands conservation at minimum economic and political cost. This instrument is known as wetlands mitigation banking (WMB). In WMB, a bank of wetlands habitat is created, restored, or preserved and then made available to developers of wetlands habitat who must buy habitat mitigation as a condition of government approval for development. This mechanism has also provided a model for endangered species protection and is in the process of being extended to other settings including watershed protection. Given the shift in emphasis from prescriptive regulation to trading, the government\u27s longstanding pursuit of no net loss of wetlands provides a particularly useful case study for comparing the use of regulatory and market instruments for environmental protection. Indeed, WMB provides a rare example of robust trading outside the air pollution context and the trading habitat-based goods raises very different concerns than seen in trading mobile pollutants. Examining the evolution of WMB also forces us to think carefully over how to assess the success of a trading program. The traditional measure would likely be efficiency. But one must also consider effectiveness. In this regards, WMB poses two different types of failures - failure of instrument design (a front-end problem) and failure of implementation through monitoring and enforcement (a back-end problem). As many of the case studies in this book illustrate, performance of WMB depends critically both on institutional design and implementation. Another important measure of success concerns distributional equity. Who wins and who loses from banking? Such concerns are far more difficult to assess as good or bad policy in habitat trading than the traditional hot spots of pollutant trading programs. The chapter ends by drawing out key lessons for market-based approaches to watershed protection

Foreword: Making Sense of Information for Environmental Protection

Despite the ubiquity of information, no one has proposed calling the present era the Knowledge Age. Knowledge depends not only on access to reliable information, but also on sound judgment regarding which information to access and how to situate that information in relation to the values and purposes that comprise the individual\u27s or the social group\u27s larger projects. This is certainly the case for wise and effective environmental governance. A regulator needs accurate information to understand the nature of a problem and the consequences of potential responses. Likewise, the regulated community needs information to decide how best to comply with adopted rules, and the public needs information in order to accept the credibility and legitimacy of the regulatory regime. But governance also requires judgment regarding how to manage information itself - how to structure burdens of proof in light of goals such as public safety or promotion of economic growth, how to balance the public\u27s interest in disclosure against competing aims such as national security or the protection of trade secrets, whether to withhold information in the belief that it may actually be harmful to the recipient, and so on. This paper, written as a foreword for the Texas Law Review\u27s symposium issue, Harnessing the Power of Information for the Next Generation of Environmental Law, provides a model to understand the role of information in environmental law - how it is generated, utilized, and disseminated within regulatory processes. Drawing on the diverse and significant insights of the symposium articles, the paper attempts both to make sense of the role of information in environmental protection and to highlight significant questions and concerns