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

See all articles by William A. Brock

William A. Brock

University of Wisconsin, Madison - Department of Economics; University of Missouri at Columbia - Department of Economics

Anastasios Xepapadeas

Athens University of Economics and Business; University of Bologna - School of Economics, Management, and Statistics

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Date Written: August 19, 2001

Abstract

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

Suggested Citation

Brock, William A. and Xepapadeas, Anastasios, Valuing Biodiversity from an Economic Perspective: A Unified Economic, Ecological and Genetic Approach (August 19, 2001). SSRI Working Paper Series No. 2001-17, Available at SSRN: https://ssrn.com/abstract=281248 or http://dx.doi.org/10.2139/ssrn.281248

William A. Brock

University of Wisconsin, Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706
United States
608-263-6655 (Phone)
608-263-3876 (Fax)

University of Missouri at Columbia - Department of Economics ( email )

118 Professional Building
Columbia, MO 65211
United States

Anastasios Xepapadeas (Contact Author)

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

University of Bologna - School of Economics, Management, and Statistics ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

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