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Paying for international environmental public goods
Rodrigo Arriagada1, Charles Perrings
1Department of Agricultural Economics, Pontificia Universidad Catolica de Chile, Santiago, Chile. rarriagadac@uc.cl
Ambio
|February 18, 2012
Summary
International environmental public goods are undersupplied due to market failures. Solutions involve compensating local providers for global benefits through targeted investments or payments for ecosystem services.
Area of Science:
- Environmental Economics
- Public Goods Theory
- International Environmental Policy
Background:
- International environmental public goods, crucial for global sustainability, are often undersupplied.
- Understanding the specific reasons for this undersupply is key to designing effective international cooperation strategies.
Purpose of the Study:
- To diagnose the causes of public goods failure in international environmental contexts.
- To categorize types of international environmental public goods based on supply technology.
- To propose solutions for efficient supply of these goods.
Main Methods:
- Analysis of public goods theory applied to environmental services.
- Categorization of supply technologies (additive vs. weakest link).
- Economic modeling of undersupply and compensation mechanisms.
Main Results:
- Identified two main categories of undersupplied international environmental public goods: additive and weakest link supply technologies.
- Determined that the importance of individual country contributions influences the optimal collective response.
- Proposed compensation for local providers as a primary solution.
Conclusions:
- Targeted financial mechanisms, such as direct investment (e.g., Global Environment Facility) or payments for ecosystem services, can address the undersupply of international environmental public goods.
- Effective solutions require understanding the specific supply characteristics and the criticality of contributions from individual nations.
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