Valuing Biodiversity from an Economic Perspective: A Unified Economic, Ecological and Genetic Approach

Posted: 15 May 2003

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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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 argue for a dynamic economic welfare measure of biodiversity that complements the existing literature on benefit-cost approaches and genetic distance/phylogenic tree approaches, which to date have been more static. Using a unified model of optimal economic management of an ecosystem under ecological and genetic constraints, we identify gains realized by management policies leading to a more diverse system, using the Bellman state valuation function of the problem. We show that a more diverse system could attain a higher value even though the genetic distance of the species in the more diverse system could be almost zero. We relate this endogenous measure of the biodiversity value to ecologically/biologically oriented biodiversity metrics (species richness, Shannon or Simpson indices).

Keywords: Biodiversity valuation, ecosystem services, ecological and genetic constraints, Bellman state valuation function.

JEL Classification: Q2

Suggested Citation

Brock, William A. and Xepapadeas, Anastasios, Valuing Biodiversity from an Economic Perspective: A Unified Economic, Ecological and Genetic Approach. Available at SSRN: https://ssrn.com/abstract=393462

William A. Brock (Contact Author)

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

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

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Anastasios Xepapadeas

Athens University of Economics and Business ( email )

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Greece

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

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40126 Bologna, fc 47100
Italy

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