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Valuation of biodiversity within a north–south trade model

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  • CABO, FRANCISCO

Abstract

Under a General Equilibrium model of International Trade, industrialized countries export capital intensive goods, while developing countries export natural resource intensive goods. Biodiversity is viewed as the number of species conserved while producing these goods. Higher conservation increases demand, but lowers goods supply. Consumers value biodiversity as the weighted sum of all the different species. If producers of both goods conserve more species, the South's terms of trade will rise in relation to the North's. Furthermore, we believe that a switch in consumer preferences, to a more homogeneous valuation of the species, is likely. This change would drop the South's terms of trade. Therefore, under these circumstances, this region is facing a risk. In conserving additional species, the South would be better off, both because its terms of trade increases and because the risk associated with a switch in preferences decreases.

Suggested Citation

  • Cabo, Francisco, 1999. "Valuation of biodiversity within a north–south trade model," Environment and Development Economics, Cambridge University Press, vol. 4(3), pages 251-277, July.
  • Handle: RePEc:cup:endeec:v:4:y:1999:i:03:p:251-277_00
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    Cited by:

    1. Jorge Madeira Nogueira & Érica Domingos da Silva & Cyntia Freitas Azevedo, 2001. "Biodiversity Conservation And Carbon Mitigation: Two Problems, One Solution? Searching For Answers Using Uncertainty And Game Theories," Anais do XXIX Encontro Nacional de Economia [Proceedings of the 29th Brazilian Economics Meeting] 075, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].

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