NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Steven M. Smith

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January 2013Payment for Environmental Services: Hypotheses and Evidence
with Lee J. Alston, Krister Andersson: w18740
The use of Payment for Environmental Services (PES) is not a new type of contract but they have become more in vogue because of the potential for sequestering carbon by paying to prevent deforestation and degradation of forest lands. We provide a framework utilizing transaction costs to hypothesize which services are more likely to be provided effectively. We then interpret the literature on PES programs to see the extent to which transaction costs vary as predicted across the type of service and assess the performance of PES programs. As predicted we find that transaction costs are the least for club goods like water and greatest for pure public goods like carbon reduction. Actual performance is difficult to measure and varies across the examples. More work and experimentation is needed...

Published: Lee J. Alston & Krister Andersson & Steven M. Smith, 2013. "Payment for Environmental Services: Hypotheses and Evidence," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 139-159, 06. citation courtesy of

Contact and additional information for this authorAll NBER papers and publicationsNBER Working Papers only

 
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