Paying for Marine Ecosystem Services
If wetlands and other marine ecosystems are such a good thing, why not pay for them? Most people think attending college is a good thing, so families are willing to pay and students are willing to work to earn money for college. In addition, billions of dollars have been put aside in various scholarship funds to help selected students pay for college.
Wetlands, once known as swamps, are sometimes more valuable when filled in and developed for housing, industry, or retail. But wetlands left as wetlands offer valuable ecosystem services. It is just that property owners are rarely able to charge for services from wetlands they own (but which they usually still have to pay property taxes).
Of course, sometimes swamps provide income to owner-entrepreneurs who
do figure out how to charge for swamp amenities and services. Video is one way to generate revenue from wilderness resources like wetlands. As much as people like the idea of pristine wilderness areas, most prefer visiting mountains to swamps. Hunting attracts people to wilderness areas, and man can contribute to nature’s balance as a careful predator. (And unfortunately, less careful people sometimes contribute to nature’s balance as prey.)
In the PERC publication Designing Payments for Ecosystem Services, James Salzman reviews the many ways that ecosystems we don’t think about are critical to the goods and services we purchase and enjoy regularly:
When visiting a store, one expects to find useful goods and services such as apples to eat and the refrigerators that keep them chilled. We depend on similar goods and services in our everyday lives. Indeed, we take them for granted. Nature also provides us valuable goods and services, and we take many of those for granted as well. When we bite into a juicy apple, if we pause to think beyond the store where it was purchased, we may think of soil and water, but probably not the natural pollinators that fertilized the apple blossom so the fruit can set. When we drink a cool glass of tap water, we may think of the local reservoir, but not the source of the water quality, which lies miles upstream in the wooded watershed that filters and cleans the water as it flows downhill.
Salzman suggests payment systems be designed to compensate people for protecting and improving marine ecosystems:
Payments for ecosystem services refer to voluntary transactions where a service provider is paid by or on behalf of service beneficiaries for land, coastal, or marine management practices that are expected to result in continued or improved service provision.
The full 40-page pamphlet is available for download from the link above (and here). From the economics perspective, and a liberty perspective, there are key advantages to developing voluntary ways for restoring and protecting marine ecosystems, rather than coercive regulatory systems.
Key advantages turn on incentives and information. Federal regulators generally depend on the threat of punishment to push wetland owners to manage their wetland the way government regulators think they should. This can lead to expensive and time-consuming legal disputes that frustrate property-owners, regulators, and ecologists.
Also important are information problems. Our knowledge of marine ecosystems and wetlands management continues to develop. Each wetland differs from every other. Knowledge of how best to preserve or restore a marine ecosystem often depends upon local knowledge, and that knowledge can be expensive to uncover through research.
From the Summary:
The key to understanding how PES [Payments for Ecosystem Services] 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. …