ABSTRACT
Chapters 2 and 3 introduced the idea of ‘economic failure’: the inability of existing markets to capture the ‘true’ value of natural resources. Two sources of such failure were identified:
Market failure – distortions due to the ‘missing markets’ in the external benefits generated by biodiversity conservation; and
Intervention or government failure – distortions due to government actions in intervening in the workings of the market place.
Within market failure we distinguished local market failure and global market failure. The former relates to the inability of markets to capture some of the local, national benefits of biodiversity conservation. Or, looked at from the standpoint of land conversion, local market failure refers to the failure of markets to account for the external costs of biodiversity loss because of land conversion. The latter concept – global market failure – relates to the fact that biodiversity conservation yields external benefits to people outside the boundaries of the nation faced with the development/conservation choice.