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Institutional Design and Performance of Markets for Watershed Ecosystem Services: A Systematic Literature Review

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  • Hao Wang

    (Institute for Management Research, Radboud University, 6525 AJ Nijmegen, The Netherlands)

  • Sander Meijerink

    (Institute for Management Research, Radboud University, 6525 AJ Nijmegen, The Netherlands)

  • Erwin van der Krabben

    (Institute for Management Research, Radboud University, 6525 AJ Nijmegen, The Netherlands)

Abstract

Markets for watershed ecosystem services have been developed as a tool in integrated water resources management. The development of vast markets for watershed ecosystem services has raised attention for the performance of these markets, their institutional design, and how their institutional design influences market performance. The main research questions guiding this systematic literature review are: Which types of markets can be distinguished; how is market performance operationalized; which institutional design characteristics are distinguished in the literature; and which of these characteristics are crucial to understanding performance? A systematic review of 224 journal articles from Web of Science leads to several main findings regarding these questions. Market performance is usually equated with effectiveness in the reviewed articles. Discussions in these articles include whether the market contributes to the preservation of ecosystem services, what the distributional impacts are, and what the participation rate is. The reviewed articles have illustrated specific institutional design features as well. The key features include the security of property rights, role of governments, bundling of ecosystem services (ES), and role of trust. In those articles addressing the relationship between institutional design and performance, the relevance of monitoring and enforcement, clearly defined property rights, and geographical market scope have been pointed out.

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  • Hao Wang & Sander Meijerink & Erwin van der Krabben, 2020. "Institutional Design and Performance of Markets for Watershed Ecosystem Services: A Systematic Literature Review," Sustainability, MDPI, vol. 12(16), pages 1-26, August.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:16:p:6382-:d:396083
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    17. Mulatu, Dawit W. & van der Veen, Anne & van Oel, Pieter R., 2014. "Farm households' preferences for collective and individual actions to improve water-related ecosystem services: The Lake Naivasha basin, Kenya," Ecosystem Services, Elsevier, vol. 7(C), pages 22-33.
    18. Kumar, Pushpam & Kumar, Manasi & Garrett, Lucy, 2014. "Behavioural foundation of response policies for ecosystem management: What can we learn from Payments for Ecosystem Services (PES)," Ecosystem Services, Elsevier, vol. 10(C), pages 128-136.
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