Market-based instruments (MBIs) are a promising new addition to the existing suite of natural resource management (NRM) tools. They use trading mechanisms, auctions and price signals to positively influence the behaviour of people managing natural resources and environmental assets. MBIs work by:
MBIs are being applied to a range of complex Australian NRM and environmental problems. A number of different projects in Australia are either investigating ways to improve the use of MBIs in NRM through research or actually using MBIs on the ground for NRM outcomes.
Australia’s natural resources are used in industries such as manufacturing, farming, mining, construction and urban development, just to name a few. For every use there is sometimes a cost involved, such as pollution, soil degradation, salinity, pests, loss of biodiversity and habitat, declining water quality and quantity. As impacts are not often immediate, markets for goods and services sometimes fail to adequately consider the impacts of production on the environment. The forces of supply and demand have failed to prevent environmental degradation in our nature assets, resulting in a ‘market failure’.
For this reason the Australian and state and territory governments have implemented a wide range of policy responses including the Natural Heritage Trust and the National Action Plan for Salinity and Water Quality. |