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Economic and Environmental Benefits of Biodiversity

David Pimentel (e-mail: [email protected] ) is a professor in the College of Agriculture and Life Sciences at Cornell University, Ithaca, NY 14853-0901.

Christa Wilson, Christine McCullum, Rachel Huang, Paulette Dwen, Jessica Flack, Quynh Tran, Tamara Saltman, and Barbara Cliff are graduate students in the College of Agiculture and Life Sciences at Cornell University, Ithaca, NY 14853-0901.

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David Pimentel, Christa Wilson, Christine McCullum, Rachel Huang, Paulette Dwen, Jessica Flack, Quynh Tran, Tamara Saltman, Barbara Cliff, Economic and Environmental Benefits of Biodiversity, BioScience , Volume 47, Issue 11, December 1997, Pages 747–757, https://doi.org/10.2307/1313097

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The annual economic and environmental benefits of biodiversity in the United States total approximately $300 billion

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The Royal Society

The Economics of Biodiversity: The Dasgupta Review

Professor Sir Partha Dasgupta FRS FBA

Frank Ramsey Professor Emeritus of Economics, Faculty of Economics, University of Cambridge

This is an expanded version of a speech delivered by Professor Sir Partha Dasgupta at a virtual event hosted by the Royal Society on Tuesday 2 February 2021. The occasion marked the launch of his independent, global Review on the Economics of Biodiversity, commissioned by HM Treasury. The launch was chaired by the Society's Past President, Sir Venki Ramakrishnan. Not so long ago, the economic questions requiring urgent attention could be studied by excluding Nature from formal economic reasoning. At the end of the Second World War, with absolute poverty endemic in much of Africa, Asia and Latin America, and with Europe in need of reconstruction, it made sense to focus on the accumulation of produced capital (roads, buildings, ports, machines) and human capital (health and education).

Unfortunately, the resulting macroeconomic models of growth and development so directed the way academic economists and economic policymakers collect and analyse data, forecast trajectories, design policy and conceive our economic possibilities, that we have over time come to imagine that we can bypass Nature in our economic lives. That belief has been strengthened by the fact that the average person today enjoys a far higher income, is less likely to be in absolute poverty, and lives significantly longer than she did even 70 years ago. Since 1950 the global expectancy of life at birth has risen from 46 years to 73 years, the world economy’s GDP has grown more than 15-fold to over 130 trillion international dollars a year, global per capita income has increased more than 5-fold to over 17,000 international dollars per year, and there are 5.3 billion more people today to enjoy that increase (world population today is 7.8 billion). It would seem we are living in the very best of times. But Nature is an asset. We are embedded in Nature. It is our home, and it provides us with a multitude of services we take for granted. So, even while we have enjoyed the fruits of economic growth, the demands we have made of Nature’s goods and services have for some decades exceeded her ability to supply them on a sustainable basis. One estimate suggests that we would need 1.6 Earths to satisfy our current demands on a sustainable basis. We do not have the extra 0.6 Earths. Because the difference between demand and sustainable supply is met by a diminution of Nature, the gap has been increasing, threatening our descendants’ lives. It would seem we are also living at the very worst of times.

One prominent reason for the increase in the gap between demand and sustainable supply is an absence of institutions for creating necessary incentives to economise on our use of Nature’s fundamental services. The high seas, for example, are used by us to enjoy cruises, transport goods, and harvest for fish. We use them as well as a sink for many of our waste products. And yet we are not charged for their use. Worse, governments subsidise the use of Nature to the extent of some 4 to 6 trillion US dollars annually, which is some 5 to 7 per cent of global GDP. In effect, we pay ourselves to eat into Nature.

“While humanity has prospered immensely in recent decades, the ways in which we have achieved such prosperity means that it has come at a devastating cost to Nature. Estimates of our total impact on Nature suggest that we would require 1.6 Earths to maintain the world’s current living standards.” ― The Economics of Biodiversity: The Dasgupta Review

Ecosystems as assets 

The Review recognises the biosphere as a web of interconnected self-regenerative entities called ‘ecosystems’. Processes governing ecosystems are non-linear. Moreover, they differ among one another both in speed and spread, which  is why even the decision to designate a patch of the environment as an ecosystem depends on the context - a hedgehog’s gut is as much an ecosystem as the woodland in which the hedgehog resides.

Individual actors in ecosystems include organisms that, among other activities, pollinate, decompose, filter, transport, redistribute, scavenge, and fix gases. Nearly all organisms that help to produce those services are hidden from view (a gram of soil may contain as many as 10 billion bacterial cells), which is why they are almost always missing from popular discourses on the environment. But their activities enable ecosystems to maintain a genetic library, preserve and regenerate soil, fix nitrogen and carbon, recycle nutrients, control floods, mitigate droughts, filter pollutants, assimilate waste, pollinate crops, operate the hydrological cycle and maintain the gaseous composition of the atmosphere. These are what ecologists call ‘regulating and maintenance services’. The processes that give rise to them are in large measure complementary to one another: degrading one severely can be expected to threaten the others. Biodiversity, by which is meant the diversity of life, is a characteristic of ecosystems. The Review builds on our increased understanding of the sense in which biodiversity contributes positively to ecosystem productivity. The economics of biodiversity is thus the economics of the entire biosphere. In addition to produced capital and human capital, the economics of the biodiversity includes what we may call ‘natural capital’. 

Regulating and maintenance services provide the basis on which we draw upon Nature’s ‘provisioning goods’, such as food, timber, medicines, dyes, fibres, and fresh water, and enjoy ‘cultural services’, such as landscapes of tranquillity, beauty, even sacredness. The Review shows that there is a tension between humanity’s needs for these two classes of goods and services. Private companies are in large measure unable to capture the returns from investment in regulating and maintenance services. That’s because the services are in all too many cases ‘non-excludable’: companies cannot confine the benefits to those who pay for them. So, they invest mostly in those forms of natural capital that are direct inputs for provisioning services (farms, plantations, houses, manufactured goods, and transportation), whose products are excludable. That practice has eroded Nature’s regulating and maintenance services. Non-market institutions have been introduced to protect cultural services (state parks and Nature reserves). Non-excludability is a reason the economics of biodiversity pays particular attention to ‘externalities’, which are the unaccounted consequences for others of our actions.

Because the biosphere is a tangled web of ecosystems, the Review, unlike the economics of global climate change, does not offer sharp formulae for policy, such as a social price for biomass. It does not prescribe ‘biomass offsetting markets’. That’s because a unit of biomass in a particular location in one ecosystem (e.g. a tropical rainforest) has widely different roles to play from a unit of biomass in another (e.g. in a grassland). Differences arise because the processes governing ecosystems are entangled with one another. Their entanglement is the reason ecosystems harbour what may be called ‘natural externalities’. If biomass offsetting markets were introduced, brokers could profitably purchase units of biomass from ecologically productive places and offset them in ecologically unproductive places, making a profit. Further institutional mechanisms would then be needed to regulate such transactions. The Review speaks of ecosystems as the source of Nature’s supply of goods and services; it does not build the economics of biodiversity on units of biomass. 

Trevally Jacks stream over reef

Image caption: Trevally Jacks stream over reef, Copyright iStock - Tammy616

The economics of biodiversity as a study in portfolio management

The Review is global in its reach in two senses: First, it is not restricted to a particular group of countries or cultures; it instead constructs an economic grammar that can be adopted anywhere. Secondly, it offers a vocabulary that speaks to institutions everywhere (government, charities, households, firms, banks, and financial companies). Anyone can adopt the common grammar and choose the vocabulary that meets their motivation and reach.

That the Review found it necessary to construct a common grammar for the economics of biodiversity is self-explanatory. Fires cannot be put out if fire fighters do not coordinate their tasks. If humanity is to face up to the emergency we have created by the enormous overshoot in the demands we have been making on the biosphere relative to its ability to meet them in a sustainable manner, there needs to be coordination among agencies. The Review therefore urges not only national governments and central banks, but also international organisations such as the World Bank, International Monetary Fund, and Food and Agriculture Organisation to include estimates of the ecological consequences of their policies before advocating them. The Review studies Nature in relation to the many other assets we hold in our portfolios, such as the vehicles we use for transport, the homes in which we live and the machines and equipment that furnish our offices and factories. But like education and health, Nature is more than a mere economic good. So, we should think of assets as durable entities that not only have what economists call ‘use value’, but may also have intrinsic worth. Once we make that extension, the economics of biodiversity becomes a study in portfolio management. 

That should be easy to understand, for we are all asset managers, pretty much all the time.  Whether as farmers or fishermen, foresters or miners, households or companies, governments or communities, we manage the assets to which we have access in line with our motivations as best as we can. But because Nature is under-priced in our day-to-day life, the best each of us is able to achieve with our portfolios may nevertheless result in a massive collective failure to manage the global portfolio of all our assets. The gap between demand and supply, which I spoke of just now, can be likened to a crowd of people trying to keep balance on a hanging bridge and bringing it crashing down. 

Amazon rainforest understorey with buttress roots

Image caption: Amazon rainforest understorey, rainforest tree with buttress roots, Copyright iStock - Atelopus

Biodiversity is the diversity of life. Just as diversity within a portfolio of financial assets reduces risk and uncertainty, diversity within a portfolio of natural assets increases Nature’s resilience in withstanding shocks. Today there are around 8 to 20 million (possibly more) kinds of organisms with cells in which the genetic material in the form of chromosomes that are contained within distinct cells (they are called eukaryotes). Of them, only about 2 million have been recognised and named. There are, in addition, an unknown and much larger number of prokaryotes, consisting of archaea and bacteria – our lack of knowledge is enormous. But biodiversity has several dimensions, including the diversity and abundance of living organisms, the genes they contain and the ecosystems in which they live.

One manifestation of the increasing gap between the demands we are making of the biosphere and the biosphere’s ability to supply them on a sustainable basis is species extinction. Current extinction rates of species in various orders are estimated to have risen to 100-1,000 times the average extinction rate over the past tens of millions of years (the ‘background rate’) of 0.1-1 per million species per year (expressed as E/MSY), and are continuing to rise. In absolute terms, 1,000 species are becoming extinct every year if 10 million is taken to be the number of species and 100 E/MSY the current extinction rate. At the global level, climate change and COVID-19 are striking expressions of Nature’s loss of resilience. But many small, village communities in the world’s poorest regions have experienced loss of resilience in their local systems. 

“Biodiversity is declining faster than at any time in human history. Current extinction rates of species in various orders are estimated to have risen to 100-1,000 times the average extinction rate over the past tens of millions of years (the ‘background rate’) of 0.1-1 per million species per year (expressed as E/MSY), and are continuing to rise. Such declines are undermining Nature’s productivity, resilience and adaptability, and are in turn fuelling extreme risk and uncertainty for our economies and well-being.” ― The Economics of Biodiversity: The Dasgupta Review

Inclusive wealth and sustainable development

The 1987 Report of the Brundtland Commission defined ‘sustainable development’ as "... development that meets the needs of the present without compromising the ability of future generations to meet their own needs". The requirement is that, relative to their respective demographic bases, each generation should bequeath to its successor at least as large a productive base as it had inherited from its predecessor. If it were to do so, economic possibilities facing the successor would be no worse than those the generation faced when inheriting the productive base from its predecessor.

The Review demonstrates that in order to judge whether the path of economic development we choose to follow is sustainable, nations need to adopt a system of economic accounts that records an inclusive measure of their wealth. The qualifier ‘inclusive’ says that wealth includes Nature as an asset. Inclusive wealth is the social value of an economy’s produced capital, human capital, and natural capital. The contemporary practice of using gross domestic product, or GDP, to judge economic performance is based on a faulty application of economics. GDP is a flow – so many market dollars of output per year. In contrast to inclusive wealth, which is a stock (it is a social worth of the economy’s entire portfolio of assets). Relatedly GDP does not include the depreciation of assets, for example the degradation of the natural environment. 

As a measure of economic activity, GDP is indispensable in short run macroeconomic analysis and management. But it is wholly unsuitable for appraising investment projects and identifying sustainable development. Nor was GDP intended by economists who fashioned it to be so used for those purposes. An economy could record a high rate of growth of GDP by depreciating its assets. But one would not know that from the national statistics.

The Review finds that in recent decades eroding natural capital, or Nature (I am using the terms interchangeably), has been precisely the means the world economy has deployed for enjoying what is routinely celebrated as economic growth. Acknowledgement that by economic progress we should mean growth in inclusive wealth brings the Review back full circle to where it begins, 500 pages before, that is. Which is that, just as a private investor manages their portfolio with an eye on its market value, the citizen investor will want to appraise the portfolio of global assets with an eye on their social worth. Maximisation of inclusive wealth unites economic reasoning in all its forms.

“Collectively, however, we have failed to manage our global portfolio of assets sustainably. Estimates show that between 1992 and 2014, produced capital per person doubled, and human capital per person increased by about 13% globally; but the stock of natural capital per person declined by nearly 40%. Accumulating produced and human capital at the expense of natural capital is what economic growth and development has come to mean for many people.” ― The Economics of Biodiversity: The Dasgupta Review

Changes in capital - biodiversity

The Review makes use of this unification to develop the idea of sustainable development. It constructs a grammar for understanding what we take from Nature; how we transform what we take from it and return to it; why and how in recent decades we have disrupted Nature’s processes to the detriment of our own and our descendants’ lives; and what we can do to change direction. 

Natural Capital, the Impact Inequality, and Mutual Causality

It is today common to call the demand that we make of the biosphere’s goods and services our ‘ecological footprint’. The Review also calls it our ‘impact’, which is why the Review calls the gap between humanity’s demand and the ability of the biosphere to meet that demand on a sustainable basis, the Impact Inequality. The analogy I drew previously between the Impact Inequality and fighting fires tells us that before all else we need to close the gap.

The Review first decomposes the demand by taking global GDP to be a measure of human activities. To formalise, let N be global population and y per capita global GDP. That means global GDP is Ny . As GDP is the market value of the final goods and services produced in a year, we need to convert it to units of the biosphere’s goods and services. So let α be a numerical measure of the efficiency with which the biosphere’s supply of goods and services are transformed into marketable products. It follows that Ny/α is the global demand for the biosphere’s flow of goods and services.

