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Q-and-A: A Pay Model for Ecosystems
- fexl 16y agoWhy use the term "market failure" here? "Ecosystems like coral reefs or forests are public goods. And we are drawing a benefit from these resources and some people may be drawing an income, but there’s no cost. In economic language, this is a market failure. There is no incentive to maintain that resource and so it suffers what is called a tragedy of the commons." This is not a market failure, it is the total absence of a market. Without clear property rights, the tragedy of the commons is bound to ensue. For example, it is widely known that poachers have decimated the elephant population in Africa. But on private property, the elephant population has rebounded enormously. The reason is simple: the people who own this land have a vested interest in maintaining large numbers of elephants on it.