Lecture 5 - Indirect Use Value

Indirect use values can be assigned to aspects of biodiversity – such as environmental process and ecosystem services – that provide both present and future economic benefits without being harvested or destroyed during use.

Because these benefits are not goods or services in the usual economic sense, they do not typically appear in the statistics or national economics, e.g. the GDP.

Indirect use values / benefits are often called public goods because they ___________

belong to the society in general, without private ownership.

______: Economists are actively improving calculations of the indirect use value of ecosystem services at regional and global levels.

One such calculation suggests that the value of ecosystem services is enormous, actually exceeding the value of the world’s economy, which was $33 trillion/year in 1995 and is currently $72 trillion/year.

Given this enormous value, it is evident that human societies are totally dependent on natural ecosystems, and societies would not persist if these ecosystem services were permanently degraded or destroyed.

Natural ecosystems provide many important products and services that are essential for human well-being.

The Value of Ecosystem Services

We will consider 2 ways of valuing biodiversity:

Option value

Existence value

Option value:

the value that biodiversity may have in the future

existence value:

the amount of people are willing to pay to protect biodiversity even if they never expect to experience them

Ecosystems with reduced species diversity may be less able to adapt to the altered conditions associated with _______

rising CO2 levels, higher temperatures, and other aspects of global climate change.

Wetland ecosystem services whose value is typically not accounted for in the current market system include waste treatment, water purification, and flood control – all of which are __________

essential to healthy human society

Aquatic ecosystems such swamps, lakes, rivers, floodplains, tidal marshes, mangroves, estuaries, the costal shelf, and the open ocean are capable of ______

breaking down and immobilizing toxic pollutants, such heavy metals and pesticides that have been released into the environment by human activities.

A decline in insect and plant populations will result in a decline in animal harvests.

Thus, a decline in a wild species of little immediate value to humans may result in a corresponding decline in a harvested species that is economically important.

Relationships between species are often essential for preserving biodiversity and providing value to people. For example, many insects pollinate the crops on which people depend on for food.

Species that are particularly sensitive to chemical toxins serve as ‘early warning indicators’ for monitoring the health of the environment.

Some species can even substitute for expensive detection equipment.

Among the best-known indicator species are lichens, which line on rocks and trees and absorb chemicals in rainwater and airborne pollution.

Ecotourism can provide an economic justification for protecting biodiversity and also can provide benefits to people living nearby.

Ecosystems provide many recreational services for humans; for instance, they furnish a place to enjoy nonconsumptive activities such as hiking, photography, and bird watching.

The monetary value of these activities, sometimes called their amenity value, can be considered and can have a major impact on local economics.

Ecotourism is a special category of recreation that involves people visiting places and spending money wholly or in part to experience unusual biological communities (e.g. rain forests, or African savannas, mangroves, etc.) and to view particular flagship species (elephants, or tiger, etc.)

In developing countries, facilities for ecotourists sometimes create a fantasyland that disguises and ignores the real problems those countries face.

The rapidly developing ecotourism industry can provide income to protect biodiversity, but possible costs must be weighted along with benefits.

Many books, television programs, movies, and websites produced for educational and entertainment purposes are based on nature themes.

These natural history materials are continually incorporated into school curricula and are worth billions of dollars per year.

For example, recent movies with penguins as main characters or themes have had revenues estimated at around $1.6 billion.

In addition to the indirect values discussed already, Option Value is another way of valuing biodiversity for future use.

The potential economic or human health value of natural resources motivates people and countries to protect biodiversity.

A question currently being asked among conservation biologists, governments, ecological economists, corporates, and local individuals is, ‘Who owns the commercial rights to the world’s biodiversity?’

Unauthorized collecting of biological materials for commercial purposes is now often termed biopiracy.

Ginkgo trees are widely grown as ornamental trees because of their beautiful leaves and long life. (B) Because of the valuable medicines made from their leaves, ginkgo trees are now cultivated as a crops

Many people throughout the world care about wildlife, plants, and entire ecosystems, and are concerned about their protection.

People value the resource without any intention to use it now or in the future.

These individuals recognize an existence value in the wild nature – the amount that people are willing to pay to prevent species from going extinct, habitats from being destroyed, and genetic variation from being lost.

A component of existence value is beneficiary value, or bequest value, how much people are willing to pay to protect something of value for their own children, and descendants, or for future generations.