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Valuing biodiversity from an economic perspective : a unified economic, ecological and genetic approach

  • Brock,W.A.
  • Xepapadeas,A.

    (University of Wisconsin-Madison, Social Systems Research Institute)

We develop a conceptual framework for valuing biodiversity from an economic perspective. We consider biodiversity important because of a number of characteristics or services that it provides or enhances. We argue for a dynamic economic welfare measure of biodiversity that complements the existing literature on benefit-cost approaches and genetic distance/phylogenic tree approaches, which to date have been more static. Using a unified model of optimal economic management of an ecosystem under ecological and genetic constraints, we identify gains realized by management policies leading to a more diverse system, using the Bellman state valuation function of the problem. We show that a more diverse system could attain a higher value even though the genetic distance of the species in the more diverse system could be almost zero. We relate this endogenous measure of the biodiversity value to ecologically/biologically oriented biodiversity metrics (species richness, Shannon or Simpson indices).

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Paper provided by Wisconsin Madison - Social Systems in its series Working papers with number 9.

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Date of creation: 2003
Date of revision:
Handle: RePEc:att:wimass:20039

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  1. Nehring,K. und C.Puppe, 1999. "A Theory of Diversity," Discussion Paper Serie A 605, University of Bonn, Germany.
  2. Chuan-Zhong Li & Karl-Gustaf Löfgren & Martin Weitzman, 2001. "Harvesting versus Biodiversity: An Occam's Razor Version," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(4), pages 355-366, April.
  3. Gardner M. Brown & Jason F. Shogren, 1998. "Economics of the Endangered Species Act," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 3-20, Summer.
  4. Heal, G., 1999. "Biodiversity as a Commodity," Papers 99-7, Columbia - Graduate School of Business.
  5. Solow Andrew & Polasky Stephen & Broadus James, 1993. "On the Measurement of Biological Diversity," Journal of Environmental Economics and Management, Elsevier, vol. 24(1), pages 60-68, January.
  6. Andrew Metrick & Martin L. Weitzman, 1998. "Conflicts and Choices in Biodiversity Preservation," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 21-34, Summer.
  7. Stephen Polasky & Andrew Solow & James Broadus, 1993. "Searching For Uncertain Benefits and the Conservation Of Biological Diversity," Boston College Working Papers in Economics 208, Boston College Department of Economics.
  8. Terrance Hurley & Silvia Secchi & Bruce Babcock & Richard Hellmich, 2002. "Managing the Risk of European Corn Borer Resistance to Bt Corn," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(4), pages 537-558, August.
  9. Simpson, R David & Sedjo, Roger A & Reid, John W, 1996. "Valuing Biodiversity for Use in Pharmaceutical Research," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 163-85, February.
  10. Martin L. Weitzman, 1998. "The Noah's Ark Problem," Econometrica, Econometric Society, vol. 66(6), pages 1279-1298, November.
  11. Bernhard, Pierre, 2002. "Survey Of Linear Quadratic Robust Control," Macroeconomic Dynamics, Cambridge University Press, vol. 6(01), pages 19-39, February.
  12. Brock,W. & Xepapadeas,A., 2000. "Optimal ecosystem management when species compete for limiting resources," Working papers 27, Wisconsin Madison - Social Systems.
  13. repec:tpr:qjecon:v:107:y:1992:i:2:p:363-405 is not listed on IDEAS
  14. Weitzman, M.L., 1991. "On Diversity," Harvard Institute of Economic Research Working Papers 1553, Harvard - Institute of Economic Research.
  15. Polasky Stephen & Solow Andrew R., 1995. "On the Value of a Collection of Species," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 298-303, November.
  16. repec:cup:macdyn:v:6:y:2002:i:1:p:19-39 is not listed on IDEAS
  17. Montgomery, Claire A. & Pollak, Robert A. & Freemark, Kathryn & White, Denis, 1999. "Pricing Biodiversity," Journal of Environmental Economics and Management, Elsevier, vol. 38(1), pages 1-19, July.
  18. Amy Craft & R. Simpson, 2001. "The Value of Biodiversity in Pharmaceutical Research with Differentiated Products," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(1), pages 1-17, January.
  19. repec:tpr:qjecon:v:108:y:1993:i:1:p:157-83 is not listed on IDEAS
  20. Dasgupta, Partha & M Ler, Karl-G Ran, 2000. "Net national product, wealth, and social well-being," Environment and Development Economics, Cambridge University Press, vol. 5(01), pages 69-93, February.
  21. repec:tpr:qjecon:v:115:y:2000:i:1:p:237-263 is not listed on IDEAS
  22. Terrance M. Hurley & Silvia Secchi & Bruce A. Babcock, 1999. "Managing the Risk of European Corn Borer Resistance to Transgenic Corn: An Assessment of Refuge Recommendations," Center for Agricultural and Rural Development (CARD) Publications 99-sr88, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  23. Weitzman, Martin L., 2000. "Economic Profitability Versus Ecological Entropy," Scholarly Articles 3693703, Harvard University Department of Economics.
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