Ecosystem Services

James Surowiecki of the New Yorker, brings to our attention the concept of wealthy countries paying for ‘ecosystem services’ as one tool in the vast array needed to mitigate climate change and associated environmental destruction.  As in many things, Norway is showing by example.

It was notable when Norway announced a deal with Liberia: Norway will give Liberia up to a hundred and fifty million dollars in aid, in exchange for which Liberia will work to stop the rapid destruction of its trees.

Liberia has much of what remains of West Africa’s rain forest, but logging is rampant. The initiative is not an act of charity but a trade: Liberia gets income, which it needs; Norway gets to preserve biodiversity and take a small step against climate change. A similar deal that Norway struck with Brazil years ago helped slow deforestation there. Economists call arrangements of this kind “payments for ecosystem services,” and they follow a rationale known as the Coase theorem. In 1960, the economist Ronald Coase argued that bargaining between parties could, under certain conditions, produce a mutually beneficial and efficient solution to problems like pollution. Trying to force Liberia to stop chopping down trees (by using, say, sanctions) would be high-handed and probably ineffective. Paying Liberia to do so makes both sides better off.

… For the West, which is historically responsible for most of the carbon dioxide in the atmosphere today, paying developing countries to make the transition away from carbon is not only the right thing to do but also squarely in our self-interest. Greenhouse gases emitted in Africa harm us as much as those emitted here. “If Africa just burns the coal and oil that it has at home in order to industrialize, it’ll do trillions of dollars of damage…

Good, thoughtful stuff