Securing multiple values of wetlands: Policy-based instruments

Abstract

Interest in the use of market-based instruments (MBIs) has increased in recent years, partly to improve economic incentives to address environmental problems, and partly due to insufficient public funding available for environmental policies. In this context, MBIs can represent a useful complement to more classical public policies as they do not require high amounts of public funding (e.g., private payments for ecosystem services (PES), offsetting) or reduce government expenditures (e.g. reform of environmentally harmful subsidies). MBIs should be seen as a complement and not a substitute to environmental regulation. They are appropriate instruments only in specific contexts and for specific environmental challenges. Their effectiveness depends very much on instrument design, institutional context and complementarity with environmental regulation. A range of MBIs can be employed to protect or improve the state of wetlands, including changes in resource prices; removal of environmentally harmful subsidies; entrance fees to protected areas; pollution charges, liability, and compensation requirements for pollution incidents; PES programmes; water funds; access and benefit sharing programmes to ensure that countries and communities providing genetic materials or associated traditional knowledge receive related economic benefits; offsets and habitat banking; environmental/reverse auctions for land use and water protection. Which instrument mix is best, depends on the specific problem and the country context, including regulatory and institutional environment.