The economics of biological invasions

Biological invasions are an economic problem. Invasions are typically the intended or unintended consequence of economic activity. They impose real costs on society, and the risk of invasion depends on human behaviour. Effective control of invasions depends on using the right economic instruments and developing the right institutions. The problem has two special features. The first is that the risks of invasions may be very low, but the potential costs are high. Since they are not reflected in market prices, they are typically ignored. The second is that the control of potentially invasive species is a public good of the "weakest link" variety. Both features indicate a precautionary approach. To deal with the first, I recommend the use of environmental assurance bonds to cover society against the risks of invasive species whilst providing importers with an incentive to research the consequences of their actions. To deal with the second I recommend the development of an institution similar to the Atlanta Centre for Disease Control to provide the information and technical advice required if governments are to act, and a central organisation (involving UNEP, UNDP and the World Bank) to strengthen eradication, control of mitigation campaigns in those countries least able to deal with invasive species.