Abstract: | Summary Markets for ecosystem services are receiving ever-increasing attention from the global environmental community as a mechanism to conserve and protect environmental resources. Formal markets for the selling and buying of ecosystem services emerge as institutions and regulatory frameworks are developed and legitimized. For a small country with relatively abundant natural resources, such as Panama, ecosystem service markets have significant potential to provide landowners with a sustainable stream of income while facilitating national environmental protection goals. This paper takes one ecosystem service in Panama-water supply-and assesses a host of policy alternatives to improve markets for water in Panama. The analysis suggests that secured long-term financing mechanisms and strengthened institutional roles are important elements in shaping stakeholder behavior and advancing water markets in Panama. |