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Weekly UpdatesGentry, B., Q. Newcomer, S. Anisfeld, and M. Fotos, Editors. Emerging Markets for Ecosystem Services: A Case Study of the Panama Canal Watershed. Binghamton, NY: Haworth Press, 2007, 387 pp., $148.00.
Environmental Services Payments (ESPs) are an often-mentioned policy prescription to support the production of positive environmental externalities management of private lands to provide public environmental benefits. This edited volume of sixteen articles focuses on the potential of ESPs in the Panama Canal Watershed. The book is the result of a Spring, 2005 course on Emerging Markets for Ecosystem Services at Yale School of Forestry and Environmental Science. The articles that comprise this volume are simultaneously published as a special edition of the Journal of Sustainable Forestry (Volume 25, Numbers 1/2 and Numbers 3/4, 2007). This journal is published by Haworth Press and with editors from The Yale School of Forestry and Environmental Science. The two course instructors, together with a visiting lecturer and a teaching assistant, are coeditors of this volume. These four coeditors, along with the twelve student participants in the course, are the articles' authors.
I was eager to read and review this volume, because I have worked as an environmental economist in Central America, and have maintained my interest in the different ESP programs over the last decade. I found this volume to be generally informative, although not scientific. I was disappointed that the markets for environmental services appear to remain speculative as opposed to "emerging." And I was disappointed in the policy conclusions presented in the face of these speculative markets.
This volume and its chapters are a very good demonstration of an innovative graduate course in environmental management. As explained in Shimon Anisfeld's introductory chapter, the course "Emerging Markets for Ecosystem Services: Developing an Integrated Framework for Analysis," was led by Bradford Gentry, the volume's lead coeditor. As part of the course, students traveled to Panama and met with a number of stakeholders, officials, and experts. Most of the chapters that comprise the book were written by the course students. These chapters demonstrate a significant achievement for graduate students and a noteworthy accomplishment for the Yale School of Forestry and Environmental Science, its faculty, and its graduates.
The book is divided into four main sections, three representing the environmental services of principal interest: (a) carbon; (b) water; and (c) biodiversity. The final section provides integrated assessments. Each of the first three sections is subdivided into chapters on demand, supply, and policy response. Thus, the book is well organized. However, I would have appreciated an introductory chapter that gave a clear presentation of the population, economy, land-use, land tenure, topography, and social and physical characteristics of the Panama Canal watershed. As expected there is substantial and perhaps unavoidable overlap in the content of different chapters. Some chapters reference other chapters, but many do not. There is a comprehensive index that does facilitate certain referencing.
Although the chapters have all been published in the Journal of Sustainable Forestry, they truly do not reflect the scientific rigor that would be expected in major disciplinary journals. The chapters contain no theory, models, nor empirical analysis. Few of the references come from refereed journal articles. Only a few of the references are written in Spanish. There is an overuse of "personal communication" as a form of documentation.
The case study of the Panama Canal has some advantages, especially for an international study tour. It is relatively safe and many professionals will speak English. It is also attractive as a case study of watershed management, given plans to expand the canal's capacity and to provide locks for larger ships. Recent studies on forest hydrology in the watershed, cited in draft form, provide much needed scientific support.
However, current property rights do not make this a particularly attractive case study for ESPs. ESPs are best thought of as a Coasian exchange, whereby those that receive benefits from environmental services would pay land owners to manage their land to produce these services. The monetary transfer would be appropriate because the land owners have the property rights to manage their land as they choose. However much of the Panama Canal watershed is public land, and as such would appropriately produce public environmental services without compensation. And the Panama Canal Authority (ACP) has extensive rights to regulate land use. Thus there would be no need for the ACP to pay for environmental services.
However, I was pleased that this book updated my knowledge of ESP markets, especially for carbon credits and bioprospecting. And I am satisfied that good efforts were made to present the scientific understanding of the value of tropical forests on water flows and sedimentation. Sandra Lauterbach's article on demand for carbon credits does a good job of presenting the difficulty of selling carbon credits for reforestation projects under the formal markets of the Kyoto Protocol's Clean Development Mechanism. She states that only one forestry project has ever been approved as worthy of carbon credits under the Clean Development Mechanism. She portrays the voluntary market as being very fragmented and with low prices. She concludes that it would be difficult for any Panamanian project to achieve a market transaction in the sales of carbon credits.
Similarly, Patrick Burtis' chapter on bioprospecting relates the low expected financial returns from any effort to preserve tropical forest land for the eventual creation and sales of drugs. Burtis states that bioprospecting ventures have not delivered marketable drugs nor conservation results. Burtis suggests that the Panamanian bioprospecting project ICBG-P has a strategy that may successfully address many of the shortcomings of other bioprospecting ventures. However, in doing so it appears that he is being polite to his hosts as opposed to being truly optimistic.
Krista Anderson's article on the supply of watershed services presents a fair, but unscientific overview of forest hydrology. As the author explains, scientific consensus contradicts the common assumption that forest cover contributes to water yield in a basin. Anderson's review of published and unpublished literature suggests that science remains ambiguous about other watershed services, namely dry season water regulation, flood control, sedimentation control, and water quality maintenance. Given the importance of water to the Panama Canal, this honest appraisal is very important.
I am most disappointed in the policy recommendations presented by the authors, especially in the final section on Integrated Assessments. As an economist, I would suggest that land owners and managers should base decisions on market signals and profit incentives. An alternative point of view is that land should be managed according to experts' advice, and in the absence of an actual market demand for environmental services, land managers should be told that these markets are "emerging." Despite Lauterbach's chapter's conclusion that carbon credits are difficult to sell, the authors suggest that land managers act as if they could sell carbon credits. I suspect that many land managers in developing countries are uninterested in talk of potential payments. And I hope that poor and uninformed land managers are protected from promises of payments that actual markets will not provide.
Now I will answer the question, "Who should buy this book?" Certainly those individuals and libraries that are subscribed to, or have access to, the Journal of Sustainable Forestry should not be in a hurry to purchase this book. At $148.00 the price of the volume is considerably less than the yearly subscription cost of the journal. Also for readers interested in a particular chapter, these can be purchased online, from Haworth Press, for $25.00. I would recommend this book to students in undergraduate and master's level natural resources policy classes. Thus many university libraries should have this book available. However, a good internet search for "Environmental Services Payments" will provide a number of very good alternative publications, including those featured in the chapters' reference lists.
Robert Hearne
North Dakota State University
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