Turning to the supply side, assume for simplicity that the biosphere’s supply of goods and services can be aggregated into a numerical measure, labelled by G . (If the aggregation, which would be a weighted sum of Nature’s goods and services, reads far fetched, the supply of each service should be read separately.) The biosphere is our global natural capital. Let S denote that stock, measured in terms of the biosphere’s features such as biodiversity. (We should again imagine that S is a weighted sum of stocks of ecosystems. The appropriate weights are known as ‘accounting prices’, and reflect the social worth of the stocks.) Now G is a function of S , the bigger is S ,  the larger is G , at least in the biosphere that prevails today. We may then write G = G ( S ). Because the biosphere is finite, G cannot exceed a finite limit. Armed with this notation, the Impact Inequality can be expressed as: 

Ny/α > G(S)

N , y , and α are not independent of one another. Policies that affect y may cause households to alter their reproductive goals, implying that future values of N would be affected; policies that affect α would be expected to influence y ; and so on. More generally, mono-causal explanations are to be avoided in the social and ecological sciences. The Impact Inequality contains five variables: N , y , α , G , S . Each is a function of time, and each can be influenced by policy. Of them, N , α , and S are stocks, while y and G are flows. If the Impact Inequality is to be closed, we have to reduce Ny/α or find ways to increase G ( S ), or both. The variable α is a reflection of the technologies that are in use and the institutions that are in play. In view of the prevailing distortions in the world economy, we can surely improve both the technologies we deploy and the institutions we fashion. But no amount of progress in the two can raise α to infinity, for to imagine that it could be so raised would be to imagine that we can in time free ourselves of Nature. That, as the Impact Inequality shows, means in turn that perpetual growth in global GDP, Ny , is an impossibility.

Per capita income y can be affected even in the short run, as can S (it doesn’t take much time today to decapitate a forest), and the trajectory of N has been known to alter sharply under rapidly changing fertility behaviour and improved hygiene and medical facilities. Investment in family planning and reproductive health has proved to be remarkably effective in ushering fertility transitions (Bangladesh in recent years; Taiwan and South Korea in the post War decades). It can take time to increase S (wetlands cannot be restored overnight). But it can nevertheless be socially profitable to do so, because, in the face of a growing gap in the Impact Inequality, the social worth of S relative to produced capital will increase over time. And changes in institutions or technology ( α ) have an impact on y , N , and G with varied gestation lags.

The Review presents a dynamic socio-ecological model in which all five are endogenous variables. Thus, each influences the others over time and is in turn influenced by the others. The model shows that mutual causation is the rule in socio-ecological systems. It is thus as wrong to insist that high consumption (read y) in industrial countries is the underlying cause of biodiversity loss as it is to claim that large population ( N ) is the underlying cause.

Only a quantitative model can unearth the mutual influence among economic variables. Policies that are directed at y can be expected to have an effect on future N as households adjust their fertility targets. Likewise, policies directed at influencing fertility behaviour (future N ) can be expected to have an effect on y . And it’s not hard to see why policies that bring about institutional changes and new technology ( α ) will have an effect on all the variables, even future values of α . The Review presents a socio-ecological model that demonstrates such mutual influence. And yet, in public discourses on the environment the practice is all too often to avoid mentioning policies that would affect future values of N ; the focus is instead on y , α , and the biosphere’s ability to produce goods and services as expressed in G . The Review argues that there are no reasons for awarding N a different normative status from the others.

As I noted earlier, by one (inevitably very crude) estimate, the ratio of demand to supply (ie  Ny / α G ( S )) is today approximately 1.6. If ‘sustainable development’ has any meaning, it should as a minimum be read as a pattern of development in which the Impact Inequality is converted into an equality. Which is why it is a puzzle that designers of the UN’s 17 Sustainable Development Goals – to be reached by year 2030 – didn’t ask whether the goals, taken together, are sustainable. Estimates reported in the Review show that meeting them on a sustainable basis would require transformative changes in global institutions.

Economics of biodiversity

The need for transformative changes 

What then should be done to direct humanity to a sustainable mode of living? Reducing the gap between what we demand of Nature and what Nature is able to supply on a sustainable basis requires, as noted previously, that we reduce our demand ( Ny / α ) and help to increase Nature’s supply ( G ( S )). To achieve that will require measured, but transformative, change. For the task is to so change individual incentives that they direct the choice of our actions to align with actions that promote the common good. The change will have to be underpinned by levels of ambition, co-ordination and political zeal akin to, but even greater than, those of the Marshall Plan. It will require changes in our institutions and practices at not only the national level but also at the transnational level and at the level of communities and civil society. And closer still, at the level of the individual person.

Investment in Nature is a route to increasing Nature’s supply. It can take many forms. Technological innovations and sustainable food production systems can decrease the sector’s contribution to climate change and change in the way land is used. Expanding and improving the management of protected areas has an essential role to play. Nature-based solutions to protect and restore have been found not only to generate employment, but help also to reduce the risks companies face in the functioning of their supply chains. 

“There is evidence that Nature-based solutions can provide large social benefits by reducing coastal risks due to climate change and development. In the Gulf of Mexico, USA, where such risks are increasing, the cost-effectiveness of adaptation measures were compared, including oyster reef or wetland restoration, grey infrastructure, and policy measures such as home elevation. Flooding costs were predicted to be US$134–176.6 billion in 2030, with annual costs expected to double by 2050 due to increasing risks. The Nature-based solutions compared favourably with engineered solutions; average benefit-cost ratios for Nature-based solutions were above 3.5. Cost-effective coastal adaptation measures could prevent US$57–101 billion in losses; Nature-based solutions could avert more than US$50 billion of these costs.” ― The Economics of Biodiversity: The Dasgupta Review

The Review points to numerous examples where this is happening. As part of fiscal stimulus packages in the wake of COVID-19, investment in natural capital has the potential for quick returns. Natural capital forms the bulk of wealth in low-income countries and those on low incomes tend to rely more directly on Nature. Conserving and restoring our natural assets also contributes to alleviating poverty. At the international level we now need supranational institutions to monitor and administer the global commons such as the high seas. The rents that could be collected for their use could, in turn, be used to pay for the protection of global public goods that are housed within national jurisdictions such as tropical rainforests and peatlands. And we would save resources if governments were able to eliminate the massive subsidy they offer people to eat into Nature.

Processes governing ecosystems are non-linear, which means ecosystems harbour thresholds, crossing which would radically transform their ability to supply goods and services – for the worse. Which is why it is typically less costly to conserve Nature than to restore it once it is damaged or degraded.

The location of ecosystem thresholds is always uncertain. Moreover, information on technology and the state of ecosystems is not commonly held: a regulator would typically know less about local ecosystems than these who reside in them. Taken together, these features of the human economy tell us that there is a strong economic rationale for quantity restrictions over pricing mechanisms. Moreover, insistence by consumers that firms disclose conditions along their entire supply chain would ultimately reduce the risks those firms face in their profits. Disclosure serves as a substitute for incompleteness of the prices for risk.  

The total demand we make of Nature’s goods and services is affected not only by our average living standards ( y ) but also by our numbers ( N ). Influencing the two will also involve changes in institution design and practices. The national level offers a number of avenues for reducing our demand. Increase in community/civil society partnerships with government, so as to help reduce consumption waste in rich countries, and investing in family planning and reproductive health services in the world’s poorest countries, should be a priority. In the UK, more than a third of our food is wasted from source to sink. And more than 220 million women in the world’s poorest countries have expressed an unmet need for modern family planning services. To put it bluntly, food in the aggregate is too cheap in rich societies, and the EU budget of less than 1% of development aid directed at family planning is thoughtless. Fortunately, contrary to contemporary economic thinking, we humans are not entirely egocentric. We are also socially embedded. The costs of change, if they are shared, are likely to be a lot less than if they were perceived to be incurred individually. Our experience with collective lockdown in response to COVID-19 illustrates that.

But Nature has three properties that make the economics of biodiversity markedly different from the economics that informs our intuitions about the character of produced capital. Many of the processes that shape our natural world are mobile, silent and invisible. The soils are a seat of a bewildering number of processes with all three attributes. Taken together, the attributes are the reason it is not possible to trace very many of the harms inflicted on Nature and, by extension, on humanity, to those who are responsible. Just who is responsible for a particular harm is often neither observable nor verifiable. No social mechanism can meet this problem in its entirety. meaning that no institution can be devised to enforce socially responsible conduct. 

It would seem then that, ultimately, we each have to serve as judge and jury for our own actions and that cannot happen unless we develop an affection for Nature and its processes. And that affection can flourish only if we each develop an appreciation of Nature’s workings. The Review ends with a plea that our education systems should introduce Nature studies from the earlier stages of our lives and revisit them in the years we spend in secondary and tertiary education. The conclusion we should draw from this is unmistakeable. If we care about our common future, and the common future of our descendants, we should all, in part, be naturalists.

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Final Report - The Economics of Biodiversity: The Dasgupta Review

Final Report of the Independent Review on the Economics of Biodiversity led by Professor Sir Partha Dasgupta.

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The Dasgupta Review is an independent, global review on the Economics of Biodiversity led by Professor Sir Partha Dasgupta (Frank Ramsey Professor Emeritus, University of Cambridge). The Review was commissioned in 2019 by HM Treasury and has been supported by an Advisory Panel drawn from public policy, science, economics, finance and business.

The Review calls for changes in how we think, act and measure economic success to protect and enhance our prosperity and the natural world. Grounded in a deep understanding of ecosystem processes and how they are affected by economic activity, the new framework presented by the Review sets out how we should account for Nature in economics and decision-making.

The final Review comprises the Full Report, an Abridged Version and the Headline Messages. Final Report documents (above).

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The Economics of Biodiversity: The Dasgupta Review – Abridged Version is available in the following languages:

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The Economic Value of Biodiversity Preservation

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  • Published: 26 April 2024
  • Volume 87 , pages 1593–1610, ( 2024 )

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We study the decision to preserve diverse species when the value of biodiversity is uncertain, or even affected by ambiguity. Optimal decisions are derived both from the perspective of the producer/investor and the policy regulator (ecosystem planner). We find that while calculated risk creates a scope for biodiversity preservation, the presence of ambiguity aversion reduces it, thus accelerating the extinction of species with lower value. Our results suggest that effective conservation strategies would involve a reduction of ambiguity aversion by creating a stable and transparent policy environment. Furthermore, they may involve a two tier strategy, with one tier addressing output targets and the other conservation targets.

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1 Introduction

One major question faced by society is the decline and extinction of natural species as a consequence of human choices and activities and the resulting irreversible depletion of biodiversity. The richness and abundance of wild plant and animal species decline with the degradation of ecosystems under the pressure of intensive land use, natural resource extraction, pollution, climate change and many other threats. The various impacts of economic development on the environment are widely regarded as key drivers of ecological degradation and biodiversity loss.

As Weitzman ( 1998 ) points out ‘in talking about biodiversity preservation, there is always a question about what is the appropriate level of discourse’. Indeed, biodiversity is a multi-faceted concept . As Dasgupta et al. ( 2013 ) explain, the value of biodiversity derives from the value of the final goods and services it produces. The services depend on the types of species that ecosystems contain, their substitutability or complementarity in the functioning of ecological systems, and on the way that such functioning is affected by resource use. Deriving from its ‘role in the production of things that people care about’ the value attached to changes in biodiversity differs depending on geographical location, income, scientific development, spiritual and cultural perception of intact ecosystems. Footnote 1

The ecological and economic importance of biodiversity has been extensively studied in the literature. Traditionally, economic theory has focused on the economic value of biodiversity, an approach that started with the defining work of Weitzman ( 1992 ), and then advanced by many others (e.g., Metrick and Weitzman 1998 ; Weitzman 1998 ; Heal 2000 ; Armsworth et al. 2004 ; Polasky et al. 2005 ; Dasgupta 2021 ). From an ecological perspective, higher levels of biodiversity are often associated with enhanced ecosystem stability and resilience (Hautier et al. 2015 ; Kinzig et al. 2001 ; Missirian et al. 2019 ). Many of these studies seem to suggest that diversity of species enhances the stability of aggregate, or community-level, properties, whereas it can enhance, erode or have little impact on resilience, interpreted as the ability of a system to return back to the initial state, rather than reducing the probability of entering more vulnerable system configurations.

Biodiversity is also associated with numerous economic benefits. Brock and Xepapadeas ( 2003 ) value biodiversity not based on diversity in the sense of genetic distances as in Weitzman ( 1992 ), but in terms of the value of characteristics or services that an ecosystem provides or enhances, when optimally managed. Their approach is an attempt to connect the ecologically/biologically oriented biodiversity metrics with an endogenous measure of economic value of biodiversity.

An emerging stream of research identifies specific anthropogenic determinants of biodiversity changes, such as forest loss, temperature changes, agricultural activities and industrial pollution . Massive wildlife losses and extinction rates of orders of magnitude larger than standard, non-anthropogenic levels, urgently demand to balance economic development and conservation and stimulate the debate about the degree to which biodiversity reacts to policy making and economic changes (Polasky et al. 2005 ; Ando and Amy and C. Langpap, 2018 ; Dasgupta 2022 ).

Despite the large volume of the conservation policy literature, there still is little work providing a theoretical foundation ‘for a cost-effectiveness criterion that can be used to rank priorities among biodiversity-preserving projects’ (Weitzman 1998 ) . This may in part be due to biodiversity meaning different things to different people. Individual farmers tend to consider their decisions foremost to be investment/production decisions. The general public, on the other hand, consider biodiversity and conservation to primarily be about ‘stewardship of the earth’.

In this paper we take the perspective of a decision-maker who has to choose the species to be preserved or to let disappear, depending on their economic value, their maintenance expenditures and, last but not least, the potential opportunities offered by the existence of diversified biological resources. A typical situation is that of a farmer who has to decide whether to invest in a monoculture, or to devote resources to plant and grow diverse species which may be of lower commercial value or may be incurring higher farming costs. Local cultivated species of fruit and vegetable are being lost as farmers replace them with higher-yielding per hectare and desease-resistant modern varieties. It is estimated that a quarter of the 1100 recognized genetic resources of fruit and vegetables worldwide are without genebank back-up and thus are at risk of being lost forever (Meldrum et al. 2018 ). On the other hand, an increased awareness of the benefits of diverse diets as well as research work on the healthy properties of some neglected fruit and vegetable species are contributing to reverse the trend and are attracting consumers’ and farmers’ interest for underutilized species. At the same time, safeguard plans are already on the agenda of international organizations (FAO International Plant Treaty, United Nations Food Systems Summits, Nagoya Protocol of the Convention on Biological Diversities (CBD), EU Common Agricultural Policy (CAP) and 2030 Sustainable Development Goals) and of national and regional governments which often fund the implementation of good agricultural practices.

