Market-based instruments for ecosystem services: framework and case study in Lishui City, China

Abstract

Effective provision of ecosystem services (ES) and improvements in well-being of residents can be realized through policy interventions of stakeholder behavior. Among the many policies, market-based instruments (MBIs) have become the focus of global attention, despite a package of practical difficulties. As the market has the advantages of flexibility and low transaction costs, MBIs remain a comprehensive mechanism to translate the external, non-market values of ES into real financial incentives for local actors to provide such services. To couple the theory with practice and solve the key problem of unclear definition of property rights, the framework of MBIs is designed. First, property rights of market creation must be clearly defined, verifiable, transferable, enforceable, and have policy continuity. Then, four key characteristics of MBIs need to be considered in the case design, namely those involving ES, stakeholders, trading mechanisms, and guarantee mechanisms. The Pledge Financing of the Right of the Ecological Public Welfare Forest (PFREPWF) in Lishui City is a typical case of China's current marketization, which is a supplement and improvement to the ecological compensation policy. Based on clearly defined contract rights, Lishui City has realized the integration of ecological compensation and credit creation. PFREPWF reflects the value of the ecological public welfare forest and also solves the problem of insufficient participation of forest farmers due to their affected livelihoods. However, the case design still has the problems of lack of quantification and lack of correlations with ES. The theoretical and practical analysis around the market mechanism has reference value for solving market failures and providing environmental services.

Payments for ecosystem services programs: A global review of contributions towards sustainability

“…Accordingly, natural capital is evaluated through different means and to different degrees for the purpose of applying economic valuations to set prices or exchange value to environmental goods and services [ 253 ]. Strikingly, the concepts of market-based approaches (MBAs) and ES are increasingly connected together in the literature [ 35 , 87 [254] , [255] , [256] , [257] ] ( Fig. 11 ) (C10 C1: + ).…”

Analyzing Characteristics of Grassland Gross Ecosystem Product to Inform Decision Making in the Karst Desertification Control

“…The value of regulating services of grassland ES in the KDC accounts for more than 60% of the GEP, which is largely consistent with the structural characteristics of ES values such as forests and wetlands, etc., [72,73]. Due to the typical public and external characteristics of GEP, most grassland GEPs in the KDC have the dilemma of being difficult to define, quantify, trade, and transfer [74,75]. On the one hand, the non-competitive and nonexclusive characteristics of grasslands in the KDC have led to market failures.…”

Accuracy of Determining Ecologically Safe Territories in the Zones of Electromagnetic Fields Caused by Radio-Television Antennas and Cellular Communications

“…The contribution of the ecosystem in 2012 to crop production was estimated to be at 20.8 billion Euros (Vysna et al, 2021). Research by Gao et al (2020) focuses on the evolution of marketbased instruments for ecosystem services. Emphasis is placed on an ownership of the ecosystem services.…”