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An ecological economic assessment of risk-reducing effects of species diversity in managed grasslands

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  • Finger, Robert
  • Buchmann, Nina

Abstract

Over the last decade, it has been shown in the ecology literature that species diversity increases yield stability in managed grasslands. Here, we develop and apply ecological economic and econometric frameworks to evaluate these potential risk-reducing effects of species diversity in terms of yields and their temporal stability from a farmer's perspective. Our empirical analysis is based on a rich panel dataset obtained from a diversity experiment covering in total 60 species and a period of 6years. We find empirical evidence for the risk-reducing effect of species diversity and the economic assessment reveals significant insurance values associated with diversity for a risk-averse decision maker. Thus, the economic value of diversity would be underestimated if not accounting for this property, and species diversity may serve as valuable ex-ante risk management strategy.

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  • Finger, Robert & Buchmann, Nina, 2015. "An ecological economic assessment of risk-reducing effects of species diversity in managed grasslands," Ecological Economics, Elsevier, vol. 110(C), pages 89-97.
    • Handle: RePEc:eee:ecolec:v:110:y:2015:i:c:p:89-97
    DOI: 10.1016/j.ecolecon.2014.12.019
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    3. I.V. Mitrofanova & G.I. Starokozheva & E.A. Shkarupa & V.V. Batmanova & I.A. Mitrofanova & A.B. Tlisov, 2016. "Specially Protected Natural Areas Of Regions Of The Southern Federal District Of Russia: Specificity Of Approaches To Management And Conservation," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 25(3), pages 57-68.
    4. Bjørnåvold, Amalie & David, Maia & Bohan, David A. & Gibert, Caroline & Rousselle, Jean-Marc & Van Passel, Steven, 2022. "Why does France not meet its pesticide reduction targets? Farmers' socio-economic trade-offs when adopting agro-ecological practices," Ecological Economics, Elsevier, vol. 198(C).
    5. Schaub, Sergei & Buchmann, Nina & Lüscher, Andreas & Finger, Robert, 2020. "Economic benefits from plant species diversity in intensively managed grasslands," Ecological Economics, Elsevier, vol. 168(C).
    6. Thomas Knoke & Carola Paul & Elizabeth Gosling & Isabelle Jarisch & Johannes Mohr & Rupert Seidl, 2023. "Assessing the Economic Resilience of Different Management Systems to Severe Forest Disturbance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(2), pages 343-381, February.
    7. Bartosz Bartkowski & Stephan Bartke, 2018. "Leverage Points for Governing Agricultural Soils: A Review of Empirical Studies of European Farmers’ Decision-Making," Sustainability, MDPI, vol. 10(9), pages 1-27, September.
    8. Sidibé, Yoro & Foudi, Sébastien & Pascual, Unai & Termansen, Mette, 2018. "Adaptation to Climate Change in Rainfed Agriculture in the Global South: Soil Biodiversity as Natural Insurance," Ecological Economics, Elsevier, vol. 146(C), pages 588-596.
    9. François Bareille & Pierre Dupraz, 2017. "Biodiversity Productive Capacity in Mixed Farms of North-West of France: a Multi-output Primal System," Working Papers SMART 17-03, INRAE UMR SMART.
    10. Zongyong Tong & Guoling Quan & Liqiang Wan & Feng He & Xianglin Li, 2019. "The Effect of Fertilizers on Biomass and Biodiversity on a Semi-Arid Grassland of Northern China," Sustainability, MDPI, vol. 11(10), pages 1-11, May.
    11. Robert Huber & Robert Finger, 2020. "A Meta‐analysis of the Willingness to Pay for Cultural Services from Grasslands in Europe," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(2), pages 357-383, June.
    12. Daniels, Silvie & Witters, Nele & Beliën, Tim & Vrancken, Kristof & Vangronsveld, Jaco & Van Passel, Steven, 2017. "Monetary Valuation of Natural Predators for Biological Pest Control in Pear Production," Ecological Economics, Elsevier, vol. 134(C), pages 160-173.
    13. Bartkowski, Bartosz, 2017. "Are diverse ecosystems more valuable? Economic value of biodiversity as result of uncertainty and spatial interactions in ecosystem service provision," Ecosystem Services, Elsevier, vol. 24(C), pages 50-57.

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