Assessing ecological infrastructure investments

Proceedings of the National Academy of Sciences
By: , and 



Conventional markets can underprovide ecosystem services. Deliberate creation of a market for ecosystem services [e.g., a payments for ecosystem services (PES) scheme] can close the gap. The new ecosystem service market alters behaviors and quantities of ecosystem service provided and reveals prices for the ecosystems service: a market-clearing equilibrium. Assessing the potential for PES programs, which often act as ecological infrastructure investment mechanisms, requires forecasting the market-clearing equilibrium. Forecasting the equilibrium is complicated, especially at relevant social and ecological scales. It requires greater disciplinary integration than valuing ecosystem services or computing the marginal cost of making a land-use change to produce a service. We conduct an ex ante benefit–cost assessment and forecast market-clearing prices and quantities for ecological infrastructure investment contracts in the Panama Canal Watershed. The Panama Canal Authority could offer contracts to private farmers to change land use to increase dry-season water flow and reduce sedimentation. A feasible voluntary contracting system yields a small program of about 1,840 ha of land conversion in a 279,000-ha watershed and generates a 4.9 benefit–cost ratio. Physical and social constraints limit market supply and scalability. Service delays, caused by lags between the time payments must be made and the time services stemming from ecosystem change are realized, hinder program feasibility. Targeting opportunities raise the benefit–cost ratio but reduce the hectares likely to be converted. We compare and contrast our results with prior state-of-the-art assessments on this system.

Publication type Article
Publication Subtype Journal Article
Title Assessing ecological infrastructure investments
Series title Proceedings of the National Academy of Sciences
DOI 10.1073/pnas.1802883116
Volume 116
Issue 12
Year Published 2019
Language English
Publisher National Academy of Science
Contributing office(s) National Research Program - Central Branch, WMA - Earth System Processes Division
Description 8 p.
First page 5254
Last page 5261
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