Demand-side Value for Ecosystem Services and Implications for Innovative Markets: Experimental Perspectives on the Possibility of Private Markets for Public Goods

Abstract

Environmental economists invest in measuring the value of the environment but put less effort toward integrating that value directly into the economy. Experimental economists evaluate the performance of mechanisms to fund public goods but in some cases offer limited insight into practical implications for developing markets. This discussion presents initial insights into applying mechanisms for private provision of public goods based on demand-side values rather than regulatory-based market incentives such as cap-and-trade policies. Consideration of mechanisms to generate revenue inspires field tests that could direct experiments using threshold public goods and Lindahl's framework toward applications that transform value into revenue.