What's in a Name? Market-based Instruments for Biodiversity Health and Environment Reports, No. 8, May 2011
The use of Market-based Instruments (MBIs) for the management of biodiversity and ecosystem services - carbon trading schemes, payment for ecosystem services, mitigation banking, etc. - is currently booming. But the definition and underpinning theory of these tools remain unsettled. It is therefore necessary to advance in the definition, theory and consistent classification of these instruments.
The report is structured in two parts that address two different questions, which we identified as common beliefs in the field. In the first part we try to evaluate the extent to which MBIs constitute a particular mode of intervention that differs substantially from other types of instruments. We find that they show extremely contrasted characteristics, which makes their classification in a single "market-based" category difficult. In the second part of the report, we try to assess the extent to which the use of MBIs triggers a “roll back” of the state, in other words the decline in its scope of action and its authority in environmental policy-making. Our study shows that the links between MBIs and public authorities remain strong, particularly on issues of monitoring, setting of objectives and choice of instruments, to the point that it could be argued they constitute a new form of regulation.