READINGS:
1. Daly and Farley ch 1
2. Daly and Farley ch 2
3. Daly and Farley ch 3
4. Daly and Farley ch 4
5. Costanza EE 1989.pdf
6. Costanza, Stern et al.pdf
7. Ropke 2004.pdf
8. Costanza et al Intro Book.doc
9. Balmford et al.pdf
10. Costanza 2001 BioScience.pdf
11. Costanza and Ruth 1998.pdf
12. Costanza et al Nature 1997.pdf
13. Costanza et al.GPI.pdf
14. Costanza et al. Pax 2002.pdf
15. Costanza et al. Science 1998.pdf
16. Economics in a full World. Herman Daly, Sci. Am.
17. Bob LV.doc
18. Costanza et al. 1989.pdf
19. Costanza Oceans 1999.pdf
20. Moore ES v3.doc
21. Sutton and Costanza.pdf
22. CompensationESRuralCommunities.pdf
23. Annotated Bibliography of PES literature

Capitalism 3.0 Peter Barnes

Core Texts
Landell-Mills, N., Porras, I.T. (2002). Silver Bullet or Fool’s Gold? A Global Review of Markets for Forest Environmental Services and Their Impact on the Poor. Institutes for Sustainable Private Sector Forestry Series. International Institute for Environment and Development, London.

Environmental Policies and PES
Wunder, S., 2005. Payments for Environmental Services: Some Nuts and Bolts CIFOR Occasional Paper No. 42.

Ecosystem Services
Costanza, R., D’ Arge, R., de Groot, R., Farber, S., Grasso, M., Hannon, B., Limburg, K., Naeem, S., O’Neill, R.V., Paruelo, J., Raskin, R.G., Sutton, P., van den Belt, M. (1997). The Value of the World’s Ecosystem Services and Natural Capital. Nature 387, 253-260.

Other
Kemkes, R., Pollock, N., Farley, J. (DRAFT) The Role of the Public and Private Sectors in PES

INTRODUCTION TO THE PROBLEM
All economic production requires ecosystem goods, the raw materials provided by nature. These raw materials however are simultaneously the elements of ecosystem structure—the building blocks of ecosystems. Structure generates function, so the conversion of ecosystem structure to economic product inevitably degrades ecosystem functions. Everything the economic system produces is eventually used up or worn out and returns to the ecosystem as waste, which in many cases again degrades ecosystem function. Ecosystem functions that support human welfare are defined as ecosystem services, and include the myriad life support functions that sustain our civilization. The problem is that most ecosystem services are non-excludable, meaning that one person cannot prevent others from using them, and non-rival, meaning that one person’s enjoyment of the service does not preclude others enjoyment. Therefore there is little or no market incentive to provide them. In contrast, most ecosystem goods are excludable and rival and can be sold in markets. The result is that market economies have a systematic bias in favor of the harvest of ecosystem structure for market production over the conservation of ecosystem structure for the production of ecosystem services. As a concrete example, the ecosystem services sustainably generated by tropical rainforests have been valued at more than $2006 per hectare per year (Costanza et al., 1997), while conversion of the forest for timber and pasture generates gross returns as low as $27 per hectare per year (Almeida and Uhl, 1995). However, the farmer captures all the benefits of conversion, and shares the benefits of preservation with all of society, thus ensuring conversion, unless action is taken.

To address this systematic bias on the part of private markets, environmentalists, economists, policy makers, and the business community have been working together to create payment schemes for the provision of ecosystem services. In Costa Rica, the government compensates landowners for reforestation and forest conservation in consideration for the water supply, biodiversity, ecotourism, and carbon sequestration services of the forests (Pagiola, 2002). The water utility In New York City and downstream irrigators in Colombia pay upstream farmers for retaining and restoring riparian buffer zones to ensure water quantity and quality (Chichilnisky and Heal, 1998). In the United States, the government has capped the permissible emission levels for sulfur dioxide, and assigned individually transferable quotas to polluters. In Brazil, Parana and other states return sales taxes to municipalities according to how well they have maintained and improved key ecosystem services (May et al., 2002).