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Invasive Species and Endogenous Risk


  • David Finnoff
  • Chris McIntosh
  • Jason F. Shogren
  • Charles Sims
  • Travis Warziniack

    () (Department of Economics and Finance, University of Wyoming, Laramie, Wyoming 82071
    Department of Economics, Labovitz School of Business and Economics, University of Minnesota, Duluth, Minnesota 55812
    Department of Applied Economics, Utah State University, Logan, Utah 84322
    Alfred-Weber Institute, University of Heidelberg, D-69115 Heidelberg, Germany)


Invasive species policy is an economic issue. People affect the spread of invasive species, and these invaders affect people. This review discusses bioeconomic modeling using endogenous risk theory to capture the idea of jointly determined ecological and economic systems. This perspective adds precision to risk assessment and cost-benefit estimation. Bioeconomic modeling can help increase the chance of developing policies that promote better invasive species protection at lower cost. Several key points emerge. Differentiating between import- and export-related externalities determines the ability of agents to manage risk. A manager has four general economic strategies to mitigate invasive species risk and associated damages: prevention, eradication, control, and adaptation. When flexibility and timing play a critical role, a real options framework becomes the more appropriate analytical framework relative to traditional cost-benefit analysis. For many invasive species, valuation exercises will involve eliciting preferences to delay in the inevitable invasion and spread.

Suggested Citation

  • David Finnoff & Chris McIntosh & Jason F. Shogren & Charles Sims & Travis Warziniack, 2010. "Invasive Species and Endogenous Risk," Annual Review of Resource Economics, Annual Reviews, vol. 2(1), pages 77-100, October.
  • Handle: RePEc:anr:reseco:v:2:y:2010:p:77-100

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    Cited by:

    1. Horan, Richard D. & Fenichel, Eli P. & Finnoff, David & Wolf, Christopher A., 2015. "Managing dynamic epidemiological risks through trade," Journal of Economic Dynamics and Control, Elsevier, vol. 53(C), pages 192-207.
    2. Warziniack, Travis W. & Finnoff, David & Shogren, Jason F., 2013. "Public economics of hitchhiking species and tourism-based risk to ecosystem services," Resource and Energy Economics, Elsevier, vol. 35(3), pages 277-294.
    3. Hyytiäinen, Kari & Lehtiniemi, Maiju & Niemi, Jarkko K. & Tikka, Kimmo, 2013. "An optimization framework for addressing aquatic invasive species," Ecological Economics, Elsevier, vol. 91(C), pages 69-79.
    4. repec:wsi:wepxxx:v:03:y:2017:i:02:n:s2382624x16500119 is not listed on IDEAS
    5. Florec, Veronique & Sadler, Rohan J. & White, Ben & Dominiak, Bernie C., 2013. "Choosing the battles: The economics of area wide pest management for Queensland fruit fly," Food Policy, Elsevier, vol. 38(C), pages 203-213.
    6. McDermott, Shana M. & Finnoff, David C. & Shogren, Jason F., 2013. "The welfare impacts of an invasive species: Endogenous vs. exogenous price models," Ecological Economics, Elsevier, vol. 85(C), pages 43-49.

    More about this item


    prevention; bioeconomics; trade; real options; valuation;

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy


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