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Download The Economics of Biodiversity
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What is biodiversity: Def. U.N. 1992 Convention on Biological Diversity: The variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems. Three levels; eco-systems, among species, within species. 5/22/2017 Environmental Economics – International Issues: Biodiversity by Mads Greaker What happens to biodiversity? A synthesis of different sources suggests (OECD 2002, Pearce 1998, Barbier, Burgess and Folke 1995): The number of species presently living in the biosphere is not known; 1.75 million different species are described Regarding estimates of the total number the consensus appears to be in the region of 12,5 – 13,5 million species 2,6 species can disappear each year without diversity loss Documented species loss since 1600 is 2,8/year However, species-area relationships in tropical forests suggest >1000 species loss per year (very low end!) Current rate of extinction is comparable to those extinctions that took place during the so-called periods of evolutionary crisis (65 mill. & 250 mill. years ago) Two key terms: Ecosystem function Refers to the processes going on in eco-systems; photosynthesis, nitrogen take-up, energy production and conservation Relationship with biodiversity ambiguous (Tilman and Downing, 1994, in Heal, 2001, positive relationship) Ecosystem resilience refers to ability to restore function after stress e.g. ”green revolution” lead to increased output, but higher variability (Anderson and Hazell, 1989 in OECD 2001) higher biodiversity -> higher resilience The economic value of biodiversity: Total economic value (TEV) Instrumental value "well-being" preferences Direct value Use value - viewing wild animals Option value Indirect value Existence value Renewable resources (ecosystem function) - fishing - farming Insurance (ecosystem resilence) Are TEV captured in markets? Activity Type of value Institutional requirement Ecotourism Use value Local property rights Sustainable forestry Renewable resource Property rights/Low discount rates Bioprospecting Option values Local property rights/ intellectual property rights Carbon storage Renovation service International agreement on climate change Ecosystem resilience Pure public good; nonrival and non-excludable International agreement on bio-conservation Answer: Deforest! Deforestation app. 0,8 % per annum (FAO, 1993) Ecotourism: Option and existence values are not appropriated, local property rights often not implemented Sustainable forestry: open access exploitation -> nutrient mining (Barbier, Burgess and Folke, 1994) Bioprospecting: Pharmaceutical companies’ willingness to pay for conservation seems to be greatly overstated (Simpson, Sedjo and Reid, J. of Political Economy, 1996) Market cannot capture the indirect services like; the insurance value of ecosystem resilience, watershed protection, scientific information etc. Lack of international agreements (U.N. Convention on biodiversity insufficient) Causes of bio-diversity loss: Single species are driven to extinction one by one due to an open-access regime or high discount rates (Pearce, 1998) More and more of the base resource, land, being converted to non-conservation uses Market failures; alternative uses of land appears to be much more profitable than conserving biodiversity Institutional failures; ill-defined property rights, subsidies to non-conservation activities Policy intervention is needed! Biodiversity and sustainable development Mechanisms generating uncertainty are not well understood i.e. ecosystem resilience Hence, comparison of benefits and costs very difficult! Need for introducing safe minimum standards Randall and Farmer (1995) ...endangered species, subspecies, undisturbed amenities and ecosystems are preserved intact unless the cost of doing so are intolerably high. Shifts the burden of proof A tale of Easter Island Supported a great palm forest approximately 37 000 years old First Polynesians arrived ca. 400 A.D. (estimated to be about 40) Forrest essential: nesting place for birds (food), provided canoes for fishing/tools/fire wood etc. Population wealthy; ample time to other activities like carving and statues 1722, first contact with Europeans There was a poor population of about 3000 There were no forest left However, there were a big amount of enormous statues (= 270 tons) Resource and population dynamics Open-access regime Myopic decision making; cost of harvest = gain from harvest Criteria for sustainable forestry not in use The higher volume of standing trees, the less costly harvesting Population growth increases with forest harvesting The more people, the higher the harvest Using your wealth instead of the return on your wealth Over-shooting (”Dutch disease”) Is Easter Island relevant for us? Brander and Taylor employ a Malthusian Population Dynamics, today different? Further, open-access resource, better institutions today? On Easter Island, 5% decrease in forest over a typical lifetime (40 years) The 40-60 year mature time exceed life expectancy However, current deforestation rate is 32% per 40 years The major environmental problems exceed our life expectancy Conclusions: There is a question of how much can be done by improving local institutions Ecosystem resilience is hard conceptualize in economic terms Measures of existence- and option values are controversial Moral values are not included in TEV On the other hand, safe minimum standards also has its problems; Where to put the SMS – easier with species than with ecosystems? The need for SMS may be exaggerated SMS seems to place a disproportionate high burden on developing countries Need for international agreement with measurable targets – not just intentions