IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Notes on Biodiversity Conservation, The Rate of Interest and Discounting

Listed author(s):
  • Tisdell, Clement A.

This article shows that there is no regular relationship between the level of the rate of interest and the extent to which the conservation of biodiversity is favoured. Microeconomic examples are given in which a rise in the rate of interest adversely affects biodiversity conservation as well as other cases in which the opposite is the case. When these alternative possibilities are taken into account, they suggest that rises in the rate of interest (other things held constant) are more likely than not to aid biodiversity conservation. This is expected to be so when there considerable upfront costs are involved in economic strategies that bring about environmental changes so that in the initial periods the private net benefits from these changes are negative although subsequently they can become significantly positive. Consideration of macroeconomic models reinforces the view that there is no definite association between changes in biodiversity conservation and the rate of interest. This is so assuming that there is a positive association on the whole, between the rate of (man-made) capital accumulation (the investment level) and biodiversity loss. From macroeconomic models, it is clear an increase in the level of aggregate investment can be associated with a rise or fall in the rate of interest (and vice versa) depending on the circumstances. This is illustrated by using a simplified form of the loanable funds theory originally developed by Wicksell but is also consistent with other general theories of the rate of interest. In conclusion, doubts are raised about our ability to enforce a zero (or very low) social rate of discount in market or mixed economy. It is, however, suggested that if a low ceiling is put on the rate of interest, this will reduce savings and consequently, investment and would be favourable to biodiversity conservation given that an increase in the rate of (man-made) capital accumulation is the main contributor to biodiversity loss. Finally, it is noted that mainstream economic models measuring possible welfare streams give no weight to the conservation of biodiversity per se. Therefore, policies designed to achieve the sustainability objectives specified by these models can continue to favour biodiversity loss on economic grounds.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://purl.umn.edu/55336
Download Restriction: no

Paper provided by University of Queensland, School of Economics in its series Economics, Ecology and Environment Working Papers with number 55336.

as
in new window

Length:
Date of creation: Apr 2009
Handle: RePEc:ags:uqseee:55336
Contact details of provider: Postal:
St. Lucia, Qld. 4072

Phone: +61 7 3365 6570
Fax: +61 7 3365 7299
Web page: http://www.uq.edu.au/economics/index.html
Email:


More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ags:uqseee:55336. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.