Division 2.9 Market failures occur when the market does not deliver an efficient outcome. In the context of the marine environment these failures can be described as:

For public goods and services – A number of goods and services provided by the marine environment such as climate regulation and biological diversity are ‘public goods’ (no-one can be excluded from benefiting from them and consumption of the service does not diminish the service being available to others). The characteristics of public goods mean that individuals do not necessarily have an economic incentive to voluntarily contribute effort or money to ensure the continued existence of these goods leading to undersupply or in this case under-protection.

Negative externalities – Negative externalities occur when damage to the marine environment is not fully borne by the users causing the damage. In many cases no monetary price is attached to marine goods and services therefore the cost of damage is not directly priced by the market. Even for those goods that are traded (such as wild fish), market prices often do not reflect the full economic cost, which is ultimately by other individuals and society as a whole.