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Definitions of Biodiversity and Measures of Its Value

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  • Simpson, R. David

Abstract

The destruction of natural habitats has prompted concerns about the loss of biological diversity. Regrettably, however, there is no consensus among either biologists or economists on the most meaningful measures of biodiversity. Fundamentally different definitions are useful in asking fundamentally different questions. Considerable attention has been given to the value of diversity in search models. A measure of “aggregate variability” is appropriate to such models. Values derived from search models tend to be well behaved; they exhibit diminishing returns in diversity. In contrast, a definition of diversity as “relative abundance” is more appropriate to more complex objective functions. Values derived in these models are not necessarily well behaved. The differences between diversity values arising in search models and those arising from more general objectives are demonstrated. An example shows that “consistency tests” applied to measures of valuation may not be useful when diversity per se is being valued.

Suggested Citation

  • Simpson, R. David, 2002. "Definitions of Biodiversity and Measures of Its Value," Discussion Papers dp-02-62, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-02-62
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    File URL: http://www.rff.org/RFF/documents/RFF-DP-02-62.pdf
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    References listed on IDEAS

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    1. 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.
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    3. Hayri Önal, 1997. "A computationally convenient diversity measure: Theory and application," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 9(4), pages 409-427, June.
    4. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
    5. Klaus Nehring & Clemens Puppe, 2002. "A Theory of Diversity," Econometrica, Econometric Society, vol. 70(3), pages 1155-1198, May.
    6. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    7. 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 163-185, February.
    8. Diamond, Peter, 1996. "Testing the Internal Consistency of Contingent Valuation Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 337-347, May.
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    Cited by:

    1. Catherine M. Chambers & Paul E. Chambers & John R. Crooker & John C. Whitehead, 2008. "Stochastic Dominance, Entropy and Biodiversity Management," Working Papers 08-08, Department of Economics, Appalachian State University.

    More about this item

    Keywords

    Biological diversity; biodiversity; diversity index; abundance; search; variability; consistency; contingent valuation; diminishing returns; increasing returns;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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