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Cost-effective provision of environmental services: the role of relaxing market constraints

Groom, Ben and Palmer, Charles (2010) Cost-effective provision of environmental services: the role of relaxing market constraints. Environment and Development Economics, 15 (2). pp. 219-240. ISSN 1355-770X

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Abstract

Ferraro and Simpson (2002) argue that when markets are competitive, payments for environmental services (PES) are more cost-effective in achieving environmental goals than more indirect approaches such as subsidies to capital. However, when eco-entrepreneurs face non-price rationing in input or output markets, as is typical for credit in developing countries for example, we show that interventions which relax constraints can be more cost-effective than PES. One corollary of this is that such indirect approaches are preferred to PES by interveners (e.g., donors) and eco-entrepreneurs alike. Both of these outcomes are more likely when constraints are severe. This has implications for schemes with dual environment and poverty alleviation objectives.

Item Type: Article
Official URL: http://journals.cambridge.org/action/displayJourna...
Additional Information: © 2010 Cambridge University Press
Library of Congress subject classification: H Social Sciences > HB Economic Theory
G Geography. Anthropology. Recreation > GE Environmental Sciences
Sets: Departments > Geography and Environment
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 10 May 2010 10:58
URL: http://eprints.lse.ac.uk/27916/

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