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Environmental market creation: saviour or oversell?

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  • David Pearce

    (University College London
    Imperial College London)

Abstract

. In recent years considerable attention has been paid to the notion of ‘market creation’ for the conservation of environmental assets. Market creation establishes a market in the external benefit or cost in question (e.g. biodiversity or pollution reduction) and leaves the relevant parties to adjust their behaviour accordingly. While most attention has been paid to market creation through tradable permits and taxes (the ‘polluter-pays’), it is less easy to secure a perspective on ‘beneficiary-pays’ initiatives. Both polluter-pays and beneficiary-pays initiatives are examples of modified Coaseian bargains in which governments intervene in the bargains to lower transactions costs, establish property rights, deal with public goods issues, or act on behalf of disadvantaged groups. This paper reviews four major initiatives in this respect - debt-for-nature swaps, bioprospecting and the Global Environment Facility at the global level, and the Costa Rican Forest Law at the local level. It finds that while there is much to applaud in initiatives in these new markets, serious questions remain about the modest flows of funds associated with such ‘global bargains’, and the extent to which they secure environmental improvements relative to the baseline of business-as-usual.

Suggested Citation

  • David Pearce, 2004. "Environmental market creation: saviour or oversell?," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 3(2), pages 115-144, September.
    • Handle: RePEc:spr:portec:v:3:y:2004:i:2:d:10.1007_s10258-004-0034-y
    DOI: 10.1007/s10258-004-0034-y
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    Citations

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    Cited by:

    1. Thomas Eichner & Rüdiger Pethig, 2019. "Coaseian Biodiversity Conservation and Market Power," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(3), pages 849-873, March.
    2. Aguilar-Gómez, Carlos R. & Arteaga-Reyes, Tizbe T. & Gómez-Demetrio, William & Ávila-Akerberg, Víctor D. & Pérez-Campuzano, Enrique, 2020. "Differentiated payments for environmental services: A review of the literature," Ecosystem Services, Elsevier, vol. 44(C).
    3. Samuel Fankhauser & David Pearce, 2014. "Financing for sustainable development," Chapters, in: Giles Atkinson & Simon Dietz & Eric Neumayer & Matthew Agarwala (ed.), Handbook of Sustainable Development, chapter 28, pages 446-460, Edward Elgar Publishing.
    4. Rosendal, G. Kristin & Andresen, Steinar, 2011. "Institutional design for improved forest governance through REDD: Lessons from the global environment facility," Ecological Economics, Elsevier, vol. 70(11), pages 1908-1915, September.
    5. Liu, Zhaoyang & Kontoleon, Andreas, 2018. "Meta-Analysis of Livelihood Impacts of Payments for Environmental Services Programmes in Developing Countries," Ecological Economics, Elsevier, vol. 149(C), pages 48-61.
    6. Sell, Joachim & Koellner, Thomas & Weber, Olaf & Proctor, Wendy & Pedroni, Lucio & Scholz, Roland W., 2007. "Ecosystem services from tropical forestry projects - The choice of international market actors," Forest Policy and Economics, Elsevier, vol. 9(5), pages 496-515, January.
    7. R. Simpson, 2007. "David Pearce and the economic valuation of biodiversity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 91-109, May.
    8. Yadav, Lava Prakash & O'Neill, Stephen, 2013. "Is there agreement between beneficiaries on who should bear the costs of conserving farm landscapes?," Tourism Management, Elsevier, vol. 39(C), pages 62-70.
    9. David Pearce, 2008. "Do We Really Care About Biodiversity?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(4), pages 611-611, August.

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