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What Paying for Ecosystem Services Means

  • James Salzman
  • Mark Sagoff’s piece, ‘The Catskills Parable,’ (June 2005) recounted the decision of New York City to invest in land management and infrastructure changes in the Catskills and Delaware watersheds rather than build a water treatment plant. Sagoff makes a number of factual corrections that improve the accuracy of the Catskills story (e.g., more funds have gone to land management changes than to fee-simple purchases), but none of his corrections address whether or not the Catskills provides a useful example of a payment for ecosystem services. That is why the story matters in the first place.

    Indeed, Sagoff’s conclusion fails to understand the most important point. He says that the Catskills parable is being misused as a preservationist argument ‘to show that wild or natural ecosystems benefit us more when left alone than when developed economically.’ But in most cases, services will be better provided by deliberate land management practices. Indeed, an ecosystem services approach is really about influencing land management practices to ensure greater provision of services. Focusing on the Catskills example as a story about leaving nature alone, as Sagoff does, misses the point.

    While some environmental advocates may use an ecosystem services argument to assert as a general proposition that roads and development are bad, to claim that this is a central part of an ecosystem services approach mischaracterizes the state of the field. I don’t know of anyone active in the ecosystem services arena who would make such an argument. The three basic assertions of an ecosystem services perspective are straightforward: (1) landscapes provide a stream of services, ranging from water quality and pollination to climate stability and soil fertility, whose economic value is enormous; (2) the vast majority of these services are public goods and not exchanged in markets, so landowners have little incentive to provide these positive externalities; and (3) therefore we need to think creatively about creating markets for these services.

    A number of insights flow from these basic points. The first is that undeveloped land can be productive, in the sense of producing socially valuable services even if there are no direct market signals that reflect this (e.g., consider the role of wetlands in flood control). The crucial corollary is that provision of ecosystem services through a refuge model as Sagoff implies, i.e., setting aside large areas of land for service provision, may prove both inefficient and impractical. We live in a humandominated landscape and the key challenge lies in creating markets for what have traditionally been public goods?the positive externalities provided by public and private land management practices such as water purification and flood control.

    As support for these assertions, don?t simply take my word for it. First, check out the Web site This is the most comprehensive source in the world for examples and analysis of payments for ecosystem services. As you?ll see, far more ecosystem service transactions are taking place than one might expect, and most of these do not involve simply setting aside land. You?ll also find that the ecosystem services approach shares many similarities with PERC?s approach to resource management.

    Jim Salzman
    Professor of Law &
    Nicholas Institute Professor of Environmental Policy
    Duke University

    Written By
    • James Salzman

      James Salzman holds joint appointments at Duke University as the Nicholas Institute Professor of Environmental Policy at the Nicholas School and as the Samuel F. Mordecai Professor at the Law School.

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