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.
References listed on IDEAS
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- Jason F. Shogren & Thomas D. Crocker, 1990.
"Risk, Self-Protection, and Ex Ante Economic Value,"
Center for Agricultural and Rural Development (CARD) Publications
90-wp57, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Amos Tversky & Daniel Kahneman, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Levine's Working Paper Archive
7656, David K. Levine.
- Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
- Costanza, Robert & Perrings, Charles, 1990. "A flexible assurance bonding system for improved environmental management," Ecological Economics, Elsevier, vol. 2(1), pages 57-75, April.
- John B. Loomis & Pierre H. duVair, 1993. "Evaluating the Effect of Alternative Risk Communication Devices on Willingness to Pay: Results from a Dichotomous Choice Contingent Valuation Experiment," Land Economics, University of Wisconsin Press, vol. 69(3), pages 287-298.
- Perrings, Charles, 1989. "Environmental bonds and environmental research in innovative activities," Ecological Economics, Elsevier, vol. 1(1), pages 95-110, February.
- Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279.
- Higgins, Steven I. & Turpie, Jane K. & Costanza, Robert & Cowling, Richard M. & Le Maitre, Dave C. & Marais, Christo & Midgley, Guy F., 1997. "An ecological economic simulation model of mountain fynbos ecosystems: Dynamics, valuation and management," Ecological Economics, Elsevier, vol. 22(2), pages 155-169, August.
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