Lecture 2: values of biodiversity: Direct & Indirect economic values

Why bother with Biodiversity?

  • Scientific: biodiversity is inherently interesting

  • Citizen: biodiversity is important for lots of reasons - biological, aesthetic, political, ethical

Arguments for the protection of biodiversity

  • Intrinsic value: biodiversity is important in living systems - conservation of ecologically equivalent species; redundancy is allowed

  • Anthropocentric: humans benefit because biodiversity supports ecosystem services - conservation of ecologically non-equivalent species; redundancy is avoided

Biodiversity is the ‘total and irreducible complexity of life’

  • ‘complexity’ includes all aspects of living systems, not just species richness

  • single objective ‘measurements’ of biodiversity are impossible or useless

  • contextual values have to be used - this is determined by usage (who/what its for)

Valuing biodiversity occurs at levels:

  1. genetic diversity: raw material for adaptation

  2. Species diversity: raw material for population growth

  3. ecosystem diversity: the matrix within which species and genes operate

Direct use of Values 1 and 2

these values are obtained via harvesting or destroying a resource

  • one of the consumptive use values applied to this form of obtaining resources is replacement cost approach

  • this means that resources are consumed locally for subsistence and are generally not traded

  • the second value is Productive use value

  • this means that the resources obtained are traded in national and global markets for first or last sale value. the final value is measured by the raw materials, labour, transport, energy and cost of other materials etc…

Indirect use values

These are non-consumptive values

  1. ecosystem productivity

  2. protection of water and soil resources

  3. climate regulation

  4. waste treatment and nutrient retention

  5. species relationships

  6. environmental monitors

  7. recreation and ecotourism

  8. educational and scientific value

How do we assign economic value?

  • for example we can look at the asian wild gaur and the possible uses and values it may have

  • meat harvested from wild populations would be an example of Direct Use

  • Seeing them via Nature tourism is an example of Indirect Use

  • Asking if they have a future potential in domestic cattle breeding programs is an example of Option Value

  • And lastly the Existence Value relies on the Asian Wild Gaurs Intrinsic/Cultural/Aesthetic Value

Costs of maintaining biodiversity

Maintaining biodiversity costs a lot, whether that’s in management or collateral.

  • management costs include: Equipment, Wages, Infrastructure and Monitoring

  • While collateral costs considers: Income foregone, Displaced Communities, Other areas that are affected and Civil Unrest

  • To value biodiversity economically it is important to consider if it is owned by everyone or no-one. The common property resources (‘global commons’) is also involved in this

Economic Discounting

the value of resources will be lower in the future due to harvesting many resources now causing us to aquire greater wealth now. However there is an uncertainty that these resources may not be there later

  • resources in developing countries tend to have high discount rates which encourages unsustainable resource use.

Environmental/Ecological Economics

  • there is an effort being made to integrate economics, environmental science, ecology and public policy into economics

  • We have to factor full costs into market for long term

  • It is difficult to asses and assign and may come with Ethical Issues

  • to factor true costs into economic activities we use COST-BENEFIT ANALYSIS which compares values gained against costs

  • we can do an environmental impact assessment to consider present and future effects on environment against the reduction of potential for future activities/restoration costs - This is a Precautionary Principle

Direct Use Values: Externalities

A diagram depicting the hidden costs of harvesting resources

The REAL value of what we produce

when looking at statistics comparing the net present value in dollars per hectare between sustainably managed ecosystems and converted ecosystems, you can see that ecosystems that are sustainably managed are far more profitable than those that have been converted. the difference is averaging an over half profitability.

The Problems with economic valuing systems for biodiversity

  • Implicit acceptance of the modern economic system

  • Not all species or communities can be assigned an economic value

  • There’s a difficulty assigning even option values

  • what about the species that are economically undesirable

  • this relies on ‘perfect knowledge’ in order to make a decision, which is difficult/impossible

Further Problems

  • as resources become scarce → they become more expensive

  • what do we do if it becomes uneconomical to conserve biodiversity