The Economics of Ecosystems and Biodiversity: Ecological and Economic Foundations
This chapter presents the economic logic behind the concept of discounting the future and discusses how it applies to biodiversity conservation. How should economists account for the effects of biodiversity and ecosystem losses in the immediate and distant future? We discuss how to integrate traditional cost-benefit analysis with other approaches to understand and measure, where possible, environmental values. We conclude that losses of biodiversity and ecosystems have properties that make it difficult to apply standard welfare analysis including discounting the future. Difficulties include: (1) it is a phenomenon having global as well as local consequences, (2) its impacts are long-term and irreversible, (3) pure uncertainty is pervasive, (4) changes are non-marginal and non-linear. And (5) questions of inter- and intra-generational equity are central. This paper will be published as Chapter Six in Pushpam Kumar (ed.). An output of TEEB: The Economics of Ecosystems and Biodiversity. London: Earthscan. 2010.
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