A1 Journal article – refereed
Economic Instruments for Biodiversity and Ecosystem Service Conservation & the EU State Aid Regulation




List of Authors: Elina Raitanen, Jukka Similä, Kristian Siikavirta, Eeva Primmer
Publisher: Brill
Publication year: 2013
Journal: Journal for European Environmental and Planning Law
Number in series: 1
Volume number: 10
Issue number: 1
ISSN: 1613-7272

Abstract
Many environmental services are not traded in markets but are rather public goods and their

supply cannot easily be motivated by the market forces. This leads to underinvestment in the

public goods relative to what would be socially desirable. Financial instruments are designed to

modify behaviour by encouraging private individuals, organisations and businesses to participate

actively in conservation. Nation states are ultimately responsible for providing public goods but

the competition rules of the European Union restrict the use of economic instruments that

constitute ‘state aid’ as defined in the Treaty on the Functioning of the European Union (TFEU).

This article will analyse the regulatory frames under which economic incentives may constitute

state aid in the meaning of 107 TFEU and the terms and conditions on which these aids may still

be granted for land-owners.

Many environmental services are not traded in markets but are rather public goods and their supply cannot easily be motivated by the market forces. This leads to underinvestment in the public goods relative to what would be socially desirable. Financial instruments are designed to modify behaviour by encouraging private individuals, organisations and businesses to participate actively in conservation. Nation states are ultimately responsible for providing public goods but the competition rules of the European Union restrict the use of economic instruments that constitute ‘state aid’ as defined in the Treaty on the Functioning of the European Union (TFEU). This article will analyse the regulatory frames under which economic incentives may constitute state aid in the meaning of 107 TFEU and the terms and conditions on which these aids may still be granted for land-owners.


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