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Species Diversity And Human Well-Being: A Spatial Econometric Approach

  • Katrin Rehdanz


    (Research unit Sustainability and Global Change, Hamburg University)

Economic valuation of biodiversity is generally carried out by applying revealed or stated preference approaches to determine people’s willingness to pay for small changes in management options. Studies on species preservation investigating passive or nonuse values typically rely on stated preference methods such as the contingent valuation approach and often focus on single animal species. The total value of species preservation can only be derived by aggregating the various values. This paper proposes a different approach by investigating country level data on life-satisfaction attempting to explain differences in subjective well-being by reference to amongst other things species diversity. While most recent papers have concentrated on finding determinants of life-satisfaction other than income, little attention has been drawn to spatial interdependencies. Most researchers investigating the determinants of life-satisfaction implicitly assume that subjective well-being is unaffected by events in neighbouring locations. The existence of spatial relationships in the data has implications for the econometric techniques typically employed including misleading inference testing procedures, bias and inconsistency depending on the precise form of the spatial relationship. We extend our analysis by a spatial econometric approach investigating whether and to what extend spatial relationships exist. Spatially weighted variables are shown to be a highly significant determinant of life-satisfaction. As nature does not respect man-made borders, neither does peoples happiness. Furthermore, even when controlling for a range of other factors we find a significant relationship with species diversity; the higher a countries number of bird or mammal species or the lower the percentage of bird species threatened the more satisfied the people are. Overall and from a human perspective, bird species seem to be a better indicator for biodiversity.

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Paper provided by Research unit Sustainability and Global Change, Hamburg University in its series Working Papers with number FNU-151.

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Length: 24 pages
Date of creation: Oct 2007
Date of revision: Oct 2007
Handle: RePEc:sgc:wpaper:151
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  1. Welsch, Heinz, 2002. "Preferences over Prosperity and Pollution: Environmental Valuation Based on Happiness Surveys," Kyklos, Wiley Blackwell, vol. 55(4), pages 473-94.
  2. Rehdanz, Katrin & Maddison, David, 2008. "Local environmental quality and life-satisfaction in Germany," Ecological Economics, Elsevier, vol. 64(4), pages 787-797, February.
  3. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March.
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  7. Vemuri, Amanda W. & Costanza, Robert, 2006. "The role of human, social, built, and natural capital in explaining life satisfaction at the country level: Toward a National Well-Being Index (NWI)," Ecological Economics, Elsevier, vol. 58(1), pages 119-133, June.
  8. Rehdanz, Katrin & Maddison, David, 2005. "Climate and happiness," Ecological Economics, Elsevier, vol. 52(1), pages 111-125, January.
    • Katrin Rehdanz & David J. Maddison, 2003. "Climate and Happiness," Working Papers FNU-20, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2003.
  9. Bernard M.S. van Praag & Barbara E. Baarsma, 2004. "Using Happiness Surveys to Value Intangibles: The Case of Airport Noise," CESifo Working Paper Series 1163, CESifo Group Munich.
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