Market inclusion of ecosystem services: A viable option to achieve sustainable land use in the tropics?

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The concept of ecosystem services (ES) links ecosystem functioning and human welfare to achieve sustainable land use. However, the success of this concept will critically depend on sources to finance the provision of ES (possibly mobilized by means of markets for ES), on credibility of ES values and on willingness of ES providers to accept financial compensation. Our proposal addresses these aspects: The first part investigates how the land use in Ecuador would change if ES were actually acknowledged as economic values. We will use and develop a risk sensitive economic modeling approach to integrate the uncertainty of expected economic values for ES. The aim is to explore how the uncertainty of ES values would affect investments into specific ecosystem types and the connected conversion processes from tropical forest lands to other land use types and vice versa. The second proposal part investigates the willingness to accept financial compensation for providing ES. In this part we adapt a risk-sensitive bioeconomic farm model that combines various productive but sustainable land management options to real farm situations. The farm level modeling builds upon the effects of risk compensation from diversified land use by means of a land use portfolio approach. It will be used to derive acceptable individual and thus effective conservation payments.