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The value of biodiversity as an insurance device

Author

Listed:
  • Emmanuelle Augeraud-Veron

    (Mathématiques, Image et Applications (MIA), Université de La Rochelle, France)

  • Giorgio Fabbri

    (Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, AMSE, France)

  • Katheline Schubert

    (Paris School of Economics, Université Paris 1 Panthéon-Sorbonne, France)

Abstract

This paper presents a benchmark endogenous growth model including biodiversity preservation dynamics. Producing food requires land, and increasing the share of total land devoted to farming mechanically reduces the share of land devoted to biodiversity conservation. However, safeguarding a greater number of species guarantee better ecosystem services – pollination, flood control, pest control, etc., which in turn ensure lower volatility of agricultural productivity. The optimal conversion/preservation rule is explicitly characterized, as well as the value of biological diversity, in terms of the welfare gain from biodiversity conservation. The Epstein-Zin-Weil specification of the utility function allows us to disentangle the effects of risk aversion and aversion to fluctuations. A twoplayer game extension of the model highlights the effect of volatility externalities and the Paretian sub-optimality of the decentralized choice.

Suggested Citation

  • Emmanuelle Augeraud-Veron & Giorgio Fabbri & Katheline Schubert, 2017. "The value of biodiversity as an insurance device," LIDAM Discussion Papers IRES 2017005, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2017005
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    Cited by:

    1. is not listed on IDEAS
    2. Augeraud-Véron, Emmanuelle & Fabbri, Giorgio & Schubert, Katheline, 2021. "Prevention and mitigation of epidemics: Biodiversity conservation and confinement policies," Journal of Mathematical Economics, Elsevier, vol. 93(C).
    3. Simon Jean & Lauriane Mouysset, 2022. "Bioeconomic models for terrestrial social-ecological system management: a review [Modèles bioéconomiques pour la gestion des socio-écosystèmes terrestres : une revue de la littérature]," Post-Print hal-05312281, HAL.
    4. Augeraud-Véron, Emmanuelle & Fabbri, Giorgio & Schubert, Katheline, 2021. "Volatility-reducing biodiversity conservation under strategic interactions," Ecological Economics, Elsevier, vol. 190(C).
    5. Friedrich Scherzinger & Martin Schädler & Thomas Reitz & Rui Yin & Harald Auge & Ines Merbach & Christiane Roscher & W Stanley Harpole & Evgenia Blagodatskaya & Julia Siebert & Marcel Ciobanu & Fabian, 2024. "Sustainable land management enhances ecological and economic multifunctionality under ambient and future climate," Nature Communications, Nature, vol. 15(1), pages 1-17, December.
    6. Thomas Douenne, 2020. "Disaster Risks, Disaster Strikes, and Economic Growth: the Role of Preferences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 38, pages 251-272, October.
    7. Marielle Brunette & Marc Hanewinkel, 2021. "Assurance financière et assurance naturelle : une application à la forêt," Working Papers of BETA 2021-28, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    8. Thomas J. Sargent & John Stachurski, 2024. "Dynamic Programming: Finite States," Papers 2401.10473, arXiv.org.
    9. Augeraud-Véron, Emmanuelle & Fabbri, Giorgio & Schubert, Katheline, 2021. "Prevention and mitigation of epidemics: Biodiversity conservation and confinement policies," Journal of Mathematical Economics, Elsevier, vol. 93(C).
    10. Unterberger, Christian & Olschewski, Roland, 2021. "Determining the insurance value of ecosystems: A discrete choice study on natural hazard protection by forests," Ecological Economics, Elsevier, vol. 180(C).
    11. 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.

    More about this item

    Keywords

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    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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