Throughout this paper, the main question is to formulate the decision-maker’s choice as a cost-benefit trade-off, where a special emphasis is put on the uncertainty or ambiguity surrounding operations. We analyze the effects of the different perspectives of investor/producers on the one hand and of the general public on the other, starting from the same ’objective’ situation. The key variable is based on the concept of species’ value, which, as explained above, is a multi-faceted concept (see Dasgupta 2000 , for a deep discussion). As the emphasis is on the risky framework, species’ values are modelled as stochastic processes. In Sect. 2 we develop a comprehensive model for choosing between biodiversity-maintaining alternatives. In particular, expanding on Kassar and Lasserre ( 2004 ), we introduce a more general and flexible model including several additional parameters and multidimensional processes for heterogeneous species. This allows us to investigate the determinants of the policy preserving multiple species in greater detail. In Sect. 3 we introduce the presence of ambiguity aversion into the model. As emphasized by Levin and Xepapadeas ( 2021 ), from a management perspective, deep uncertainty and aversion to ambiguity are important concepts in ecological-economic systems. Levin and Xepapadeas ( 2021 ) list major gaps in global and national monitoring systems: the lack of inventory of species; definitional ambiguities that may lead to confusing results; and lack of theories to anticipate how humans will respond to changing conditions. Therefore, ‘efficient management should be based on a recognition that there are deep uncertainties and that people have preferences that are averse to deep uncertainty, or ambiguity’ (page 367). Our incorporation of ambiguity aversion in Sect. 3  affects the policy towards species preservation by accelerating the extinction of more volatile growth rates, which eventually causes disruption in the preservation efforts. Section 4 analyzes some possible actions by a regulator, or an ecosystem planner, to promote biodiversity preservation. In particular, we suppose that the ecosystem planner is concerned with the total value of species, including the non-use value of social importance, and thus introduces an harvesting rule (along the lines of Brock and Xepapadeas 2002a , b ) and incentives that compensate the producer for the reduced profits. Section 5  provides some insights on the introduction of more general ambiguity attitudes in the model and their effects on investors’ decisions and the general public’s ambitions. Section 6 concludes and discusses some policy implications, one of which is the appropriateness of following a two-tier policy approach, differentiating between policies focusing on ‘investment/production’ and those focusing on ‘conservation’.

2 Basic Model

In this section we study the problem of a producer who has to invest in a pool of biospecies to grow and exploit and may decide whether to limit the investment to the most profitable species or to keep open the opportunity offered by biodiversity. Here we focus on the case of two species to simplify the setting.

To each species i we can associate a value \(v_{i}\) . This value includes a direct economic value that accrues to the producer (use, or market value). An additional component of the value may be "associated with existence values, aestetic values and non-substitutable ecosystem services as indirect (non-use) values" (Brock and Xepapadeas 2002a ) which may contribute to increase the benefit stream of the species. We assume that the value \(v_{i}\) of species i evolves as

where the Wiener processes \(W_{t}^{(i)}\) , \(i=1,2\) , are correlated as \(E[dW_{t}^{(1)}dW_{t}^{(2)}]=\rho dt\) . The assumption that the species values are described by a Geometric Brownian motion (GBM), where \(m_{i}\) is the drift, or instantaneous growth rate, and \(\sigma _{i}^{2}\) is the variance per unit time, is a simplification. However, it is employed in several contributions and in particular in Brock and Xepapadeas ( 2002a ) where they suppose that species biomasses can be modeled by stochastic differential equations of the GBM type and the existing biomasses at any point in time have non-negative existence values. In Brock and Xepapadeas ( 2002a ) species values are obtained multiplying biomasses by the price of harvested species, which is assumed to be fixed within the planning horizon. Thus, our assumption is consistent with theirs, but also allows to model non-fixed prices (e.g., GBM prices with deterministic dynamics for biomasses).

We suppose that the cost of maintaining species i is proportional to its value, that is, is \(k_{i}v_{i}\) , with \(0\le k_{i}<1.\) For example, in the case of a farm, it includes fertilizers, water supply and working hours, so the assumption of proportionality is pretty reasonable if we neglect the effect of scale economy. We also assume that there is a fixed cost, H , irrespective of the number of species used. For example, H may represent the cost for acquiring farmland to instal a plantation or an orchard. If only species i is conserved and exploited the cumulated expected return extracted from it is:

where \(r>0\) is the interest rate used to discount. In the above expression it is implicitly assumed that \(r-m_{i}>0.\) This is a classical technical assumption which is adopted to guarantee a finite value function. Although it may be unrealistic in some circumstances, it is legitimate in times of high interest rates and a decreasing profitability of the farming sector.

Following Kassar and Lasserre ( 2004 ) we suppose that only the most valuable species is exploited for commercial use while the unexploited species may be preserved or abandoned depending on its relative cost and possible opportunities it may offer in the future. Let \(F(v_{1},v_{2})\) denote the net present value from employing the species with the maximum value while preserving the other one. Let us denote by \(t^{*}\) the stopping time at which it is optimal to abandon one species as the option of keeping it around has no value.

In the subregion \(v_{1}\ge v_{2}\) one has \(\max _{i=1,2}v_{i}=v_{1}\) . Then F solves the following optimal stopping problem:

subject to the dynamics (1) with initial values \(v_{i}(t)=v_{i}\) , \(i=1,2\) . Then F satisfies the following free-boundary value problem:

on the continuation region, where \(\mathcal {L=}\frac{1}{2}[\sigma _{1}^{2}v_{1}^{2}\partial _{v_{1}}^{2}+\sigma _{2}^{2}v_{2}^{2}\partial _{v_{2}}^{2}+2\rho \sigma _{1}\sigma _{2}v_{1}v_{2}\partial _{v_{1}v_{2}}^{2}]+m_{1}v_{1}\partial _{v_{1}}+m_{2}v_{2}\partial _{v_{2}}-r\) .

On the critical threshold between the continuation region and the stopping region, F satisfies:

\(F=F_{1}\) (continuous pasting) and \(\nabla F=\nabla F_{1}\) (smooth pasting).

In view of homogeneity considerations the critical threshold is a line \(v_{2}=z^{*}v_{1}\) , as specified below in Proposition 1.

Let us write a general solution for equation (2). A particular solution to equation (2) is \(\frac{(1-k_{1})v_{1}}{r-m_{1}}-\frac{k_{2}v_{2}}{r-m_{2}}- \frac{H}{r}.\) The homogeneous part of equation (2) can be solved through the usual dimension reduction obtained by introducing a new variable \(x=v_{1}/v_{2}.\) If we search for a solution of the form \(v_{2}g(x)\) , then g should solve the differential equation:

where \(S^{2}=\sigma _{1}^{2}+\sigma _{2}^{2}-2\rho \sigma _{1}\sigma _{2}\) . If \(g(x)=x^{\beta }\) then \(\beta\) should solve

Let \(\beta _{\pm }\) denote the two roots of equation (3). Note that in view of the assumption \(m_{i}<r\) , \(i=1,2\) , we have: \(\beta _{-}<0<1<\beta _{+}.\) Therefore

where \(A_{\pm }\) are arbitrary constants.

A similar argument in the subregion \(v_{1}\le v_{2}\) yields:

where \(\widetilde{A}_{\pm }\) are arbitrary constants.

As on the line \(v_{1}=v_{2}\) separating the two subregions there is indifference between exploiting species 1 rather than 2, we can apply smooth-pasting considerations to find a relationship between \(\widetilde{A} _{\pm }\) and \(A_{\pm }.\) In particular, we obtain

Now the continuous and smooth pasting conditions, \(F=F_{i}\) and \(\nabla F=\nabla F_{i}\) , holding on the critical thresholds, are employed to determine the regions where it is optimal to abandon one species. Calculation below shows that the curve separating the set where both species are maintained from the set where only species 1 is preserved is of the form \(v_{2}=z^{*}v_{1}\) with \(z^{*}\le 1.\) Similarly, abandonment of species 1 occurs whenever \(v_{2}\ge \widehat{z}v_{1}\) for some \(\widehat{z} \ge 1.\) (See Fig.  1 , for an illustration). The values for \(z^{*}\) and \(\widehat{z}\) are computed in Proposition 1.

Proposition 1

Assume that \(\frac{\beta _{+}-1}{\beta _{+}}\frac{ r-m_{2}}{r-m_{1}}<\frac{1-k_{2}}{1-k_{1}}<\frac{\beta _{-}-1}{\beta _{-}} \frac{r-m_{2}}{r-m_{1}}\) . Then the lines separating the set of values \((v_{1},v_{2})\) where both species are preserved from the regions where one species is abandoned are of the form \(v_{2}=z^{*}v_{1}\) (for abandoning species 2) and \(v_{2}=\widehat{z}v_{1}\) (for abandoning species 1), where \(z^{*}\) and \(\widehat{z}\) are computed by solving the system

\(F(v_{1},v_{2})\) for \(v_{1}\ge v_{2}\) is matched with \(\frac{(1-k_{1})v_{1}}{r-m_{1}}-\frac{H}{r}\) on the line \(v_{2}=z^{*}v_{1}\) along with their derivatives \(\partial _{v_{1}}\) and \(\partial _{v_{2}}\) . Three equations are obtained, but one of them is redundant. Similarly, \(F(v_{1},v_{2})\) for \(v_{1}\le v_{2}\) is matched with \(\frac{ (1-k_{2})v_{2}}{r-m_{2}}-\frac{H}{r}\) on the line \(v_{2}=\widehat{z}v_{1}\) along with the derivatives. In total, four equations are obtained where the unknowns are \(A_{\pm }\) , \(z^{*}\) and \(\widehat{z}.\) Solving for \(A_{\pm }\) in terms of the remaining unknowns, we are left with the two equations (4) for the unknowns \(z^{*}\) and \(\widehat{z}.\) Note that the condition \(\frac{\beta _{+}-1}{\beta _{+}}\frac{r-m_{2}}{r-m_{1}}<\frac{1-k_{2}}{1-k_{1} }<\frac{\beta _{-}-1}{\beta _{-}}\frac{r-m_{2}}{r-m_{1}}\) is necessary for \(z^{*}\le 1\) and \(\widehat{z}\ge 1.\) \(\square\)

Fig.  1 represents an example of switching lines between the various strategies when the following parameter values are adopted: \(r=0.1,\) \(m_{1}=0.05,\) \(m_{2}=0.03,\) \(\sigma _{1}=0.3,\) \(\sigma _{2}=0.2,\) \(\rho =0.5\) , \(k_{1}=0.5\) , \(k_{2}=0.5.\)

figure 1

Switching lines between species abandonment or preservation \((\rho =0.5)\)

Fig.  2 illustrates the effect of correlation on the preservation policy: if \(\rho\) becomes negative the two species complement each other in the face of negative events and the scope for conserving both of them is expanded.

Realistic values for the correlation coefficient, \({\small \rho }\) , can be extracted from time series of the commercial values of two alternative species or varieties, used to proxy \(v_{i}\) if the biomasses do not exhibit significant changes in growth rate during the period. For example, we find a correlation of 0.56 between wheat and rice, of 0.41 between Annurca apple (a rare variety) and Gala apple, of 0.15 between Golden Delicious apple and Decana pear, of \(-\) 0.44 between cherries and Granny Smith apple (data source: www.ismeamercati.it).

figure 2

Switching lines between species abandonment or preservation \(( {\rho =-0.5)}\)

An advantage of our model is that it extends Kassar and Lasserre ( 2004 ) in various directions including the relaxation of symmetry assumptions. In particular, the stochastic processes may exhibit diversified growth rates and variances and the maintenance costs for the two species may differ. Thus we can study the effect of the several model parameters on the decision-maker’s choice. For example, in Fig.  3 , \(k_{2}\) is reduced to 0.3 while other parameters remain as in Fig.  1 : the zone where species 2 is eliminated is reduced (from about 50% of all states to 34% - where the percentages refer to the relative amplitudes of the angles representing the different regions), as expected.

figure 3

Switching lines ( \({k}_{2}\) reduced in comparison to Fig.  1 )

Another question deserving investigation is the effect of risk (measured by the \(\sigma\) parameter) on the scope for biodiversity preservation. In particular, our comprehensive model allows for asymmetries in \(\sigma .\) In Fig.  4 the solid thick lines are obtained by adopting the following parameter values: \(r=0.1,\) \(m_{1}=0.05,\) \(m_{2}=0.05,\) \(\sigma _{1}=0.2,\) \(\sigma _{2}=0.2,\) \(\rho =0.5\) , \(k_{1}=0.2\) , \(k_{2}=0.2\) , while the thin curves are obtained by increasing \(\sigma _{1}\) to 0.3. The cone of biodiversity preservation is expanded if \(\sigma _{1}\) is increased. Symmetrically, the same effect is obtained if \(\sigma _{2}\) is increased to 0.3 (not shown in the pictures).

figure 4

Biodiversity region for two different levels of \({\sigma }_{1}\)

Fig.  5 illustrates the influence of the growth rate \(m_{i}\) on the decision to switch between preservation and abandonment policy. All parameters generating the solid thick lines are as in Fig.  4 , while we increase \(m_{1}\) (solid thin lines) or \(m_{2}\) (dashed lines) as specified. As expected a higher growth rate of a species reduces its extinction range at the expenses of the other species.

figure 5

Biodiversity region with varying \({m}_{i}\)

3 Introducing Ambiguity Aversion

In this section we introduce ambiguity into the model to explore how this form of ’incalculable’ risk influences the decision of preserving biodiversity. The stochastic processes are modelled as Choquet-Brownian motions following Kast et al. ( 2014 ). The theory is based on Choquet’s capacities (see Chateauneuf et al. 2001 ). Let S denote the set of uncertain states. A capacity \(\nu\) is a set function such \(\nu (S)=1\) , \(\nu (\varnothing )=0\) and \(\forall E,F\subseteq S\) , \(E\subseteq F\) implies \(\nu (E)\le \nu (F)\) . In other words, capacities are non-additive unit measures used to represent beliefs. A capacity is convex (concave) if \(\nu (E)+\nu (F)\le \nu (E\cup F)+\nu (E\cap F)\) , \(\forall E,F\) (respectively, \(\ge\) holds).

