rem 363 env 399 week 14 economics biodiversity
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REM 363/ENV 399 - Week 14 ECONOMICS & BIODIVERSITY. What is biodiversity and how much is being lost?. Biodiversity is defined by one source as: "… the variety and variability among living organisms and the ecological complexes in which they occur." (U.S. OTA)

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what is biodiversity and how much is being lost
What is biodiversity and how much is being lost?
  • Biodiversity is defined by one source as:

"… the variety and variability among living organisms and the ecological complexes in which they occur." (U.S. OTA)

  • Recorded biodiversity (species) loss since 1600:
    • vertebrates … 337 species
    • invertebrates … 389 species
    • plants … 90 species
  • Recent losses may be 128 (birds) to 176 (mammals) times the background rate
proximate superficial causes of biodiversity loss
Proximate (superficial) causes of biodiversity loss
  • vulnerability factors (e.g. polar bear)
  • habitat destruction (e.g. tall and short grass prairies of North America)
  • bio-invasions - refers to the introduction of an alien species to a new habitat (e.g. feral cats, rabbits in Australia).
  • overharvesting - rarely leads to extinction (e.g. various whale species)
underlying reasons for biodiversity loss
Underlying reasons for biodiversity loss ..
  • Market failure explanations (e.g. public goods, externalities, lack of property rights, trade and invasives, etc.)
  • Policy failure explanations (e.g. clearing and drainage for agriculture)
  • An example .. conservation in tropical protected areas
  • Also,

“Human society has a choice in regard to the amount of biodiversity that will be retained along its development path, and this choice has thus far been made in a haphazard fashion” (Swanson 1995:2)


Conservation Challenges in a National Park in a Tropical Country

Park Protection




Access to

natural resources




economics and which species to preserve
Economics and which species to preserve
  • Initial (and narrow) view: single species valuations:
    • Grizzly bear …. $18.50
    • Bald eagle …. $12.40
    • Blue whale …. $9.30
    • Bighorn sheep …. $8.60
    • California sea otter $8.10
    • Whooping crane …. $1.20

[Generally, these are annual willingness-to-pay per household]

  • Ecological economics view: focus on uncertainty!
  • Conventional economics view: benefits minus costs
more complex views of biodiversity value
More complex views of biodiversity value
  • Biodiversity value and genetics
    • Weitzman (1992) proposed measuring biodiversity in relation to genetic distance
    • strategy that minimizes the loss from extinction is the one that permits one species of a closely related pair to go extinct
  • Another view concerns the probability of extinction and cost of improving the odds of increasing probability of survival
  • Noah’s ark problem (Metrick & Weitzman 1998)
    • combines these and previous approaches in order to select which species to preserve, given limited resources for conservation
    • when results are compared to real conservation expenditures, they differ significantly from what the model predicts
convention on biological diversity 1992
Convention on Biological Diversity (1992)
  • Came into force in 1993 & ratified by 193 countries and signed by 168 (as of Nov 2010)
  • Funding for protected areas, national strategies, training & education programs & international co-operation
  • Interesting aspects:
    • Global Environment Facility (GEF)
    • Acting without ‘full knowledge’ ..

“Noting also that where there is a threat of significant reduction of loss of biological diversity, lack of full scientific certainty should not be used as a reason for postponing measures to avoid or minimise such a threat.”

    • Application of the ‘Precautionary Principle’
rhinoceros in nepal s chitwan national park
Rhinoceros in Nepal’s Chitwan National Park
  • Background on rhino in Nepal
    • high level of poaching for horn
    • significant expenditures on protection
    • parks-people conflicts
    • substantial tourism benefits
    • some community management now
  • In situ policy approaches to conserve rhino:
    • Enhanced patrolling and enforcement within park
    • Community-based wildlife (CBWM) management with household level incentives
a protected areas and incentives for rhino poaching
a) Protected areas and incentives for rhino poaching
  • Following Milner-Gulland and Leader-Williams (1992):

π = p - Pc (f + p) - c

πis the financial gain from poaching rhino

p is the price from the sale of one animal

Pcis the probability of capture and conviction

f is the fine for a conviction of poaching

c is the cost for supplies to bag one animal


Empirical results for rhino in Nepal

  • Before intensification of anti-poaching:

Rs10,000 - .05 (Rs25,000 + Rs10,000) - Rs570 = Rs7680 (US$135)

  • After intensification of anti-poaching and increase in fine:

Rs10,000 - .15(Rs100,000 + Rs10,000) - Rs570

= Rs -15,570 (- US$273)

  • Incentive for poaching has reversed ..
  • An alternative .. community-based eco-tourism ??