Abstract
Economic valuation of the tropical forest resource is en vogue. The acknowledgment of the environment’s multiple benefit delivery paves the way for reciprocal bargain-like transactions, opening up the potential for designing efficient and effective compensation mechanisms. The following chapter contributes to the economic section of the present handbook, introducing in a first step theoretical considerations necessary to gain an understanding of the rationale environmental and forest-related compensation schemes are based on. Subsequently, the reader will be familiarized with practical examples including Kyoto’s Clean Development Mechanism (CDM), Payments for Ecosystem Services (PES), and Reducing Emissions from Deforestation and Forest Degradation (REDD). Through the combination of theory and their practical embedding, this chapter offers a holistic overview of compensation payment arrangements found throughout the tropical hemisphere, providing guidance and material for mastering the subject.
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Notes
- 1.
An externality can be defined as “the effect that an action any decision maker has on the well-being of other consumers or producers, beyond the effect transmitted by changes in prices” (Besanko and Braeutigam 2010, p. 773).
- 2.
Valuation methods commonly encountered in the environmental field will be discussed in the subsequent section.
- 3.
Note that also nongovernmental organizations (NGOs) or international financial or conservation institutions can act as a third party (cf. Engel et al. 2008).
- 4.
Excludability refers to the ability of a good to prevent people who have not paid for it from consuming/using it.
- 5.
A rival good is a type of good that can be possessed or consumed by only one single user, e.g., consumer products.
- 6.
See also Garrett Hardin’s (1968) essay on “The Tragedy of the Commons.”
- 7.
A list of forest goods and services classified according to their public/private and market/nonmarket nature can be found in FORVALUE (2008), Annex 5, p. 7.
- 8.
- 9.
References
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Recommended References
For understanding the economic foundation of compensation payments (Pigou and Coase) as well as the typology of goods and services better, consult any introductory economic textbook
Guide to the Millennium Ecosystem Assessment Reports: http://www.unep.org/maweb/en/index.aspx
Study on the Development and Marketing of Non-Market Forest Products and Services (FORVALUE): http://ec.europa.eu/agriculture/analysis/external/forest_products/index_en.htm
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Michel, J., Kallweit, K., von Pfeil, E. (2016). Concept of Compensation Payments and Ecosystems. In: Pancel, L., Köhl, M. (eds) Tropical Forestry Handbook. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-54601-3_231
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DOI: https://doi.org/10.1007/978-3-642-54601-3_231
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