Public goods and externalities linked to Mediterranean forests: economic nature and policy

This paper considers public goods and/or economic externalities (off-site and off-market effects) of Mediterranean forests, referred as MEDFOREXs. It also reports possible market failures and/or distortions. MEDFOREX can be valued in monetary terms as already undertaken in several Mediterranean forest sites. Multifunctional indicators are also being developed. Policy tools aimed at promotion of positive MEDFOREX, and prevention of negative ones, can be classified as mandatory or voluntary. Mandatory tools have been much used in the Mediterranean context, and now represent the core of forest policies. More recently financial or economic tools, mainly based on payments, and internalisation of externalities, have emerged. Also market options are now envisaged and applied as shown by recent surveys. Policy effectiveness is improved by the use of a combined set of tools. The most appropriate mix has not yet been formalised and this represents a policy challenge.