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Assessing ecological infrastructure investments.

Wiktor Adamowicz1, Laura Calderon-Etter2, Alicia Entem2,3

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Summary
This summary is machine-generated.

Creating markets for ecosystem services, like payments for ecosystem services (PES) schemes, can improve water flow and reduce sedimentation. A Panama Canal Watershed study shows a feasible PES program yields a 4.9 benefit-cost ratio.

Keywords:
ecosystem serviceshydrologyincentivesnatural capitalreforestation

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Area of Science:

  • Ecological economics
  • Environmental management
  • Conservation science

Background:

  • Conventional markets often fail to provide sufficient ecosystem services.
  • Payments for Ecosystem Services (PES) schemes can address this market failure by creating new markets.
  • Forecasting market-clearing prices and quantities is crucial for assessing PES program feasibility, especially at relevant scales.

Purpose of the Study:

  • To conduct an ex ante benefit-cost assessment for ecological infrastructure investment contracts in the Panama Canal Watershed.
  • To forecast market-clearing prices and quantities for PES contracts aimed at improving dry-season water flow and reducing sedimentation.
  • To evaluate the feasibility and scalability of a voluntary contracting system for PES.

Main Methods:

  • Ex ante benefit-cost analysis.
  • Forecasting market-clearing equilibrium for ecosystem services.
  • Modeling land-use change contracts for farmers.

Main Results:

  • A feasible voluntary contracting system for PES in the Panama Canal Watershed involves approximately 1,840 ha of land conversion.
  • The program generates a benefit-cost ratio of 4.9.
  • Physical, social constraints, and service delays limit market supply, scalability, and program feasibility.

Conclusions:

  • PES programs can be effective ecological infrastructure investment mechanisms.
  • Program feasibility is influenced by factors such as scale, constraints, and timing of service delivery.
  • Targeting opportunities can increase the benefit-cost ratio but may reduce the overall scale of land conversion.