In the Choquet Expected Utility model a capacity simultaneously represents the ambiguity experienced by the decision maker and his/her attitude toward ambiguity. Let the ambiguity level of a capacity \(\nu\) at an event \(E\subseteq S\) be denoted by \(\ell _{\nu }(E)=1-\nu (S-E)-\nu (E)\) , which reflects the combined effect of the amount of ambiguity and the decision maker’s ambiguity attitude. For convex capacities, ambiguity levels attain non-negative values only. For example, if we set \(u_{1}\) for states in E and \(u_{2}\) for states in \(S-E\) , then for \(u_{1}>u_{2}\) the Choquet integral of the utility u with respect to \(\nu\) can be written as

while for \(u_{1}<u_{2}\) one has:

that is, in each case, the bad outcome is over-weighted by the ambiguity level \(\ell _{\nu }\) . If a decision-maker’s beliefs are represented by a strictly convex capacity, then \(\ell _{\nu }>0\) and he/she puts more weight on bad outcomes than an expected utility maximizer would. In this case, ‘the bad outcome is ‘over-weighted’ by the ambiguity level of the event under such a capacity’ (Kelsey and Spanjers 2004 ). This concept will be discussed in Sect. 5 in a more detailed way.

In Kast et al. ( 2014 ) the key variable is the capacity variable, c , which acts as a proxy for the distortive effect of ambiguity on the decision-makers’ attitudes towards ambiguity; it reflects investors’ ambiguity attitudes (aversion or seeking) on future prospects, with 0 \({<}\) c \({<}\) 0.5 representing aversion (convex capacities), and 0.5 \({<}\) c \({<}\) 1 indicating ambiguity-seeking (concave capacities). The Choquet integral overweights high outcomes if the capacity is concave and superadditive (c \({>}\) 0.5), while emphasizing low outcomes if the capacity is convex and subadditive (c \({<}\) 0.5). The special case c = 0.5 corresponds to the traditional probabilistic framework (absence of ambiguity). Footnote 2

In order to obtain a dynamic model, Choquet-Brownian motions are considered. Choquet-Brownian motions are obtained as limit processes of binomial trees where, at each point in time \(t=0,1,...,T\) , the uncertain states are \(\left\{ s_{t}^{1},...,s_{t}^{t+1}\right\} =:S_{t}\) . There are two possible successors of every \(s_{t}\) at time \(t+1:\) \(s_{t+1}^{u}\) (up movement) and \(s_{t+1}^{d}\) (down movement), where the conditional capacities are \(\nu (s_{t+1}^{u}\left| s_{t}\right) =\nu (s_{t+1}^{d}\left| s_{t}\right) =c\) with \(0\le c\le 1\) . The constant c is the relevant parameter and represents the effect of the decision-maker’s ambiguity about the likelihood of the states to come. We focus on the case of convex capacities ( \(c<0.5\) ) where the ambiguity level is positive.

The discrete process outlined above can be shown to converge to a continuous time generalized Wiener process with mean \(2c-1\) and variance \(4c(1-c)\) (see Kast et al. ( 2014 ), where theory and proofs are detailed). The absence of an ambiguity bias is obtained as a special case for \(c=1/2\) . As specified below, the Choquet-Brownian motion can be represented as a re-parametrization of a Brownian motion with an additional parameter c relating to the ambiguity perceived by the decision maker. More precisely, now we suppose that the species value \(v_{i}(t)\) follows a Choquet Brownian motion:

where \(W_{t}^{(i)}\) is a Wiener process. Thus, we assume that the actual underlying dynamic process is a standard Wiener process, and that ambiguity leads to a distortion in the perception of this process. As it is the distorted perceived process that drives the decisions, it is this distorted process that is analyzed. Observe that for the case of ambiguity aversion both drift and volatility are smaller than in the probabilistic model. That is, with ambiguity aversion mass is shifted to the “worst state” outcome, so that the drift falls and the perceived variance of the process is reduced as well.

As a first step, we simplify the setting by assuming that the two processes are driven by a single Wiener process. Since ambiguity interplays with the uncertainty parameter of the underlying stochastic factor dynamics we adopt asymmetric levels of \(\sigma _{1}\) and \(\sigma _{2}\) and of the other parameters.

In Fig.  6 the switching lines between species preservation and abandonment are represented for various levels of the ambiguity parameter: \(c=0.5\) (absence of ambiguity) resulting in the solid thick line, \(c=0.45\) (thin line) and \(c=0.4\) (dashed line). It is evident that the introduction of ambiguity dramatically shrinks the scope for preserving both species, from about 44% of all states to 26% (when \(c=0.45\) ) and finally to 16% (when \(c=0.4\) ), where the percentages refers to the relative amplitudes of the cones containing the states. In this numerical simulation it is assumed that \(\sigma _{1}\) is much larger than \(\sigma _{2}\) while equal costs are assumed: consequently, when ambiguity is introduced, the zone for keeping species 1 alive is strongly reduced in favour of the less risky species. In other words, ambiguity and ’calculated’ risk work in opposite directions.

figure 6

Biodiversity preservation (interior of cones) for different ambiguity levels with asymmetric parameters

Finally, we consider a more general framework where the two variables are driven by different Wiener processes and the impact of ambiguity on correlation is considered as well. This analysis requires the theory of multi-dimensional Choquet-Brownian motions developed in Roubaud et al. ( 2017 ). In particular, we adopt independent processes in the unambiguous benchmark case ( \(c=0.5\) ). As shown in Roubaud et al. ( 2017 ) the correlation is given by \(\rho =\frac{(1-2c)(a-c^{2})}{c(1-c)}\) where the parameter a , \(0\le a\le c,\) represents the conditional capacity of simultaneous up-movements in the two random walks. In particular, \(a=c^{2}\) yields uncorrelated processes. In Fig.  7 symmetric parameters are adopted for the two stochastic processes. The cone of biodiversity preservation in the benchmark case is delimited by the thick solid lines, while the cone inside the dashed lines is obtained in the case \(c=0.4\) when the worst belief on a is adopted, that is, \(a=c\) . Even in the other extreme case ( \(a=0\) ), not shown in the picture, the cone of biodiversity preservation lies inside the cone of the benchmark case. Thus we confirm that ambiguity tends to shrink the continuation region for biodiversity maintenance even in a truly multi-dimensional setting.

figure 7

Biodiversity preservation (interior of cones) for two ambiguity levels with symmetric parameters

4 The Role of an Ecosystem Planner

So far the model has been developed from the perspective of an investor-producer who maximizes the use value of ecosystem, while keeping the option of biodiversity open to face risk and other forms of uncertainty. A species value includes the market value of harvested biomass, but also indirect benefits from the species existence value, such as increased ecological resilience, social reward for alignment with sustainability targets, additional profit from the recreational and aesthetic value, etc. This section adds the presence of an ecosystem or landscape planner whose main consideration is the total value of species, including the non-use values of social importance, in view of their environmental, cultural, scientific, educational content. One channel for possible action is the introduction of harvesting rules (see Brock and Xepapadeas 2002a , b ) accompanied with subsidies. Let \(h_{i}\in [0,1]\) denote the proportion of the biomass of the \(i^{th}\) species which is harvested and assume that the producer receives a compensation for growing and maintaining the non-harvested mass. This policy can be determined by a conservation program associated with endangered species, for example, a wild species which is too much exploited and close to extinction or a cultivated plant which is going to be abandoned due to its negligible market value. An example is provided by EU rules on fishing quotas, that is, catch limits (expressed in tonnes or numbers) that are set for most commercial fish stocks, in particular, all catches of regulated species should be counted against quotas, undersized fish cannot be sold for consumption, prohibited species must be returned to the sea. EU agricultural policy has an impact on harvesting in the agri-food sector through the tariff quota allocation which is established mainly to stabilise agricultural markets. Referring to green policies, an indirect impact on harvesting decisions is related to the targets set by the common agricultural policy (CAP) of the European Commission aiming at penalizing practices associated with intensive farming systems which are harmful to public health and environment, such as overuse of chemical fertilizers and pesticides, while promoting less productive but sustainable agricultural systems, such as organic agriculture. At the same time, CAP 2023-27 incorporates ’green direct payments’ to compensate farmers for adopting less productive processes with an ecological focus, for example, dedicating at least 5% of arable land to areas deprived of crops with commercial value but preserving endangered biodiversity habitats, or to support farmers and foresters for additional costs and income foregone when implementing the Birds and Habitat Directives.

In what follows we assume that the investor-producer is compensated for the growing cost of the non-harvested biomass through a unit subsidy of \(s_{i}\) , although other forms of incentives can be easily accommodated into the model. In the base case considered in Sect. 2 , \(h_{i}=1\) and \(s_{i}=0\) , that is, the \(i{th}\) species is fully harvested and no incentive policy is in force.

Let us confine the analysis to the case of two species. Then the cumulated expected return to the producer depends on \(\max [h_{1}v_{1},h_{2}v_{2}]\) , while the unit cost \(k_{i}\) is reduced by a unit subsidy \(s_{i}\) , \(i=1,2\) . For simplicity’s sake, let us consider the case where the planner’s policy is applied only to species 1. Then the producer’s problem of Sect. 2 is modified as follows. Let \(F(v_{1},v_{2})\) denote the net present value from employing the species with the maximum value while preserving the other one. Let us denote by \(t^{*}\) the stopping time at which it is optimal to abandon one species as the option of keeping it around has no value. In the subregion \(h_{1}v_{1}\ge v_{2}\) , F solves the following optimal stopping problem:

which can be solved as in Sect. 2  just multiplying \(v_{1}\) by \(h_{1}\) and replacing \(k_{1}\) with \(\frac{k_{1}-s_{1}}{h_{1}}.\) Finally, we can compute the total net present value available to the ecosystem (inclusive of the value achieved by the producer). For example, when both species are kept, but the harvesting rule is applied to species 1 only, then the cumulated value of \(v_{2}+(1-h_{1}-s_{1})v_{1}\) remains available to the planner. If we consider the sum of the value gained by the producer and the value left available to the eco-system, then the total value, denoted by \(\widetilde{F}(v_{1},v_{2})\) , becomes:

Here the threshold values are determined by the producer and can be easily obtained by multiplying the corresponding thresholds obtained in Sect. 2 by \(h_{1}\) and replacing \(k_{1}\) with \(\frac{k_{1}-s_{1}}{h_{1}}.\) Note that we do not solve the optimization problem from the perspective of an eco-planner because it would not be realistic in the economies around the world - with very few exceptions related to collectivisation of agriculture and the creation of controlled farms by some totalitarian regimes. Usually the role of institutional planners is confined to set general targets, to introduce some limitations on harmful farming practices and provide incentives to sustainable ones, but the decision on the production process remains in the hands of producers.

Figure  8 represents the allocation of species when \(h_{1}=1\) is replaced by \(h_{1}=0.9\) and the parameter values are as in Fig.  6 with the exception of \(k_{1}\) which is set equal to 0.5 to emphasize the effect. For a comparison, note that in the base case \(h_{1}=1\) and \(s_{1}=0\) , that is, when no special policy is activated, one can compute that the region of extinction of species 1 spans about 31% Footnote 3 of all possible states. As Fig.  8 shows, if restrictions on harvesting are introduced without compensation ( \(s_{1}=0\) ), then the scope for eliminating species 1 is expanded, but it is significantly reduced when subsidies are provided (for example, to about 17% when \(s_{1}=20\%\) and to 12% when \(s_{1}=25\%\) ). Furthermore, arguing as in Sect. 3 , one can compute that the presence of ambiguity may offset the subsidy policy: if, for instance the ambiguity parameter perceived by the investor is \(c=0.4\) , then a subsidy rate, \(s_{1}\) , of 20% reduces the likelihood of eliminating species 1 only by 2.4% and the improvement with \(s_{1}=25\%\) is only of 6%. In other words, in the presence of ambiguity aversion, perceived ambiguity has a disruptive effect on the policy of ecosystem planners and makes their subsidy expenditures by far less effective. As a consequence, in this context a successful safeguard plan should remove all possible sources of ambiguity, design clear targets, increase transparency in the development and monitoring process, rather than just inflating the funding mechanism.

figure 8

Percentage of the three options when \({h}_{1}\) =90% for several subsidy rates ( \({s}_{1}\) ) displayed on the horizontal axis

Finally, we point out that the total value obtained under the landscape planner’s policy above reaches its peak in the central region where both species are preserved (see Fig.  9 , where \(h_{1}=1\) , \(s_{1}=0\) and \(\widetilde{F}(v_{1},v_{2})\) is plotted against \(v_{1}\) and \(v_{2}\) ). Although the critical thresholds are fixed by the producer, the peak regions for the ecosystem and the producer turn out to be both in the central area where both species are present. This reinforces the need for biodiversity preservation by social institutions as suggested by common wisdom and the general public, which perceives the extinction of a species as a ’loss’.

figure 9

The social value of growing two species in terms of \({v}_{1}\) and \({v}_{2}\)

5 Discussion

In a broader context, following Chateauneuf et al. ( 2007 ), it is useful to look deeper into the parameter ‘ c ’, which reflects the decision maker’s ambiguity bias. In particular, one may want to separate the effects of the level of ambiguity from the effects of the decision maker’s attitude towards ambiguity. To describe the level of ambiguity, we follow the literature by denoting the level of confidence by \(\gamma \in [0,1]\) and the associated level of ambiguity \(1-\gamma\) . Here \(\gamma =1\) reflects full confidence and the absence of ambiguity, whereas \(\gamma =0\) reflects no confidence and full ambiguity. Similarly, the describe the ambiguity attitude by \(\delta \in [0,1]\) , where \(\delta\) reflects the level of ambiguity seeking behaviour, i.e. optimism, hoping for the best, and \(1-\delta\) reflects the level of ambiguity aversion, i.e. pessimism, fearing the worst.

For given a level of confidence \(\gamma\) and level of optimism \(\delta\) , the capacity value ‘ c ’ for moving up now equals \(0.5+(1-\gamma )\times [0.5\times \delta -0.5\times (1-\delta )]\) . For the absence of ambiguity, i.e. for the situation of full confidence, we obtain \(c=0.5\) , as we would in the presence of ambiguity for the ambiguity attitude \(\delta =0.5\) . For the combination of full ambiguity, \(\gamma =0\) , and full pessimism \(\delta =0\) , we find \(c=0\) , whereas for full ambiguity, \(\gamma =0\) , and full optimism, \(\delta =1\) , we find \(c=1\) .

