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Implementing The Optimal Provision Of Ecosystem Services, Stephen Polasky, David Lewis, Andrew Plantinga, Erik Nelson

Economics Department Working Paper Series

Many ecosystem services are public goods whose provision depends on the spatial pattern of land use. The pattern of land use is often determined by the decisions of multiple private landowners. Increasing the provision of ecosystem services, while beneficial for society as a whole, may be costly to private landowners. A regulator interested in providing incentives to landowners for increased provision of ecosystem services often lacks complete information on landowners’ costs. The combination of spatially-dependent benefits and asymmetric cost information means that the optimal provision of ecosystem services cannot be achieved using standard regulatory or payment for ecosystem services (PES) …