ABSTRACT
The public good nature of many ecosystem services makes them particularly vulnerable to the missing market phenomenon. Payments for ecosystem services (PES) address the missing market problem by paying resource-users directly for the provision of ecosystem services such as biodiversity conservation and waterway protection. PES payments may either be fixed or set through a market mechanism. The logic of market reform narratives suggests that market-based mechanisms ought to be more effective at performing the calculus of value underlying ecosystem service payments than buyer-driven fixed price schemes. The earliest agri-environmental programs in the UK were intended to reduce the damage caused by agricultural intensification in areas of particularly high landscape or wildlife value. The emphasis of US agri-environmental policy is on voluntary participation in a variety of conservation programs. Securing almost any ecosystem service or resource conservation outcome requires long-term commitment and action. PES creates new property rights in service provision designed to encourage the internalization of environmental costs.