Thus, in a world where there is ambiguity regarding the future relative usefulness of an alternative species compared to the dominant species, an investor who is pessimistically inclined will undervalue the alternative species, compromising the efforts of its conservation. Clearly, the parametrization with respect the level of ambiguity and the ambiguity attitude not only allows for comparative statics with respect to the associated parameters, but also for modelling heterogeneity of decision makers in these aspects.

The general public, for example, will not tend to perceive the conservation of a species as a decision between two investment projects in the way the investors do. Rather, the general public will be inclined to consider the extinction of a species as a loss compared to the status quo. Decisions that are driven by the evaluation of ‘gains’ and ‘losses’ could be interpreted in the context of cumulative prospect theory. In the case of non-additive weights, cumulative prospect theory combines an ‘optimistic’ evaluation ( \(\delta =1\) ) for the non-additive cumulative weights for losses, with a ‘pessimistic’ evaluation ( \(\delta =0\) ) for the non-additive cumulative weights for gains. In the terminology applied by Chateauneuf et al. ( 2007 ), a standard (pessimistic) capacity is applied with respect to gains, whereas a ‘dual’ (optimistic) capacity is applied with respect to losses. Footnote 4

Following this reasoning, we would find that the pessimism guiding the investors’ investments in the species ( \(\delta =0\) ) would lead to sub-optimally low conservation efforts, compared to ambiguity neutral value maximizing ( \(\delta =0.5\) ). The general public, considering the extinction of species a ‘loss’ in the cumulative prospect theory setting and thus applying an optimism ( \(\delta =1\) ) would strive for conservation efforts which exceed those obtained for ambiguity neutral value maximizing. As the ‘common good’ is best defined as reflecting the preferences of the general public, this leads to the conclusion that, in the presence of ambiguity, not only the investors’ conservation efforts are sub-optimal. But even the higher conservation effort levels reflecting ambiguity neutral maximization would still fall short of the conservation efforts requested by the general public. The insight that in the presence of ambiguity investors tend to undertake conservation efforts below those of ambiguity neutral value maximization and the general public requests conservation efforts above those of ambiguity neutral value maximization has profound policy implications which are discussed in the next section.

6 Final Remarks and Policy Implications

This paper studies the effect of risk and ambiguity on the decision of selecting between preserving biodiversity (thus incurring additional maintenance expenditures) or abandoning underutilized species. In keeping with extant literature, we show that ’calculated’ risk creates a scope for biodiversity preservation as the availability of different species provides flexibility in the face of market risks (e.g. consumers’ shifts in taste and habits) and increases resilience to negative externalities, such as pests, diseases, climate change, etc. On the contrary, in the presence of ambiguity averse investors/producers maintenance of agrobiodiversity becomes less convenient.

Our findings may contribute to the evaluation of some strategies embedded in various policy frameworks at national and international levels to promote biodiversity conservation. For example, the European Commission CAP provides that EU countries can utilize a number of measures enabling farmers to enhance biodiversity on their land such as breeding traditional plant varieties, maintaining high nature value grassland, restoring and preserving wetlands as biodiversity habitats, purchasing biodiversity-friendly machinery, etc. While an adequate funding mechanism is key to a safeguard and development agenda, incentives and direct payments cannot be the sole action taken by policy-makers. As we showed, both the perceived value of species as income-generating opportunities and the attached level of uncertainty and risk play a crucial role in delineating management strategies and prioritizing actions. It is widely recognized that some additional measures can be taken by policy-makers to bend the curve of decline in biodiversity. For instance a global awareness campaign among consumers may help promoting sustainable use of species varieties, thus sustaining cultivation of local fruits and crops and diversifying farm systems. At the same time, researchers can contribute to mainstream genetic diversity investigating and valorising the benefits of diversified genetic resources in terms of ecological and nutritional role, resistance to pests, diseases and pollution, and their service in climate change mitigation. All these actions will facilitate the identification of the ’true’ value of each species (in our model, \(v_{i}\) ) and of the wide array of services and opportunities made possible by biodiversity (in our model, the option value).

Our paper shows that ambiguity has a deterring influence on taking actions in favour of biodiversity development. As a consequence, a successful safeguard plan should avoid abrupt changes in policy measures, complicated and vexatious cross-compliance rules, lack of clear and prioritized objectives and should instead increase transparency in the development and monitoring process. A successful rescue plan should involve workers, companies and local communities acting as custodians of biodiversity. So our final question is: are the concerted global conservation policies adequate to protect biodiversity from the threats and harms that may occur from development?

Our findings suggest a two-tier policy with respect to investments and conservation. One policy tier would target the investors and their investment and production policies, under base-line expectations or obligations regarding conservation efforts. The main consideration of this tier would ensure sufficient food being available. The other policy tier would target conservation efforts financed through public subsidies, without any specific expectations or obligations regarding the economic viability of the investment and production decisions involved. The main consideration of this tier would be safeguarding biodiversity and working towards sustainability.

It would seem that in the context of EU conservation policies this type of two-tier policy is implemented in its biodiversity strategy 2030 to protect nature and to reverse the degradation of ecosystems, as part of the European ‘Green Deal’, through its new ‘Biodiversity Strategy’ and its ‘Farm to Fork strategy’, which supplement the current ‘first tier’ approach with forward looking elements of the ‘second tier’ approach. Furthermore, the type of two-tier policy approach proposed could provide a framework for countries within which to consider effective contributions to the FAO’s Strategy for Mainstreaming Biodiversity across Agricultural Sectors.

In this context, the extinction of a species may be perceived as a ’loss’ in the sence of prospect theory (Kahneman and Tversky 1979 ; Tversky and Kahneman 1992 ; Wakker 2010 ).

For a proof in a general context we refer to Agliardi ( 2017 ), Proposition 2.

Measured through the relative amplitudes of the cones representing the different regions. In the two-state case considered in this study, the amplitude of each angle can be easily computed as \(\arctan (v_{2}/v_{1})\) at the critical thresholds.

For a more detailed discussion and examples of the impact of the reference point in cumulative prospect theory on the ambiguity attitude, see Liu and Spanjers ( 2023 ).

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W HAT IS THE contribution of nature to the economy? Students of economics are well acquainted with production functions, which work out how inputs like capital and labour combine to yield output. These functions make all sorts of assumptions, many of which economists know well (that the contributions of capital and labour are subject to diminishing returns, say). Others rarely get a thought: that a mix of inputs that generates output on Earth will not on Venus, for example. The breathable air, drinkable water and tolerable temperatures that allow humans to do everything they do, and the complex ecosystems that maintain them, tend to be taken for granted. This is more than a mere analytical oversight, reckons a new report on the economics of biodiversity commissioned by the British government, and produced by Partha Dasgupta of the University of Cambridge. By overlooking the role nature plays in economic activity, economists underestimate the risks from environmental damage to growth and human welfare.

Professor Dasgupta’s review is similar in spirit to a report on climate change by Nicholas Stern, commissioned by Britain’s Treasury in 2006, and now widely regarded as a seminal economic work on the subject. It does not seek to play on the heartstrings with tales of starving polar bears. Rather, it makes the hard-headed case that services provided by nature are an indispensable input to economic activity. Some of these services are relatively easy to discern: fish stocks, say, in the open ocean. Others are far less visible: such as the complex ecosystems within soil that recycle nutrients, purify water and absorb atmospheric carbon. These are unfamiliar topics for economists, so the review seeks to provide a “grammar” through which they can be analysed.

The report features its own illustrative production function, which includes nature. The environment appears once as a source of flows of extractable resources (like fish or timber). But it also shows up more broadly as a stock of “natural” capital from which humans derive “regulating and maintenance services”: the work of environmental cycles that refresh the air, churn waste products into nutrients, and keep global temperatures hospitable, among other things. With this new production function in hand, economists can properly account for nature’s contributions to growth. Functions that omit nature misattribute its benefits to productivity, exaggerating human capabilities.

The inclusion of natural capital enables an analysis of the sustainability of current rates of economic growth. As people produce GDP , they extract resources from nature and dump waste back into it. If this extraction and dumping exceeds nature’s capacity to repair itself, the stock of natural capital shrinks and with it the flow of valuable environmental services. Between 1992 and 2014, according to a report published by the UN , the value of produced capital (such as machines and buildings) roughly doubled and that of human capital (workers and their skills) rose by 13%, while the estimated value of natural capital declined by nearly 40%. The demands humans currently place on nature, in terms of resource extraction and the dumping of harmful waste, are roughly equivalent to the sustainable output of 1.6 Earths (of which, alas, there is only the one).

To reduce these demands without slowing growth would be a monumental task. Between 1992 and 2014, Professor Dasgupta estimates, the efficiency with which humans transformed natural capital into GDP grew at about 3.5% a year. To stop natural capital declining by 2030 while maintaining current growth trends, however, would require growth in efficiency of about 10% a year.

Even these sorts of rough calculations fail to capture fully humans’ potential vulnerability, because complex natural systems can flip from one equilibrium to another under pressure. The cost of restoring an ecosystem that has been destroyed can be larger than the value of the services it provided when healthy—assuming restoration is possible. Deforestation of the Amazon rainforest beyond some critical threshold is likely to cause an abrupt transformation of the forest into savannah, a change that may prove irreversible. Indeed, Professor Dasgupta argues that economists should acknowledge that there are in fact limits to growth. As the efficiency with which we make use of Earth’s finite bounty is bounded (by the laws of physics), there is necessarily some maximum sustainable level of GDP .

This is a striking admission from an economist. For now, these ultimate limits to growth are not yet binding. There is still considerable room for efficiency to improve (in part, the review notes, because of government subsidies, worth 5-7% of global GDP , which encourage environmentally wasteful activities). But a more pressing worry is that activity pushes nature beyond critical thresholds—in terms of global temperatures, the chemistry of the oceans, the productivity of the soil, or something else—before humans are able to recognise the danger and react.

Down to earth

That economics stands to benefit from a better understanding of nature’s contributions to activity seems clear enough. But whether a better understanding of the economics of biodiversity is essential to improving humans’ relationship with nature is another question. Economists’ work on climate change has yielded insights, for example, but it is less clear that the profession has improved the policy response.

Professor Dasgupta hints at this problem by appealing to the “sacredness” of nature, in addition to his mathematical models and analytical arguments. Clear thinking about nature can benefit from framing it in economic terms: as an asset and input to production, the overuse of which is a problem of incentives and property rights. Building the political will to prevent irreparable damage to the environment, though, may require an appeal to values that are beyond the purview of economics. ■

For more coverage of climate change, register for The Climate Issue, our fortnightly newsletter , or visit our climate-change hub

This article appeared in the Finance & economics section of the print edition under the headline “The natural question”

Finance & economics February 4th 2021

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The effectiveness of national biodiversity investments to protect the wealth of nature

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Finance will be among the priority concerns when the United Nations Convention on Biological Diversity launches the post-2020 framework for global biodiversity conservation (Global Biodiversity Framework) in 2021. The Biodiversity Finance Initiative provides a means for countries to account systematically for their biodiversity expenditures. A sample of 30 countries facilitated the construction of a panel to better understand the effectiveness of public biodiversity investments. Overall, the results show a positive trend in national public biodiversity investments and that larger economies invest more in biodiversity in gross magnitude and as a percentage of gross domestic product (GDP) (0.30% of GDP among wealthy countries versus 0.29%) and of national budgets (1.78% versus 1.14%). Controlling for GDP, wealthier countries invest proportionately less than less wealthy countries. The relationship between GDP and public biodiversity expenditure is an inverted-U curve. All biodiversity-related variables (threatened species, protected area and the presence of a hotspot) were positively correlated with public biodiversity investments. Funds allocated to biodiversity are associated with a reduction in the number of threatened species and the rate of biodiversity loss of about 1% per year. Each US$1 billion investment in biodiversity is associated with an annual reduction in the proportion of threatened to total species of about 0.57%. Population growth is associated with lower financial support for biodiversity and an increase in the proportion of threatened to total species in a country.

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Data availability.

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Acknowledgements

We thank the BIOFIN country and global team members, past, present and future, for contributing to the evolution of the BIOFIN methodology. We thank our partners for their support to BIOFIN: The European Union, the Governments of Germany, Switzerland, Norway, Flanders and Sweden. We acknowledge the following individuals for their guidance, feedback and research assistance: A. Dinu, J. Alvsilver, H. Barois, M. Bellot, K. Bhattacharyya, T. Cumming, I. Dickie, J. Ervin, B. Gjeka, J. Maiden, D. Meyers, M. Paxton, N. Sekhran and A. Trinidad. We would also like to thank the numerous country teams, experts and governments who generated the national-level Biodiversity Expenditure Reviews. The views expressed in this publication are those of the authors and do not necessarily represent those of the United Nations, including UNDP, or the UN Member States.

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A.S., M.A., O.v.d.H. and M.R. developed the data collection method. A.S., K.M., M.A. and O.v.d.H. took part in data collection. A.S., K.M. and M.A. interpreted the models. K.M. undertook data synthesis and econometric modelling. M.A., K.M., O.v.d.H. and M.R. wrote the manuscript.

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Extended data

Extended data fig. 1 real public biodiversity expenditure and trends among sampled countries (n = 30)..

Public biodiversity expenditure (in 2020 million USD), Public biodiversity expenditure as % of GDP.

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Seidl, A., Mulungu, K., Arlaud, M. et al. The effectiveness of national biodiversity investments to protect the wealth of nature. Nat Ecol Evol 5 , 530–539 (2021). https://doi.org/10.1038/s41559-020-01372-1

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Economic Benefits of Biodiversity

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Each Species has a Role

Biodiversity underpins economic activity, related benefits, organization of this guide, economic impact studies, economic and environmental benefits of biodiversity, linking biodiversity conservation and poverty alleviation: a state of knowledge review, conserving biological diversity in agricultural/forestry systems, impacts of biodiversity on the emergence and transmission of infectious diseases, economic reasons for conserving wild nature, download as.

