Markets in Environmental Governance - the best way forward?

Abstract

This lecture aims first at to clarify the concept of ‘markets for environmental goods/ecosystem services (EG/ES)’. The defining charac¬teristic of markets is interaction through trade. Two main dimensions are identified as basis for classifying markets in ES. Firstly, we have markets with and without intermediaries. Secondly, some markets for EG/ES are created by defined liabilities like caps on emissions while other trades come about voluntarily. Altogether six forms of markets are identified. Secondly, I offer an analysis of the most important existing markets for EG/ES using the developed classification. Regarding payments for ecosystem services (PES), most are not markets, not even incomplete. This is so as most resources are raised through taxes or fees – command not trade. Moreover, most payments are best characterized as subsidies. Cap-and-trade systems like those for carbon qualify as markets, but depend crucially on the politically defined cap. Moreover, it is this cap that protects the environment. While the idea with markets in ES is to ‘escape’ command and control, it is observed that command and control is essential for these markets to work.

About the speaker

Arild Vatn is professor at the Department of International Environment and Development Studies at the Norwegian University of Life Sciences (NMBU). His main expertise is in institutional and ecological economics. Specific fields of experience are: a) Environmental governance and policy processes; b) Policy evaluations in forestry and agriculture; c) Environmental valuation. Vatn has been president and vice president of the European Society of Ecological Economics. He was awarded the NMBU research prize in 2002 and the joint EAEPE and AFEE Veblen 150 prize in 2007 for his book ‘Institutions and the Environment’. His latest book from 2015 is entitled ‘Environmental Governance. Institutions, policies and actions’