

Q-and-A: A Pay Model for Ecosystems - ricaurte
http://green.blogs.nytimes.com/2010/06/18/q-and-a-a-pay-model-for-ecosystems

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fexl
Why use the term "market failure" here?

"Ecosystems like coral reefs or forests are public goods. And we are drawing a
benefit from these resources and some people may be drawing an income, but
there’s no cost. In economic language, this is a market failure. There is no
incentive to maintain that resource and so it suffers what is called a tragedy
of the commons."

This is not a market failure, it is the total _absence_ of a market. Without
clear property rights, the tragedy of the commons is bound to ensue.

For example, it is widely known that poachers have decimated the elephant
population in Africa. But on private property, the elephant population has
rebounded enormously. The reason is simple: the people who own this land have
a vested interest in maintaining large numbers of elephants on it.

