Financing environmental conservation: Private or public investment?

A more affluent and certainly larger world population is expected to increase demand for environmental services. With at best a steady supply of such services and more likely a continuing deterioration -- the economic relevance of investing to capture 'future' values is clear. Not only environmental economists understand that 'market failure' for 'public goods' is the main challenge. Intervention is required wherever environmentally degrading activities are delivering substantial, private, short-termbenefits while the public bears the long-term cost. However,the public resources available for environmental conservation are limited and their allocation across priority areas is likely to be less than optimal. Could market mechanisms in the form of a'cap and trade' regime enhance efficiency Can these mechanisms generate much-needed additional investmentDeclining financial resources significantly constrain conservation and sustainable development. Various innovative mechanisms have been developed for financing conservation in recent years. These mechanisms aim to access new revenue sources. Examples include private sector companies through paymentschemes, forgiving government debt in return for nature swaps, and new mechanisms for utilizing any available funds, such as conservation trusts.

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