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Valuing Biodiversity from an Economic Perspective: AUnified Economic, Ecological and Genetic Approach

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Author Info
William Brock () (University of Wisconsin, Department of Economics, USA)
Anastasios Xepapadeas () (Department of Economics, University of Crete, Greece)

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Abstract

We develop a conceptual framework for valuing biodiversity from an economic perspective. We consider biodiversity important because of a number of characteristics or services that it provides or enhances. We argue for a dynamic economic welfare measure of biodiversity that complements the existing literature on benefit-cost approaches and genetic distance/phylogenic tree approaches, which to date have been more static. Using a unified model of optimal economic management of an ecosystem under ecological and genetic constraints, we identify gains realized by management policies leading to a more diverse system, using the Bellman state valuation function of the problem. We show that a more diverse system could attain a higher value even though the genetic distance of the species in the more diverse system could be almost zero. We relate this endogenous measure of the biodiversity value to ecologically/biologically oriented biodiversity metrics (species richness, Shannon or Simpson indices).

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Paper provided by University of Crete, Department of Economics in its series Working Papers with number 0301.

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Length: 38 pages
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Handle: RePEc:crt:wpaper:0301

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  1. Weitzman, Martin L, 1992. "On Diversity," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 363-405, May. [Downloadable!] (restricted)
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  2. Brown, Gardner M, Jr & Shogren, Jason F, 1998. "Economics of the Endangered Species Act," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 3-20, Summer. [Downloadable!] (restricted)
  3. repec:cup:macdyn:v:6:y:2002:i:1:p:19-39 is not listed on IDEAS
  4. Andrew Metrick & Martin L. Weitzman, 1998. "Conflicts and Choices in Biodiversity Preservation," Harvard Institute of Economic Research Working Papers 1836, Harvard - Institute of Economic Research.
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  5. 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. [Downloadable!] (restricted)
  6. Terrance M. Hurley & Silvia Secchi & Bruce A. Babcock, 1999. "Managing the Risk of European Corn Borer Resistance to Transgenic Corn: An Assessment of Refuge Recommendations," Center for Agricultural and Rural Development (CARD) Publications 99-sr88, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
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  7. Montgomery, Claire A. & Pollak, Robert A. & Freemark, Kathryn & White, Denis, 1999. "Pricing Biodiversity," Journal of Environmental Economics and Management, Elsevier, vol. 38(1), pages 1-19, July. [Downloadable!] (restricted)
  8. 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. [Downloadable!] (restricted)
  9. Martin L. Weitzman, 2000. "Economic Profitability Versus Ecological Entropy," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 237-263, February. [Downloadable!] (restricted)
  10. Klaus Nehring & Clemens Puppe, 2002. "A Theory of Diversity," Econometrica, Econometric Society, vol. 70(3), pages 1155-1198, May. [Downloadable!] (restricted)
  11. Chuan-Zhong Li & Karl-Gustaf Löfgren & Martin Weitzman, 2001. "Harvesting versus Biodiversity: An Occam's Razor Version," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(4), pages 355-366, April. [Downloadable!] (restricted)
  12. Stephen Polasky & Andrew Solow & James Broadus, 1993. "Searching For Uncertain Benefits and the Conservation Of Biological Diversity," Boston College Working Papers in Economics 208, Boston College Department of Economics.
  13. 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. [Downloadable!] (restricted)
  14. Stephen Polasky & Andrew Solow & James Broadus, 1993. "Searching for uncertain benefits and the conservation of biological diversity," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 3(2), pages 171-181, April. [Downloadable!] (restricted)
  15. Martin L. Weitzman, 1998. "The Noah's Ark Problem," Econometrica, Econometric Society, vol. 66(6), pages 1279-1298, November.
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(explanations, 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.)

  1. William Brock & Anastasios Xepapadeas, 2004. "Ecosystem Management in Models of Antagonistic Species Coevolution," Working Papers 0503, University of Crete, Department of Economics. [Downloadable!]
  2. Michael Rauscher & Edward B. Barbier, 2007. "Biodiversity and Geography," Thuenen-Series of Applied Economic Theory 79, University of Rostock, Institute of Economics, Germany. [Downloadable!]
    Other versions:
  3. Michele Baggio & Jean-Paul Chavas, 2006. "On the Consumer Value of Environmental Diversity," Working Papers 35, Università di Verona, Dipartimento di Scienze economiche. [Downloadable!]
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