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In recent years, interest in ecosystem services has exploded. From cover stories in the New York Times and The Economist, websites connecting buyers and sellers of ecosystem services, and the comprehensive UN-sponsored Millennium Assessment - a report on the state of the world's ecosystem services - to a statement by the U.S. Secretary of Agriculture calling for "a future where credits for clean water, greenhouse gases, or wetlands can be traded as easily as corn or soybeans," the ecosystem services approach has firmly arrived in the environmental policy world. But what does this approach entail and where is it going? This short article reviews the state of the field. Although critical to our well-being, ecosystem services are neither explicitly protected by the law nor traded in markets. The first section explains the three major obstacles to protection and commodification of ecosystem services. The second section proposes payments for services as an alternative policy approach to the more traditional instruments of prescriptive regulation and financial penalties. The third section briefly describes examples of service payments around the globe, demonstrating the wide range of approaches. The fourth section considers the difficult issues in structuring payments for services, including the challenges of moral hazard, the polluter pays principle, and norm shaping. The final section describes three exciting recent developments - the growing interest of conservation and land trust organizations to integrate ecosystem services into their central missions, the launching of an ecosystem marketplace on the web, and negotiations to incorporate ecosystem service markets explicitly into the 2007 Farm Bill. This article was voted by law professors for inclusion in the 2006 issue of the Land Use and Environmental Law Review.

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