Species preservation and biodiversity value: a real options approach
AbstractWe evaluate biodiversity in a real options framework, when the resources in use are substitutable. We examine optimal conservation decisions given that a biodiversity loss is irreversible and that future use values are uncertain. While species substitutability is generally believed to reduce the value of diversity, we show that the flexibility associated with substitutability is a source of value.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Environmental Economics and Management.
Volume (Year): 48 (2004)
Issue (Month): 2 (September)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622870
Other versions of this item:
- Ilhem Kassar & Pierre Lasserre, 2002. "Species Preservation and Biodiversity Value: A Real Options Approach," CIRANO Working Papers 2002s-82, CIRANO.
- Ilhem Kassar & Pierre Lasserre, 2002. "Species Preservation and Biodiversity Value: A Real Options Approach," Cahiers de recherche du DÃ©partement des sciences Ã©conomiques, UQAM 20-18, Université du Québec à Montréal, Département des sciences économiques.
- D46 - Microeconomics - - Market Structure and Pricing - - - Value Theory
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D99 - Microeconomics - - Intertemporal Choice - - - Other
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fisher, Anthony C. & Hanemann, W. Michael, 1987. "Quasi-option value: Some misconceptions dispelled," Journal of Environmental Economics and Management, Elsevier, vol. 14(2), pages 183-190, June.
- Timo Goeschl & Timothy Swanson, 2002. "The Social Value of Biodiversity for R&D," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(4), pages 477-504, August.
- Gordon C. Rausser & Arthur A. Small, 2000.
"Valuing Research Leads: Bioprospecting and the Conservation of Genetic Resources,"
Journal of Political Economy,
University of Chicago Press, vol. 108(1), pages 173-206, February.
- Rausser, Gordon C. & Small, Arthur A., 2000. "Valuing Research Leads: Bioprospecting and the Conservation of Genetic Resources," Berkeley Olin Program in Law & Economics, Working Paper Series qt4t56m5b8, Berkeley Olin Program in Law & Economics.
- Pindyck, Robert S., 1993.
"Investments of uncertain cost,"
Journal of Financial Economics,
Elsevier, vol. 34(1), pages 53-76, August.
- Sedjo, Roger & Simpson, R. David, 1996. "Valuation of Biodiversity for Use in New Product Research in a Model of Sequential Search," Discussion Papers dp-96-27, Resources For the Future.
- Swanson, Timothy M, 1994. "The Economics of Extinction Revisited and Revised: A Generalised Framework for the Analysis of the Problems of Endangered Species and Biodiversity Losses," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 800-821, Supplemen.
- Martin L. Weitzman, 1998. "The Noah's Ark Problem," Econometrica, Econometric Society, vol. 66(6), pages 1279-1298, November.
- Oliver Fromm, 2000. "Ecological Structure and Functions of Biodiversity as Elements of Its Total Economic Value," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 16(3), pages 303-328, July.
- Amy Craft & R. Simpson, 2001. "The Value of Biodiversity in Pharmaceutical Research with Differentiated Products," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(1), pages 1-17, January.
- Arrow, Kenneth J & Fisher, Anthony C, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 312-19, May.
- Mason, Charles F., 2001. "Nonrenewable Resources with Switching Costs," Journal of Environmental Economics and Management, Elsevier, vol. 42(1), pages 65-81, July.
- McDonald, Robert L & Siegel, Daniel R, 1985. "Investment and the Valuation of Firms When There Is an Option to Shut Down," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(2), pages 331-49, June.
- Brennan, Michael J & Schwartz, Eduardo S, 1985. "Evaluating Natural Resource Investments," The Journal of Business, University of Chicago Press, vol. 58(2), pages 135-57, April.
- Boyle, Phelim P., 1988. "A Lattice Framework for Option Pricing with Two State Variables," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 23(01), pages 1-12, March.
- Sedjo, Roger & Simpson, R. David, 1996. "Investments in Biodiversity Prospecting and Incentives for Conservation," Discussion Papers dp-96-14, Resources For the Future.
- Weitzman, Martin L, 1993. "What to Preserve? An Application of Diversity Theory to Crane Conservation?," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 157-83, February.
- Trigeorgis, Lenos, 1993. "The Nature of Option Interactions and the Valuation of Investments with Multiple Real Options," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 28(01), pages 1-20, March.
- Simpson, R David & Sedjo, Roger A & Reid, John W, 1996. "Valuing Biodiversity for Use in Pharmaceutical Research," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 163-85, February.
- Henry, Claude, 1974. "Investment Decisions Under Uncertainty: The "Irreversibility Effect."," American Economic Review, American Economic Association, vol. 64(6), pages 1006-12, December.
- Cox, John C. & Ross, Stephen A. & Rubinstein, Mark, 1979. "Option pricing: A simplified approach," Journal of Financial Economics, Elsevier, vol. 7(3), pages 229-263, September.
