Community-based water markets and collective payment for ecosystem services: toward a theory of community-based environmental markets

In the last few decades, the scope of governanceauthr solutions for environmental problems has increased substantially. The old trichotomy of governance by government, governance by markets, and governance by communities has been replaced by a new interest in hybrid solutions in the recognition that no single-governance mode possesses the capabilities to address the multiple facets, interdependencies, and scales of current environmental problems. This paper takes stock on experiences that combine community-based natural resource management and market-based solutions, or as we call them community-based environmental markets (CBEMs). Specifically, we draw lessons from the literature on community -based payment for ecosystem services in the forest context, and from water markets in the context of water user associations (WUA markets). Similarities across the two contexts include the role of communities to ensure participation, compliance, and distributional equity, and the importance of markets as a source of revenue for communities, among others. Differences across highlight the importance to pay attention to the authority held by the communities (stronger in the context of WUA markets) and the nature of the market (i.e. whether it is a service or a resource market). These commonalities and differences motivate the interest of generating new theory on CBEMs, that is, one that builds on but also transcends community-based natural resource management and environmental market theory and allows to compare experiences from different resource contexts.