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Nothing contained in this document is intended to be relied upon as legal advice or to create an attorney-client relationship. The material presented is generally provided in the context of Pennsylvania law and, depending on the subject, may have more or less applicability elsewhere. There is no guarantee that it is up to date or error free.

Economic impact studies document the many and substantial economic benefits generated by biodiversity. This guide identifies major studies, summarizes key findings of each and provides hyperlinks to the studies.

Economic impact studies identify a variety of economic benefits generated by biodiversity. The studies described in this guide each analyzed one or more of these benefits, including the following:

  • Enabling the agricultural and forest industry through processes such as pollination, pest control, nutrient provision, genetic diversity, and disease prevention and control
  • Provision of wild harvested food products such as fish, large and small animals, and maple syrup
  • Provision of medicinal plants and raw materials for pharmaceuticals
  • Enabling nature-based tourism and the hunting and fishing industry
  • Natural degradation of chemicals released into the environment, a significant cost savings over physical, chemical and thermal bioremediation.
  • Reduced healthcare costs through the prevention of the spread of disease.
  • Reduction of worldwide poverty.
  • Sustaining the natural ecosystems on which humans, and therefore human economic systems, depend.

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Biodiversity is “the variability among living organisms from all sources including terrestrial, marine and other aquatic ecosystems, and the ecological complexes of which they are part; this includes diversity within species, between species, and of ecosystems.” It is the foundation of life on Earth. - International Union for Conservation of Nature, ( About Biodiversity, http://iucn.org/what/tpas/biodiversity/about at 11/14/2011 )

Each species has a specific niche, a specific role and function in an ecosystem. These roles include capturing and storing energy, providing food, predation, decomposing organic matter, cycling water and nutrients, controlling erosion, controlling pests and climate regulation. Species support biological production and regulation throughout the food chain in a variety of ways, such as adding to soil fertility, pollination, plant growth, predation and waste decomposition. The more diverse an ecosystem is, the more stable it is, the more productive it tends to be, and the better it is able to withstand environmental stress. Biodiversity is essential for sustaining the natural ecosystems on which humans, and all life, depend.

Although concern about threats to species diversity tend to focus on large species, such as bald eagles or whooping cranes, threats to the biodiversity of small organisms such as arthropods and microbes are the same or greater. Small organisms are often more specialized and adapted to certain plant species and habitats than are the large animals, and therefore they are more susceptible than large animals to extinction.

Agriculture, forestry and fisheries products, stable natural hydrological cycles, fertile soils, a balanced climate and numerous other vital ecosystem services depend upon the conservation of biological diversity. Food production relies on biodiversity for a variety of food plants, pollination, pest control, nutrient provision, genetic diversity, and disease prevention and control. Both medicinal plants and manufactured pharmaceuticals rely on biodiversity. Decreased biodiversity can lead to increased transmission of diseases to humans and increased healthcare costs. The outdoor tourism industry relies on biodiversity to create and maintain that which tourists come to see, as does the multi-billion dollar fishing and hunting industry.

While this guide focuses on economic benefits, it is not meant to diminish the importance of the environmental and social benefits of biodiversity. Related guides at ConservationTools.org include:

  • Economic Benefits of Land Conservation
  • Economic Benefits of Parks
  • Economic Benefits of Trails
  • Economic Benefits of Smart Growth and Costs of Sprawl

This guide presents an inventory of studies. The heading of each section is the title of the study and is hyperlinked to the ConservationTools.org library listing where the study can be viewed or downloaded. The organization responsible for the study is given, followed by a summary of the key economic findings of the study.

  • Pollinators, including bees and butterflies, provide significant environmental and economic benefits to agricultural and natural ecosystems, including adding diversity and productivity to food crops. As many as one-third of the world’s food production relies directly or indirectly on insect pollination. About 130 of the crops gown in the United States are insect pollinated. Habitat fragmentation and loss adversely affects pollinator food sources, nesting sites, and mating sites, causing precipitous declines in the populations of wild pollinators.
  • There are 6 million tons of food products harvested annually from terrestrial wild biota in the United States including large and small animals, maple syrup, nuts, blueberries and algae. The 6 billion tons of food are valued at $57 million and add $3 billion to the country’s economy (1995 calculations).
  • Approximately 75% (by weight) of the 100,000 chemicals released into the environment can be degraded by biological organisms and are potential targets of both bioremediation and biotreatment. The savings gained by using bioremediation instead of the other available techniques; physical, chemical and thermal; to remediate chemical pollution worldwide give an annual benefit of $135 billion (1997 calculation). Maintaining biodiversity in soils and water is imperative to the continued and improved effectiveness of bioremediation and biotreatment.
  • Biodiversity is essential for the sustainable functioning of the agricultural, forest, and natural ecosystems on which humans depend, but human activities, especially the development of natural lands, are causing a species extinction rate of 1,000 to 10,000 times the natural rate.
  • The authors estimate that in the United States, biodiversity provides a total of $319 billion dollars in annual benefits and $2,928 billion in annual benefits worldwide (1997 calculation)

Convention on Biological Diversity

  • Biodiversity conservation and poverty reduction are two global challenges that are inextricably linked. But biodiversity is generally a public good, so it is under-valued, or not valued at all, in national economies. This paper focuses on the question “which groups of the (differentiated) poor depend, in which types of ways, on different elements of biological diversity?” It focuses on biodiversity as a means of subsistence and income to the poor and biodiversity as insurance to prevent the poor from falling even deeper into poverty.
  • Ten conservation mechanisms that can reduce poverty in the rural poor are identified: non-timber forest products, community timber enterprises, payments for environmental services, nature-based tourism, fish spillover, mangrove restoration, protected area jobs, agroforestry, grasslands management, and agrobiodiversity conservation.
  • There are caveats to these links. The poor depend disproportionately on biodiversity for their subsistence needs and biodiversity conservation can be a route out of poverty under some circumstances. However, it is often the relatively low value or inferior goods that are most significant to the poor, and the more affluent’s pursuit of the higher commercial value often crowds out the poor. The scale of poverty reduction may be small; conservation interventions do not necessarily lend themselves to poverty interventions. A focus on the cash benefits of biodiversity conservation is too limited; it excludes the ability to meet basic human needs. And biomass may matter more in the short term, biodiversity (as the foundation for biomass) more in the long term.
  • Both high agricultural productivity and human health depend on the activity of a diverse natural biota. Efforts to curb the loss of biodiversity have intensified in recent years, but they have not kept pace with the growing encroachment of human activities.
  • An estimated $20 billion year is spent worldwide on pesticides. Yet, parasites and predators existing in natural ecosystems provide an estimated 5-10 times this amount of the pest control. Without the existence of natural enemies, crop losses by pests in agriculture and forestry would be catastrophic and costs of chemical pest controls would escalate enormously.
  • A diverse group of microbes fix nitrogen from the atmosphere for use by crops and forests. An estimated $7 billion of nitrogen is supplied to US agriculture each year by nitrogen-fixing microbes and 90 million tons a year for use by agriculture worldwide with a value of almost $50 billion.
  • A loss of biodiversity leads to an increase in the spread of disease. Researchers speculate this is because some species are better at buffering disease transmission. An example of this is that species that have low rates of reproduction or invest heavily in immunity tend to be more strongly impacted by losses of biodiversity than those with high reproduction rates or those that invest less in immunity (and would consequently be more likely disease hosts).
  • The study examines 12 diseases from different ecosystems worldwide, including Lyme disease. In eastern North America, the white-footed mouse is simultaneously the most abundant host species, the most competent host for the Lyme bacterium, and the highest-quality host for immature tick vectors. Virginia opossums are poor hosts for the pathogen and kill the vast majority of ticks that attempt to feed on them. Virginia Opossums however are absent from many low-diversity forest fragments and degraded forests, places where the mice are abundant. Along with a loss of biodiversity comes a loss of the species with the strongest disease buffering effect.
  • Although the study does not discuss costs associated with an increased rate of disease transmission, it could be inferred that a decrease in biodiversity that leads to an increase in disease transmission will lead to increased medical costs, increasing the urgency of the need of local, regional, and global efforts to preserve natural ecosystems and the biodiversity they contain.

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  • Amidst continuing loss of natural habitat and biodiversity, it is necessary to examine the benefit:cost ratio of investments in habitat conservation. Evidence has been accumulating that shows habitat conservation generates more economic benefits than does habitat conversion. The authors estimate that the overall benefit:cost ratio of an effective global program for the conservation of remaining wild nature is at least 100:1.

The Economics of Biodiversity Loss

We explore the economic effects of biodiversity loss by developing an ecologically-founded model that captures how different species interact to deliver the ecosystem services that complement other factors of economic production. Aggregate ecosystem services are produced by combining several non-substitutable ecosystem functions such as pollination and water filtration, which are each provided by many substitutable species playing similar roles. As a result, economic output is an increasing but highly concave function of species richness. The marginal economic value of a species depends on three factors: (i) the number of similar species within its ecosystem function, (ii) the marginal importance of the affected function for overall ecosystem productivity, and (iii) the extent to which ecosystem services constrain economic output in each country. Using our framework, we derive expressions for the fragility of ecosystem service provision and its evolution over time, which depends, among other things, on the distribution of biodiversity losses across ecosystem functions. We discuss how these fragility measures can help policymakers assess the risks induced by biodiversity loss and prioritize conservation efforts. We also embed our model of ecosystem service production in a standard economic model to study optimal land use when land use raises output at the cost of reducing biodiversity. We find that even in settings where species loss does not reduce output substantially today, it lowers growth opportunities and reduces resilience to future species loss, especially when past species loss has been asymmetric across functions. Consistent with these predictions of our model, we show empirically that news about biodiversity loss increases spreads on credit default swaps (CDS) more for countries with more depleted ecosystems.

Stefano Giglio, Theresa Kuchler, Johannes Stroebel and Olivier Wang declare that they have no conflicts of interest to disclose. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

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Why are nature and biodiversity important to the economy?

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Each of the millions of species that call Earth “home” plays an important role in balancing and preserving its ecosystem. This biodiversity, which has enabled human beings to satisfy basic needs for food, medicine and water, is proving decisive in finance. Here’s what you need to know about how nature and biodiversity influence the decisions Santander makes. 

“Biodiversity” refers to the vast number of living things and natural resources that populate the planet, how they have evolved and how they interact to benefit from their ecosystem. It is a network of animals, plants and micro-organisms in various habitats on land, in the water and in the sky.

Human beings have always relied on mining, fishing, forestry, farming and raising livestock; but overexploitation has caused damage to nature and biodiversity, destroying land, water and natural resources, and wiping out species of animals and plants. According to the WWF’s Living Planet Report 2022 , populations of mammals, fish, birds, reptiles and amphibians have declined, on average, by 69%.

Biodiversity and sustainable investment

No future is possible without nature and biodiversity. As they deteriorate, humans risk not being able to produce food, obtain raw materials for goods and services, or find genetic resources that are needed in farming and medicine or to ensure general food security. Biodiversity is being affected by climate change, which must also be dealt with. No nature or biodiversity means no social or economic development. People and businesses need to commit to tackling major environmental challenges.

In this climate emergency, sustainable finance is playing an important role in bringing industry and society together to protect species and ecosystems by putting capital at the service of the planet. You can find a wide array of sustainable investment products that apply ESG standards and fund environmental and social projects and initiatives. Depending on your goal, you can invest in sustainable funds, green and social bonds, green loans and other financial products. If you  are interested in protecting marine biodiversity and ecosystems, you could choose investment products, like blue bonds . Companies that issue these products offer you a return and promise to use proceeds for ecological conservation.

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What is the Global Biodiversity Framework?

This historic agreement reached at the 2022 United Nations Biodiversity Conference (COP15) in Montreal, Canada, aims to protect and recover nature and biodiversity by 2030. It sets out 23 targets, such as conserving and managing 30% of land, coastal areas and oceans; halving global food waste; and requiring financial institutions to monitor, assess and transparently disclose risks and impacts on biodiversity.

What is Santander doing to protect biodiversity?

The financial sector has an impact on nature and biodiversity. At Santander, we commit to finding out how our financing affects nature and how much our business depends on such activities as logging, mining and agriculture. Our materiality assessment identified 15 ESG areas of focus, including nature and biodiversity.

In accordance with Target 15 of the Global Biodiversity Framework, Santander is running an impact assessment of our business regarding nature and biodiversity. In Brazil, we are helping protect the Amazon Rainforest. Our action includes checking loan applications from farmers and meat producers to make sure they have no connection to illegal timber or the invasion of indigenous lands. If we approve them, we run the same check throughout the life of the loan.

In the UK, we are founder members of the Net Zero With Nature initiative to capture funds for restoring wildlife parks, like Scotland’s Cairngorms National Park, in addition to preventing carbon emissions naturally.

We’re also supporting nature and biodiversity through the Motor Verde initiative, which is funding three new forests being planted on 300 hectares in Spain to offset 82,000 tonnes of CO 2 .

Nature and biodiversity are in danger. Stopping their destruction and helping them recover is one of society’s biggest challenges. It will ensure enough resources for future generations. Earth and the challenge of protecting it belong to everyone.

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Biodiversity loss impacts societies and economies: How can Europe confront the spread of invasive species?

by Núria Roura-Pascual, The Conversation

raccoon

Biological invasions are the main cause of biodiversity loss, but they can also have serious social and economic repercussions. In Europe, over 13,000 non-native (or "alien") species have an established presence, around 1,500 of which are invasive species that have a negative impact on their surroundings. Species of particular concern are the brown rat, raccoon, red swamp crayfish, tiger mosquito, varroa mite, ragweed, and ailanthus, among many others .

Various studies have predicted that by 2050, the number of non-native species in Europe will grow by as much as 64%. This estimate assumes that current trends will continue unchanged. However, the number and repercussions of invasive species depend on a range of environmental and socioeconomic factors that will evolve in ways that are hard to predict.

Four possible future scenarios

Researchers, managers and policymakers from various countries have developed four qualitative scenarios on the future of biological invasions up to 2050 . This was done as part of the AlienScenarios and InvasiBES projects.

The scenarios are not predictions as such—they are narrative descriptions and accounts of what could happen in the future under a range of different circumstances.

In particular, our scenarios take into account the socio-ecological developments that are critical for invasive species, and they are more biodiversity-focused than other global change scenarios, such as the shared socioeconomic pathways (SSPs) used by many climate change reports. The scenarios are as follows:

Big Tech rules Europe : Distrust of governments leads to companies having increased power, while populations concentrate in cities and suffer economic hardship. An increase in invasive species and a reduction in their coordinated management .

