Adequate economic policies can tackle the market failures in forest services provision
The workshop was broken down into several sessions. The first session “A close look at MBIs and PES” focused on the presentation of the latest theoretical knowledge on market-based instruments and payments for environmental schemes. In this session, the emphasis was put on clarifying the relationship between these two concepts, and on analyzing the basic foundations underlying the payments for environmental services (PES).
As well known, the main objective of any economic incentive is to tackle the existing market failures. Policy makers dispose of a wide variety of instruments and tools, among which payments for environmental services are one of the most novel ones. PES form part of policy mechanisms based on providing economic incentives, and moreover can be considered market-based ones as they implicitly create a market for an environmental service. Their role in the provision of incentives is very important, as payments for environmental services can only be introduced in situations in which to achieve the desired level of environmental service a change of the current management practice is required.
In the workshop it was highlighted that when designing PES schemes, the nature of Forest Goods and Services and the fact that they are jointly produced should be carefully considered. In addition, the social and cultural context in which PES schemes are to be implemented should be thoroughly understood in order to improve their acceptability and to avoid creating perverse incentives. The importance of science-policy dialog and stakeholder involvement in the process of policy design was also remarked.
In the second session, “MBIs and PES in practice: selected case studies as applied in forestry”, several case studies from different countries illustrating the applicability of existing policy mechanisms in forestry have been presented: (1) a comparative study of mushroom business model in Italy and in Finland; (2) a Portuguese Forest Fund to prevent forest fires; (3) a carbon payment scheme in Mexican forests; and (4) the trading programme in natural values in Finland. Participants of the workshop observed that the success stories are usually a result of a trial and error process.
In the third session, “MBIs and PES – a curse or a cure?“, an extensive discussion among the key note speakers and the participants of the workshop took place. Several critical issues have been discussed, such as property rights, transaction costs, and different design and applicability aspects of policy mechanisms. It was pointed out that the existing mechanisms are not necessarily directly transferable from one country to another, although the interchange of experiences is always enriching. In addition, workshop participants remarked the potential of common property framework (advocated among others by the recent Nobel laureate in Economics, Elinor Ostrom) in the management of natural resources.
Presentations available on the event website here
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