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Media type:
E-Article
Title:
Cost-effective provision of environmental services: the role of relaxing market constraints
Contributor:
GROOM, BEN;
PALMER, CHARLES
Published:
Cambridge University Press (CUP), 2010
Published in:
Environment and Development Economics, 15 (2010) 2, Seite 219-240
Language:
English
DOI:
10.1017/s1355770x09990167
ISSN:
1355-770X;
1469-4395
Origination:
Footnote:
Description:
ABSTRACTFerraro 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.