Technological (pseudo-)panacea : Rapid technological development, large trade volumes and high biosecurity. European societies concentrate in "smart cities." The rate of invasive species spreading and becoming established is low due to solid, strict biosecurity measures.

Green local governance : Local governments acquire more influence. By adopting degrowth, society begins to value locally produced goods, and spreads from urban centers to rural areas. Reduced trade limits the spread of invasive species, but inefficient coordination is an obstacle to management and biosecurity.

  • Lost (in) Europe : Reduced international cooperation and increased social inequality. Pollution, climate change and biodiversity loss become worse. There are fewer invasive species due to reduced trade, but they are barely controlled or managed.

Biodiversity loss impacts societies and economies—how can Europe confront the spread of invasive species?

Going beyond direct management

We have used these scenarios to develop a strategy for the management of biological invasions .

The strategy was built around the vision that "by 2050, the harmful impacts of invasive species in Europe (EU member states and non-EU states) are substantially reduced compared to today," and that we can adapt to the uncertainties arising from the scenarios mentioned above.

This management strategy covers 19 different objectives, grouped into four categories:

Political : improving political competence on the issue, increasing funding, scanning the horizon for future alien species, prioritization of invasive species, invaded areas and pathways for management.

Research : establishing research networks, detecting gaps in data and knowledge regarding invasive species, and developing critical tools to record and control their spread.

Public awareness : setting up communication strategies , funding to raise awareness, and enhancing public engagement.

Biosecurity : an increase in international and European cooperation, creating a monitoring system and developing systems for rapid response, control, eradication and restoration.

This range of goals highlights the complexity of managing invasive species, and the need to consider actions beyond direct management, such as prevention, eradication and control.

Several of these objectives have been identified by other studies, but the AlienScenarios and InvasiBES projects expand on them, integrating existing knowledge into a comprehensive framework. This framework will guide actions on invasive species in different future scenarios, and help to design a long-term management strategy for biological invasions in Europe.

Main recommendations

Based on the relationship between our goals and the main elements of the management strategy, we have four main recommendations for managing invasive species in Europe :

  • Establish a dedicated European agency, or an intergovernmental agreement, that has the mandate and resources to regulate and oversee activities related to the management of invasive species.
  • Establish a cross-sectoral communication strategy on invasive species (including a dedicated curriculum for schools) and a centralized, multilingual communication platform at the European level.
  • Adopt standard protocols to gather and provide access to data on invasive species, with the aim of guiding management decisions.
  • Set up a monitoring system to assess biological invasions on a European and national level.

None of these recommendations will be sufficient on their own, but they are the pillars of a long-term strategy for managing biological invasions at the European level. It is time to shift the focus towards a more holistic perspective, one that accounts for the unique situations of different sectors and countries, and that explicitly considers plausible future scenarios.

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  • Mass Extinction

10 causes of biodiversity loss and its effect on the environment

April 21, 2023
topic:
tags: , , ,
by:

Biodiversity refers to the variety of life on Earth, including the diversity of species, genes and ecosystems. It is the result of billions of years of evolution and is essential for the stability of ecosystems and environmental regulation, such as air purification, carbon sequestration and population control.

However, destructive human activities and the worsening climate crisis are resulting in the loss of this biodiversity  through the extinction and endangerment of species , which results in far-reaching consequences for the environment, as well as for human beings. 

The Top 10 Causes of Biodiversity Loss

  • Habitat loss and fragmentation : The conversion of natural habitats into agricultural land, urban areas and infrastructure development leads to the destruction and fragmentation of habitats, which is the primary cause of biodiversity loss. As humans take over previously wild lands, we reduce the available space for native species to live, feed and reproduce, and also disrupt the connections between different ecosystems.
  • Climate change : Global warming and the resulting changes in climate patterns have altered habitats, making it challenging for organisms to perform their natural functions or adapt to new conditions. Changes in temperatures or rain patterns, for example, make it different for certain plants to grow or survive, which also affects the species that depend on them.
  • Overhunting : Overhunting of a species to meet high demand for meat or animal byproducts, for sport, or due to pest control is one of the main drivers of species extinction. Industrialised hunting does not take into account the effects of species deterioration on the rest of the ecosystem and quickly depletes populations. For example, the sharp commercialisation of otter fur in the 18th and 19th centuries in the United States and Russia nearly drove the species extinct, which catalysed the secondary effects of losing kelp forests and depleting fish populations.
  • Overfishing : Industrialised fishing has led to the depletion of highly-demanded species like tuna , whales and salmon to meet the world’s demand. Unsustainable methods of fishing, like bottom trawling, have also destroyed sea-floor habitats, which are important nursery areas for many species. This has had the knock-off effect of changing marine ecosystem structures by increasing the populations of predators at the expense of their prey.
  • Invasive species : As ecosystems have evolved to maintain a relative stability of species populations, non-native species introduced to new environments can outcompete native species for resources, prey on them, or transmit diseases. When invasive species are at higher levels of the food chain, they can deplete populations of the prey they feed on. Conversely, when invasive species are in the middle or bottom of the food chain, the native species that feed on them may spike in population as they have an abundance of food, which could have repercussions on the rest of the ecosystem.
  • Pollution : Air, soil and water pollution can harm species by degrading their habitats, physically harming them, or increasing their vulnerability to diseases or predation. Some pollutants, such as pesticides and heavy metals, can be passed up the food chain , therefore contaminating many levels of the ecosystem.
  • Disease : The spread of infectious diseases , often facilitated by human activities, can devastate wildlife populations. Organisms have developed natural defences against disease-inducing microbes native to their region. However, when human activity contaminates ecosystems with non-native microbes, indigenous species are not equipped to combat them.
  • Genetic pollution : The release of genetically modified organisms or the hybridization of closely related species can lead to the loss of genetic diversity , which is crucial for species' adaptability and resilience.
  • Ocean acidification : Increases in carbon dioxide levels are responsible for the acidification of oceans, which makes it difficult for marine organisms, like corals , plankton or shellfish, to maintain their protective coating . The result is a decline in these species’ populations, as well as those of species that rely on them for food and shelter. 
  • Ecosystem simplification : The conversion of complex, diverse ecosystems into simplified ones, such as monocultures or urban areas, reduces the number of niches available for species and decreases ecosystem resilience.

essay on economic potential of biodiversity

The risks and dangers of bee extinction

The Effects of Biodiversity Loss on the Environment

Biodiversity loss has a cascading effect on ecosystems and the environment, leading to a decline in ecosystem services and reduced resilience to disturbances. Some of the consequences include:

  • Loss of ecosystem stability : Biodiverse ecosystems are more stable and resilient to disruptions such as climate change, disease outbreaks or invasive species. Loss of biodiversity can reduce an ecosystem's ability to recover from these disturbances and increase the risk of ecosystem collapse.
  • Decline in ecosystem services : Healthy, diverse ecosystems provide essential services, such as water and air purification, soil formation pollination , carbon sequestration and climate regulation. Biodiversity loss can impair these services, leading to a decline in environmental quality.
  • Loss of genetic resources : Biodiversity is a reservoir of genetic resources that can be used for the development of new crops , medicines and for cultural expression.
  • Altered biogeochemical cycles : Biodiversity loss can affect the cycling of nutrients , such as carbon, nitrogen and phosphorus, in ecosystems. This can lead to changes in ecosystem productivity, water quality, and greenhouse gas emissions.
  • Increased risk of species extinction : The loss of individual species can have cascading effects on other species within the same ecosystem, leading to further declines in biodiversity and increasing the risk of extinction for multiple species.

essay on economic potential of biodiversity

The blue whale is critically endangered. How many are left?

How Biodiversity Loss Affects Humans

The loss of biodiversity has significant implications for human health, well-being and economic development. Some of the ways in which biodiversity loss affects humans include:

  • Reduced food security : Biodiversity is essential for food production , as it provides genetic resources for crop and livestock improvement, pollination services and natural pest control. Declining biodiversity can reduce agricultural productivity and increase the vulnerability of food systems to pests, diseases and climate change.
  • Decline in human health : Biodiversity plays a critical role in the development of new medicines, as many pharmaceuticals and homoeopathic remedies are derived from plants or animals . Losing species could mean losing potential sources of new treatments for diseases. Additionally, the decline in ecosystem services, such as water and air purification, can lead to increased exposure to pollutants and pathogens, negatively affecting human health.
  • Economic losses : Biodiversity supports many industries, including agriculture, forestry, fisheries and tourism. Loss of biodiversity can reduce the productivity and sustainability of these industries, leading to economic losses and reduced employment opportunities.
  • Loss of cultural values : Biodiversity has cultural and spiritual significance for many people, particularly indigenous communities. The loss of species and ecosystems can result in the loss of cultural heritage, traditional knowledge and spiritual connections to nature.
  • Increased vulnerability to natural disasters : Healthy, diverse ecosystems can help protect human communities from natural disasters, such as floods, storms and landslides. Biodiversity loss can reduce the ability of ecosystems to buffer these events, increasing the vulnerability of human settlements to natural disasters.
  • Reduced resilience to climate change : Biodiversity is crucial for ecosystem resilience to climate change . Loss of biodiversity can reduce the capacity of ecosystems to adapt to changing climate conditions, potentially exacerbating the impacts of climate change on human societies.

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The economic value of biodiversity

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Related Papers

Ecological Economics

Malte Faber

essay on economic potential of biodiversity

Environmental Management

Joshua Farley

Beatriz Rodriguez-Labajos

After 1992 many conservation biologists thought that the use of economic instruments would be more effective to halt biodiversity loss than policies based on setting apart some natural spaces outside the market. At the same time there was a new elaboration of the concept of ecosystem services and, since 1997, there have been attempts at costing in money terms the loss of ecosystem services and biodiversity, including the high profile TEEB (The Economics of Ecosystems and Biodiversity) project (2008–2011). Our discussion rests on instances showing the analytical implications of three main socio-economic meanings of biodiversity loss: 1) the loss of natural capital; 2) the loss of ecosystem functions; and 3) the loss of cultural values and human rights to livelihood. We review several approaches to include economic considerations in biodiversity conservation. We show cases where monetary valuation is relevant and other cases where it is controversial and even counterproductive, as it undermines the objectives of conservation.

Clement Tisdell

This chapter is presented in the following sequence. First, there is a discussion of the economic valuation of wild biodiversity and the services provided by natural ecosystems. This is followed by an examination of the role of opportunity costs in the evaluation of wild biodiversity and in deciding whether or not natural ecosystems should be conserved. Subsequently, socio-economic drivers of wild biodiversity loss are identified and policy implications of this analysis are outlined.

Conservation Biology

Erwin Bulte

Although economic analysis can be used to argue for preservation of species and habitats, many natu- ral assets represent inferior investments in society&#x27;s asset portfolio. We demonstrate this for the case of ancient temperate rainforests and minke whales ( Balaenoptera acutorostrata ). For both rainforests and whales, we deter- mined their value for harvest and balanced this against society&#x27;s valuation

Sustainability Science

Paulo A.L.D. Nunes

Abstract: Biodiversity has received much attention in environmental research and public policy in recent years. There is a world-wide interest in its relevance for the carrying capacity of rich but fragile ecosystems. Voices suggesting to build up proper protection mechanisms for unique and scarce diversity become louder. The question emerges whether – and which combination of – ecological and economic insights can help us to identify meaningful policy options to map out proper roads towards a sustainable future. This paper surveys and highlights the potential and limitations of an ecological-economics perspective on biodiversity. Such a perspective on complex biodiversity issues, if firmly supported by modern ecological insights, can help to clarify the processes, functions and values associated with biodiversity. This study aims to offer a review of key ecological and economic concepts that are essential in building bridges between ecology and economics, and discusses ways to inte...

Javier Benayas

Abstract: Recognition of the need to include economic criteria in the conservation policy decision-making process has encouraged the use of economic-valuation techniques. Nevertheless, whether it is possible to accurately assign economic values to biodiversity and if so what these values really represent is being debated. We reviewed 60 recent papers on economic valuation of biodiversity and carried out a meta-analysis of these studies to determine what factors affect willingness to pay for biodiversity conservation. We analyzed the internal variables of the contingent-valuation method (measure of benefits, vehicle of payment, elicitation format, or timing of payment) and anthropomorphic, anthropocentric and scientific factors. Funding allocation mostly favored the conservation of species with anthropomorphic and anthropocentric characteristics instead of considering scientific factors. We recommend researchers and policy makers contemplate economic valuations of biodiversity carefully, considering the inherent biases of the contingent-valuation method and the anthropomorphic and anthropocentric factors resulting from the public's attitude toward species. Because of the increasing trend of including economic considerations in conservation practices, we suggest that in the future interdisciplinary teams of ecologists, economists, and social scientists collaborate and conduct comparative analyses, such as we have done here. Use of the contingent-valuation method in biodiversity conservation policies can provide useful information about alternative conservation strategies if questionnaires are carefully constructed, respondents are sufficiently informed, and the underlying factors that influence willingness to pay are identified.Resumen: El reconocimiento de la necesidad de incluir criterios económicos en el proceso de toma de decisiones sobre políticas de conservación ha impulsado el uso de técnicas de valoración económica. Sin embargo, aún se debate si es posible asignar valores económicos precisos a la biodiversidad, así como lo que esos valores realmente representan. Revisamos 60 artículos recientes sobre valoración económica de la biodiversidad y realizamos un meta análisis de estos estudios para determinar los factores que afectan la disposición a pagar por la conservación de la biodiversidad. Analizamos las variables internas del método de valoración contingente (medida de los beneficios, forma de pago, formato de respuesta o frecuencia de pago) y de factores antropomórficos, antropocéntricos y científicos. La asignación de recursos favoreció principalmente a la conservación de especies con características antropomórficas y antropocéntricas en vez de considerar factores científicos. Recomendamos que los investigadores y políticos contemplen cuidadosamente las valoraciones económicas de la biodiversidad, considerando los sesgos inherentes del método de valoración contingente y los factores antropomórficos y antropocéntricos resultantes de las actitudes del público hacia las especies. Debido a la creciente tendencia por incluir consideraciones económicas en las prácticas de conservación, sugerimos que equipos interdisciplinarios de ecólogos, economistas y científicos sociales en el futuro colaboren y dirijan análisis comparativos, tal como hemos hecho aquí. El uso del método de valoración contingente en las políticas de conservación de la biodiversidad puede proporcionar información útil sobre estrategias de conservación alternativas si los cuestionarios son cuidadosamente elaboradas, los encuestados estén suficientemente informados y se identifican los factores que influyen sobre la disposición a pagar.Resumen: El reconocimiento de la necesidad de incluir criterios económicos en el proceso de toma de decisiones sobre políticas de conservación ha impulsado el uso de técnicas de valoración económica. Sin embargo, aún se debate si es posible asignar valores económicos precisos a la biodiversidad, así como lo que esos valores realmente representan. Revisamos 60 artículos recientes sobre valoración económica de la biodiversidad y realizamos un meta análisis de estos estudios para determinar los factores que afectan la disposición a pagar por la conservación de la biodiversidad. Analizamos las variables internas del método de valoración contingente (medida de los beneficios, forma de pago, formato de respuesta o frecuencia de pago) y de factores antropomórficos, antropocéntricos y científicos. La asignación de recursos favoreció principalmente a la conservación de especies con características antropomórficas y antropocéntricas en vez de considerar factores científicos. Recomendamos que los investigadores y políticos contemplen cuidadosamente las valoraciones económicas de la biodiversidad, considerando los sesgos inherentes del método de valoración contingente y los factores antropomórficos y antropocéntricos resultantes de las actitudes del público hacia las especies. Debido a la creciente tendencia por incluir consideraciones económicas en las prácticas de conservación, sugerimos que equipos interdisciplinarios de ecólogos, economistas y científicos sociales en el futuro colaboren y dirijan análisis comparativos, tal como hemos hecho aquí. El uso del método de valoración contingente en las políticas de conservación de la biodiversidad puede proporcionar información útil sobre estrategias de conservación alternativas si los cuestionarios son cuidadosamente elaboradas, los encuestados estén suficientemente informados y se identifican los factores que influyen sobre la disposición a pagar.

