Here is an interesting article from ENN about markets for ecosystem services (biodiversity, water, carbon, etc).
I loved the quote near the end by the Director of USDA's Office of Ecosystem Markets and Services, who was at first skeptical about whether or not market mechanisms would work to enhance conservation. Regarding the standard (CAC) approach she says: "The regulatory framework that is so critical was driving people to do just the bare minimum"...
In other words, CAC mechanisms result in inefficiency as once you are in compliance, there is no incentive to do more.
Here is the press release from USDA.