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Incentivizing the Provision of Ecosystem Services


  • Hanley, Nick
  • White, Ben


Payment for Ecosystem Service schemes have become widely discussed in the academic literature and in policy circles over the past 10 years, and indeed an increasing number of schemes have been put in place across the world. This paper has four objectives. First, to explain the idea of a Payment for Ecosystem Service scheme to those not working in this area. Second, to set out a formal model which shows the effects of incomplete information in terms of deviations from a first-best outcome, and which allows the relative merits of outcome- and actionsbased schemes to be compared. Third, to explain why measuring the actual performance of any Payment for Ecosystem Service scheme is difficult. Finally, to set out what we see as the main research needs to inform policy development in the near future.

Suggested Citation

  • Hanley, Nick & White, Ben, 2014. "Incentivizing the Provision of Ecosystem Services," International Review of Environmental and Resource Economics, now publishers, vol. 7(3-4), pages 299-331, December.
  • Handle: RePEc:now:jirere:101.00000064

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    Cited by:

    1. Wunder, Sven, 2015. "Revisiting the concept of payments for environmental services," Ecological Economics, Elsevier, vol. 117(C), pages 234-243.
    2. repec:eee:ecoser:v:22:y:2016:i:pa:p:51-59 is not listed on IDEAS
    3. repec:eee:jeeman:v:83:y:2017:i:c:p:68-89 is not listed on IDEAS
    4. Simanti Banerjee & Timothy N. Cason & Frans P. de Vries & Nick Hanley, 2015. "Spatial Coordination in Agglomeration Bonus Schemes with Transaction Costs and Communication: An Experimental Study," Discussion Papers in Environment and Development Economics 2015-10, University of St. Andrews, School of Geography and Sustainable Development.
    5. repec:eee:wdevel:v:96:y:2017:i:c:p:359-374 is not listed on IDEAS

    More about this item


    Payment for Ecosystem Services; Agri-environmental policy; Adverse selection; Contracts; Un-observed effort;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics


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