Suppose two states (i and i) border the same wetland and receive equal benefits from the ecosys- tem services it provides. They both stand to gain from investing in preservation of the wetland, but have to decide how much they will choose to invest to maintain (protect) the wetland. Both state's utility (Ui and Ui) from investment (Ii and Ii) can be represented by the following functions: Ui = E Ii + 0.6(Ii + Ii) Ui = E Ii + 0.6(Ii + Ii)

c) How much should each state invest and why? (d) What could be done to ensure a socially optimal outcome?