The Economic Value of Biodiversity

Posted: 14 Oct 2019

See all articles by Nick Hanley

Nick Hanley

University of Glasgow

Charles Perrings

Arizona State University (ASU)

Date Written: October 2019

Abstract

Biodiversity is declining worldwide, and the costs of biodiversity losses are increasingly being recognized by economists. In this article, we first review the multiple meanings of biodiversity, moving from species richness and simple abundance-weighted species counts to more complex measures that take account of taxonomic distance and functionality. We then explain the ways in which protecting biodiversity generates economic benefits in terms of direct and indirect values. Empirical approaches to estimating direct and indirect values are presented, along with a selection of recent evidence on how substantial these values are. The use of asset accounting approaches to track biodiversity values over time is discussed, in the context of sustainable development paths. Finally, we review some important challenges in valuing biodiversity that remain to be solved.

Suggested Citation

Hanley, Nick and Perrings, Charles, The Economic Value of Biodiversity (October 2019). Annual Review of Resource Economics, Vol. 11, Issue 1, pp. 355-375, 2019, Available at SSRN: https://ssrn.com/abstract=3468084 or http://dx.doi.org/10.1146/annurev-resource-100518-093946

Nick Hanley (Contact Author)

University of Glasgow ( email )

Adam Smith Business School
Glasgow, Scotland G12 8LE
United Kingdom

Charles Perrings

Arizona State University (ASU)

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

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