Fix ‘market failures’ – through ombudsman services to police corporate greed and misbehaviour, and ensure competition To provide for ‘non-market’ goods and services – especially associated with the environment But how? Through legislation and regulation? Or through incentives (stewardship schemes etc.) Or?? Key questions: How much to pay, for what, and how, and to whom? Fix ‘market failures’ – through ombudsman services to police corporate greed and misbehaviour, and ensure competition To provide for ‘non-market’ goods and services – especially associated with the environment But how? Through legislation and regulation? Or through incentives (stewardship schemes etc.) Or?? Key questions: How much to pay, for what, and how, and to whom? So what for policy?

For what?

How much? Consumers buy more ES? Citizens “vote” for more/ better ES. YN Won’t pay the price? ‘cheap talk’ – markets working? Markets working Y A thought experiment – supposing that we had ‘reliable’ data on Votes, WTP and actual spending on ES, would we expect these three to say the same thing?

How much? Others don’t (free rider problem)? Consumers buy more ES? Citizens “vote” for more/ better ES. YN Won’t pay the price? ‘cheap talk’ – markets working? Free rider deficit > market deficit? N Markets working Y Y N Free-Rider deficit: the difference between the sum of individual WTPs and the sum of WTPs conditional on other people also paying for ES. Market deficit: the cost of providing the (additional) ES.

How much? Others don’t (free rider problem)? Consumers buy more ES? Citizens “vote” for more/ better ES. YN Won’t pay the price? ‘cheap talk’ – markets working? Free rider deficit > market deficit? N Markets working Encourage/Promote ES clubs OR, as a last resort, subsidise consumption of Env. friendly products Y Y Markets working N Y

How much? Others don’t (free rider problem)? Consumers buy more ES? Citizens “vote” for more/ better ES. YN Won’t pay the price? ‘cheap talk’ – markets working? Free rider deficit > market deficit? N Markets working Encourage/Promote ES clubs OR, as a last resort, subsidise consumption of Env. friendly products Improve 3 rd party validation Improve Info. & Comm. Systems Labels are unreliable? N Y YY Markets working N Y N Info. is inadequate? Y

How much? Other things more important? Others don’t (free rider problem)? Consumers buy more ES? Citizens “vote” for more/ better ES. YN Too much effort? Won’t pay the price? ‘cheap talk’ – markets working? Free rider deficit > market deficit? N Markets working Encourage/Promote ES clubs OR, as a last resort, subsidise consumption of Env. friendly products Improve 3 rd party validation Improve Info. & Comm. Systems Labels are unreliable? N Y YY Markets working N Y N Info. is inadequate? NN YYYY Markets working