6 Payment for Ecosystem Services

Question 1

Externalities

Answer 1

• Externality A cost or benefit to an agent who is not involved in the original transaction
(affected by the action/s of other agent/s)

• If it brings cost a negative externality (uncompensated)
• If it brings benefit a positive externality (unrewarded)
• Some may probably be both and need to be considered more carefully

Question 2

Do the calculation and be able to make the graph

as we can see on 
# Lecture 6 slide 104

Answer 2

YOU CAN DO IT!

Question 3

Environmental Problems and the “Global Commons”

Answer 3

• Markets are likely to generate inefficient outcomes in the presence of externalities and public goods
• Within a single country government has the legitimacy to enforce efficient resource allocation in case of market failure
• Where impacts spill over national boundaries there is typically no international institution having the power to enforce efficient outcomes
• “Tragedy of the Commons”(Hardin)
• Common pool resources (water, wildlife, fish, grazing land)

Question 4

Payments for Ecosystem Services (PES)

Answer 4

A voluntary transaction where a well defined Ecosystem Service is acquired (buy/obtain) by one/many service buyer(s) from one/many service provider(s). If and only if the provision is secure, contingent on the actual provision.

Question 5

PES Example:

EU Common Agricultural Policy Greening

Answer 5

• Part of the EU‘s direct payments to farmers are contingent (tergantung) on several provisions the farmers have to comply (mematuhi) with
• The EU thus acts as a buyer of ecosystem services

Question 6

Get the idea about graph on

Lecture 6 slide 116

Answer 6

KEEP IT UP!