Valuing Biodiversity from an Economic Perspective: A Unified Economic, Ecological and Genetic Approach
SSRI Working Paper Series No. 2001-17
34 Pages Posted: 27 Aug 2001
Date Written: August 19, 2001
We develop a conceptual framework for valuing biodiversity from an economic perspective. We consider biodiversity important because of a number of characteristics or services that it provides or enhances. We attribute biodiversity loss to economic activities related to decisions of private optimizing agents that ignore useful characteristics or services associated with diverse ecosystems. Using a unified model of economic management of an ecosystem under ecological and genetic constraints, we compare the optimal value of the social optimization problem where positive externalities associated with biodiversity are internalized, to that of a private optimization problem. We obtain an endogenous measure of the biodiversity value and relate this measure to ecologically/biologically oriented biodiversity metrics (species richness, Shannon or Simpson indices) that correspond to the equilibrium diversities of the social and private optimization problems.
Keywords: Biodiversity, Valuation, Ecology, Genetics
JEL Classification: Q2
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