- Wesseler, Justus, 2000. "Temporal Uncertainty And Irreversibility: A Theoretical Framework For The Decision To Approve The Release Of Transgenic Crops," Proceedings:Transitions in Agbiotech: Economics of Strategy and Policy, June 24-25, 1999, Washington, D.C. 26010, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
- Triantis, Alexander J & Hodder, James E, 1990. " Valuing Flexibility as a Complex Option," Journal of Finance, American Finance Association, vol. 45(2), pages 549-65, June.
- Leroux, Anke D. & Martin, Vance L. & Goeschl, Timo, 2009. "Optimal conservation, extinction debt, and the augmented quasi-option value," Journal of Environmental Economics and Management, Elsevier, vol. 58(1), pages 43-57, July.
- Costello, Christopher & Ward, Michael, 2006.
"Search, bioprospecting and biodiversity conservation,"
Journal of Environmental Economics and Management,
Elsevier, vol. 52(3), pages 615-626, November.
- Costello, Christopher & Ward, Michael B., 2007. "Search, bioprospecting, and biodiversity conservation," MPRA Paper 26527, University Library of Munich, Germany.
- Gatti, J.R.J. & Goeschl, T. & Groom, B. & Timothy Swanson, 2004.
"The Biodiversity Bargaining Problem,"
Cambridge Working Papers in Economics
0447, Faculty of Economics, University of Cambridge.
- Lasserre, Pierre & Moatti, Jean-Paul & Soubeyran, Antoine, 2006.
"Early initiation of highly active antiretroviral therapies for AIDS: Dynamic choice with endogenous and exogenous learning,"
Journal of Health Economics,
Elsevier, vol. 25(3), pages 579-598, May.
- Pierre Lasserre & Jean-Paul Moatti & Antoine Soubeyran, 2005. "Early Initiation of Highly Active Antiretroviral Therapies for Aids: Dynamic choice with Endogenous and Exogenous Learning," CIRANO Working Papers 2005s-34, CIRANO.
- Sarr, Mare & Goeschl, Timo & Swanson, Tim, 2008. "The value of conserving genetic resources for R&D: A survey," Ecological Economics, Elsevier, vol. 67(2), pages 184-193, September.
- Béné, C. & Doyen, L., 2008. "Contribution values of biodiversity to ecosystem performances: A viability perspective," Ecological Economics, Elsevier, vol. 68(1-2), pages 14-23, December.
- Trommetter, M., 2004.
"Biodiversity and international stakes : a question of access,"
200418, Grenoble Applied Economics Laboratory (GAEL).
- Trommetter, Michel, 2005. "Biodiversity and international stakes: A question of access," Ecological Economics, Elsevier, vol. 53(4), pages 573-583, June.
- Marcoul, Philippe & Weninger, Quinn, 2008.
"Search and active learning with correlated information: Empirical evidence from mid-Atlantic clam fishermen,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 32(6), pages 1921-1948, June.
- Marcoul, Philippe & Weninger, Quinn, 2008. "Search and Active Learning with Correlated Information: Empirical Evidence from Mid-Atlantic Clam Fishermen," Staff General Research Papers 11601, Iowa State University, Department of Economics.
- Erwin, Patrick M. & López-Legentil, Susanna & Schuhmann, Peter W., 2010. "The pharmaceutical value of marine biodiversity for anti-cancer drug discovery," Ecological Economics, Elsevier, vol. 70(2), pages 445-451, December.
- Eppink, Florian V. & van den Bergh, Jeroen C.J.M., 2007. "Ecological theories and indicators in economic models of biodiversity loss and conservation: A critical review," Ecological Economics, Elsevier, vol. 61(2-3), pages 284-293, March.
- Joubert, J.W. & Luhandjula, M.K. & Ncube, O. & le Roux, G. & de Wet, F., 2007. "An optimization model for the management of a South African game ranch," Agricultural Systems, Elsevier, vol. 92(1-3), pages 223-239, January.
- Sims, Charles & Finnoff, David, 2012. "The role of spatial scale in the timing of uncertain environmental policy," Journal of Economic Dynamics and Control, Elsevier, vol. 36(3), pages 369-382.
- Luca Corato & Michele Moretto & Sergio Vergalli, 2013.
"Land conversion pace under uncertainty and irreversibility: too fast or too slow?,"
Journal of Economics,
Springer, vol. 110(1), pages 45-82, September.
- Luca Di Corato & Michele Moretto & Sergio Vergalli, 2011. "Land Conversion Pace under Uncertainty and Irreversibility: too fast or too slow?," Working Papers 2011.84, Fondazione Eni Enrico Mattei.
- de, Vries Frans & Ellis, Ciaran & Goulson, Dave & Hanley, Nicholas & Kleczkowski, Adam, 2013. "Ecological-economic modelling of interactions between wild and commercial bees and pesticide use," Stirling Economics Discussion Papers 2013-10, University of Stirling, Division of Economics.
- Feng Song & Jinhua Zhao & Scott M. Swinton, 2011.
"Switching to Perennial Energy Crops Under Uncertainty and Costly Reversibility,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 93(3), pages 764-779.
- Song, Feng & Zhao, Jinhua & Swinton, Scott M., 2009. "Switching to Perennial Energy Crops under Uncertainty and Costly Reversibility," Staff Papers 56195, Michigan State University, Department of Agricultural, Food, and Resource Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.