Consilience - The Journal of Sustainable Development

Globally, the use of economic instruments for biodiversity conservation has gained a lot of support. This is because of the concern for the economic well being of people living in and near biodiversity-rich areas. Also, economic drivers are the main threats to biodiversity. This policy of using economic instruments is being used on a case-by-case basis worldwide. A review of their use from a global perspective is important to facilitate learning from issues resulting from their implementation. This article documents and reviews the specific economic instruments being used in different parts of the world for biodiversity conservation. An analysis of the economic instruments using a demand or supply classification suggests that more instruments are targeted at increasing supply of biological resources for human use. A review of literature and field documents was also employed to determine trends in the use of economic instruments for conservation. A major trend observed is the relativ...

Both the stock of the world's biological diversity and the state of its ecosystems are major influences on the ability of humankind to sustain and increase its well-being. They are major determinants of the availability of commodities essential to human life, such as food and water, and they are also, to a large extent, interdependent. However, it is not only the supply of necessities which is affected by the state of biodiversity and ecosystems. Also the availability of many non-essentials that add to the quality of human life is directly or indirectly dependent on the state of biodiversity and ecosystems. Human societies are embedded in ecological systems which they have been altering for many millennia. Even before agriculture commenced about 9000 years ago, humans were both altering natural ecosystems to increase their well-being and adapting their economic activities to varied local and environmental conditions. These processes gathered considerable momentum following the commencement of agriculture and its geographical spread. Major acceleration occurred in humankind's ability to control ('and conquer') nature following the Industrial Revolution, which began in Europe: processes set in motion by this revolution (mainly increasing reliance on the application of advances in science and technology and associated capital accumulation for achieving economic growth) have (and continue to have) major impact on the state of the globe's biodiversity and ecosystems. A feature of this long-term development process has been the increased decoupling of human economic activity from its surrounding local environmental conditions. This has not only been made possible by advances in science and technology and capital accumulation but also by the development of market systems and their extension. This 'increased decoupling' is a major cause of losses of pre-existing biodiversity and the reduced presence of ecosystems that once existed. In effect, humankind now has to adapt its economic activities less to local environments than in earlier times. This is because it alters local environments or it is able to a significant extent to insulate its activities from them, on a scale which could never have been imagined by its forebears. Although this has added greatly to human well-being, it is unclear for how long this type of development process can continue to add to human well-being, given global population growth and increasing demands on the earth's biological resources and ecosystems.

Continuing loss of biodiversity, mainly due to economic development, is a major contemporary concern. This is because it could threaten economic sustainability and diminish the satisfaction humankind obtains by experiencing the living world; and it can be a source of guilt among individuals who feel that humankind has a moral responsibility to help conserve the living world. Therefore, biological conservation is an important subject and is the focus of this chapter. This chapter is developed initially by identifying a range of subjects that can be investigated in studying biological conservation and management. Diverse motives are specified which have an influence on decisions about biological conservation and management. Subsequently, attention is given to the role and limitations of markets in determining biological conservation and management and after that, to the role and shortcomings of non-market institutions (governments and NGOs) in doing so. The usefulness of economic valuation techniques in relation to this subject is assessed and particular attention is given to the need to take account of opportunity costs, the importance of regular biases in conservation preferences, and the difficulty of resolving social conflict about the management of biological resources. Before concluding, the following illustrative topics are discussed:  Conflicts, valuation issues and the costs of policies for conserving koalas;  The role of wildlife rehabilitation centres in nature conservation;  Ecotourism enterprises and the conservation of species; and  Conflicts between conservationists about conserving species illustrated by the presence of wild horses (brumbies) in the high country of Australia.

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IMAGES

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  2. Biodiversity Essay

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COMMENTS

  1. Economic and Environmental Benefits of Biodiversity

    The annual economic and environmental benefits of biodiversity in the United States total approximately $300 billion.

  2. The Economics of Biodiversity: The Dasgupta Review

    The economics of biodiversity is thus the economics of the entire biosphere. In addition to produced capital and human capital, the economics of the biodiversity includes what we may call 'natural capital'. ... As part of fiscal stimulus packages in the wake of COVID-19, investment in natural capital has the potential for quick returns ...

  3. The Economics of Biodiversity The Dasgupta Review Full Report

    The Dasgupta Review is an independent, global review on the Economics of Biodiversity led by Professor Sir Partha Dasgupta (Frank Ramsey Professor Emeritus, University of Cambridge). The Review ...

  4. The economics of biodiversity: Accounting for human impact in the

    Abstract. This article provides an analysis of The Economics of Biodiversity: The Dasgupta Review. The review places the study of biodiversity at the core of economics, by providing a conception that takes into account human impact in the biosphere, and planetary boundaries. This leads to a theoretical model where the human economy is bounded.

  5. PDF THE ECONOMIC VALUE OF BIODIVERSITY

    THE ECONOMIC VALUE OF BIODIVERSITY Page 4 Genetic diversity Genetic diversity is the sum of genetic information contained in the genes of individuals of plants, animals and micro-organisms. Each species is the repository of an immense amount of genetic information. The number of genes range from about 1000 in bacteria, up to 400 000 or more in many

  6. (PDF) Economic of biodiversity: The importance of studiesaimed at

    We reviewed 60 recent papers on economic valuation of biodiversity and carried out a meta-analysis of these studies to determine what factors affect willingness to pay for biodiversity conservation. We analyzed the internal variables of the contingent-valuation method (measure of benefits, vehicle of payment, elicitation format, or timing of ...

  7. Reflections on the Dasgupta Review on the Economics of Biodiversity

    The Dasgupta Review provides a rich overview of the economics of biodiversity, paints a bleak picture of the current state of biodiversity, and is a call to arms for action in anticipation of the CBD COP 15. The Review takes a global perspective aimed at the high level of international and national policy on biodiversity, while elucidating the very local nature of biodiversity threats and ...

  8. The Economics of Biodiversity: The Dasgupta Review

    The Dasgupta Review is an independent, global review on the Economics of Biodiversity led by Professor Sir Partha Dasgupta (Frank Ramsey Professor Emeritus, University of Cambridge). The Review ...

  9. The Economics of Biodiversity: Afterword

    This Afterword to The Economics of Biodiversity: The Dasgupta Review discusses (i) the ideas in the Review that have been accepted readily by decision makers and are being put into operation, (ii) those that have been accepted but are judged by decision makers to be unworkable in the contemporary climate, (iii) those that are seen as politically too sensitive even to acknowledge in public.

  10. Biodiversity's contributions to sustainable development

    Sustainability is a function of environmental, economic and social integration. This Review synthesizes knowledge on the many ways biodiversity can support sustainable development.

  11. Economics of biodiversity

    The biodiversity of the Masai Mara nature reserve in Kenya is a tourist attraction. There have been a number of economic arguments advanced regarding evaluation of the benefits of biodiversity.Most are anthropocentric but economists have also debated whether biodiversity is inherently valuable, independent of benefits to humanity.. Diverse ecosystems are typically more productive than non ...

  12. The Economics of Biodiversity

    A framework that treats biodiversity loss as an asset management problem and uses the language of economics and finance to describe how we can jointly protect and enhance biodiversity and support our prosperity and wellbeing now, and in the future. The Dasgupta Review addresses important macroeconomic issues relevant to the IMF's mandate.

  13. The Economic Value of Biodiversity Preservation

    Abstract. We study the decision to preserve diverse species when the value of biodiversity is uncertain, or even affected by ambiguity. Optimal decisions are derived both from the perspective of the producer/investor and the policy regulator (ecosystem planner). We find that while calculated risk creates a scope for biodiversity preservation ...

  14. The socio-economic case for biodiversity action

    The economic value of biodiversity's contribution to food systems is considerable. Pollination from bees, birds, bats and other species contributes directly to between 5% and 8% of current global crop production. The annual market value of these crops is USD 235-577 billion (in 2015 USD) (IPBES, 2016[5]).

  15. How should economists think about biodiversity?

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    Biodiversity loss is one of the top five risks to the global economy 7.Biodiversity is eroding rapidly primarily due to human mismanagement: imprudent economic policies, air and water pollution ...

  17. Economic Benefits of Biodiversity : WeConservePA Library

    Biodiversity is essential for the sustainable functioning of the agricultural, forest, and natural ecosystems on which humans depend, but human activities, especially the development of natural lands, are causing a species extinction rate of 1,000 to 10,000 times the natural rate. The authors estimate that in the United States, biodiversity ...

  18. (PDF) Economic of biodiversity: The importance of studies aimed at

    Economic of biodiversity: The importance of studies aimed at assessing the economic value of biological diversity November 2013 African Journal of Agricultural Research 8((43)):5376-5386,

  19. Economic factors underlying biodiversity loss

    No mention is made in the essay of the global biodiversity loss and the corresponding loss in the biosphere's ability to supply maintenance and regulating services on a sustainable basis. ... trading off the potential economic and other benefits of replacing shell fisheries by fin ... As the economics of biodiversity is the study of asset ...

  20. The Society for Conservation Biology

    1 INTRODUCTION. Conservation scientists have long stressed the need to pay attention to the socioeconomic context of biodiversity loss if effective policies are to be designed (Martin, Maris, & Simberloff, 2016).Such a question becomes urgent in the face of an unprecedented degradation of the biosphere, undermining human well-being and calling into question the standard development model ...

  21. The Economic Benefits of Biodiversity

    Leveraging Biodiversity for Sustainable Growth. The economic benefits of biodiversity are abundant. Biodiversity ensures the longevity of natural resources that are essential for business operations and opens avenues for innovation, risk mitigation, and market growth. While the global economy benefits from nature, it is also driving nature loss ...

  22. The Economics of Biodiversity Loss

    Working Papers; The Economics of Biodiversity Loss The Economics of Biodiversity Loss. Stefano Giglio, Theresa Kuchler, Johannes Stroebel & Olivier Wang. Share. X LinkedIn Email. Working Paper 32678 DOI 10.3386/w32678 Issue Date July 2024. We explore the economic effects of biodiversity loss by developing an ecologically-founded model that ...

  23. Why are nature and biodiversity important to the economy?

    Why are nature and biodiversity important to the economy? 21/03/2023. Each of the millions of species that call Earth "home" plays an important role in balancing and preserving its ecosystem. This biodiversity, which has enabled human beings to satisfy basic needs for food, medicine and water, is proving decisive in finance.

  24. Climate change and ecosystems: threats, opportunities and solutions

    At the same time, ecosystems can also assist in the mitigation of, and adaptation to, climate change. The mechanisms, potential and limits of such nature-based solutions to climate change need to be explored and quantified. This paper introduces a thematic issue dedicated to the interaction between climate change and the biosphere.

  25. Climate change effects on biodiversity, ecosystems, ecosystem services

    1. Introduction. Climate change is a pervasive and growing global threat to biodiversity and ecosystems (Díaz et al., 2019).Climate change affects individual species and the way they interact with other organisms and their habitats, which alters the structure and function of ecosystems and the goods and services that natural systems provide to society (Díaz et al., 2019).

  26. (PDF) The Loss of Biodiversity and Ecosystems: A Threat to the

    The MEA (2005a) [10] announced that degradation of aquatic biodiversity in freshwater ecosystem is double in comparison to other ecosystems. One of the biggest difficulties of the twenty-first ...

  27. Biodiversity loss impacts societies and economies: How can Europe

    Biological invasions are the main cause of biodiversity loss, but they can also have serious social and economic repercussions. In Europe, over 13,000 non-native (or "alien") species have an ...

  28. 10 causes of biodiversity loss and its effect on the environment

    The loss of biodiversity has significant implications for human health, well-being and economic development. Some of the ways in which biodiversity loss affects humans include: Reduced food security : Biodiversity is essential for food production , as it provides genetic resources for crop and livestock improvement, pollination services and ...

  29. How to unlock $10.1 trillion from the nature-positive transition

    The World Economic Forum's New Nature Economy Report series provides a compelling economic rationale for this shift. It projects that by 2030, fully embracing nature-positive transitions across three key socio-economic systems could unlock $10.1 trillion in business opportunities, with China poised to capture 20% of this potential.

  30. (PDF) The economic value of biodiversity

    This paper surveys and highlights the potential and limitations of an ecological-economics perspective on biodiversity. Such a perspective on complex biodiversity issues, if firmly supported by modern ecological insights, can help to clarify the processes, functions and values associated with biodiversity. ... We reviewed 60 recent papers on ...