Biodiversity conservation, loss of natural capital and interest rates
It is argued that there is neither regular relationship between changes in the level of the market rate of interest and variations in the rate of biodiversity loss nor does such a regular relationship occur between alterations in the market rate of interest and changes in the rate of natural resource extraction. However, some texts suggest otherwise. Microeconomic examples are given in which a rise in the market rate of interest results in increased biodiversity loss and others in which it does not. It is also posited that the rate of biodiversity loss (as well as the rate of natural resource extraction) tends to rise with the level of aggregate investment and aggregate economic activity. It is demonstrated, using macroeconomic models, that the market rate of interest can increase or decrease with a rise in aggregate investment and also with an increase in the level of aggregate economic activity. Therefore, changes in biodiversity loss (and in the rate of natural resource extraction) are independent of variations in the market rate of interest in macroeconomic models.
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References listed on IDEAS
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- Tisdell, Clem, 2003.
"Socioeconomic causes of loss of animal genetic diversity: analysis and assessment,"
Elsevier, vol. 45(3), pages 365-376, July.
- Tisdell, Clement A., 2002. "Socioeconomic Causes of Loss of Animal Genetic Diversity: Analysis and Assessment," Economics, Ecology and Environment Working Papers 48741, University of Queensland, School of Economics.
- N. Gregory Mankiw, 2006.
"The Macroeconomist as Scientist and Engineer,"
NBER Working Papers
12349, National Bureau of Economic Research, Inc.
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- N. Gregory Mankiw, 2006. "The Macroeconomist as Scientist and Engineer," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 29-46, Fall.
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- Tisdell, Clem, 2001. "Globalisation and sustainability: environmental Kuznets curve and the WTO," Ecological Economics, Elsevier, vol. 39(2), pages 185-196, November.
- Clem Tisdell, 1999. "Biodiversity, Conservation and Sustainable Development," Books, Edward Elgar Publishing, number 1408.
- Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
- T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
- Štiblar Franjo & Oplotnik Žan & Vukotić Veselin, 2006. "Montenegrin Quarterly Macroeconomic Econometric Model," Prague Economic Papers, University of Economics, Prague, vol. 2006(2), pages 156-171.
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