Conventional markets are the wrong institutions for managing ecosystem services
We need to think much more creatively about the design of institutions better suited to the common asset nature of ecosystem services. If we think of ecosystem services as part of “the commons,” we still can and should use economic incentives (fees and payments) to manage the commons, but we need a different institutional form than “markets” within which to do this – something more akin to an “ecosystem trust”.
American property law, regulation, and social norms have an anti-ecosystem services bias. However, an alternative emerges in the “public trust doctrine,” an idea which has the breadth and substance to guide a comprehensive approach to natural resource management. “Common asset trusts” may be one way of implementing this doctrine.
For example, Vermont’s Senate introduced a bill to create such a trust that would “propertize” (but not privatize) the state’s natural and social capital assets in order to better manage them on behalf of their common stakeholders. This is a new but demonstrably straightforward approach. Trusts would define whole ecosystems as common property assets, managed by trustees on behalf of all current and future beneficiaries. Once property rights are assigned, we can use existing property law to manage ecosystems more effectively; charging fees for damages, making payments for enhancements, and paying dividends to stakeholders. This approach can also help to drastically reduce transaction costs of Payments for Ecosystem Services schemes.
While trusts may not be the only or the best institution for managing ecosystem services, do they seem to be a move in the right direction?