Abstract

Ecosystems provide society with a wide range of services—from reliable flows of clean water to productive soil, carbon sequestration and biodiversity conservation among many others. However, private landowners typically lack the incentive to manage their land to provide ecosystem services because many of these benefits accrue to third parties. As a result, land management effects on ecosystem services are often not incorporated into private decision-making, perpetuating suboptimal outcomes that may even harm both human well-being and the environment. To tackle this inefficiency, the use of market instruments and other forms of incentive programs that target resource conservation and provision of ecosystem services in private lands have become increasingly prevalent in environmental policy.