Week 10: Economics and valuing biodiversity Flashcards
why consider the costs of conservation?
Optimal allocation of resources for most benefits
Resources will always be inadequate
Can change the best course of action
Including costs in reserve design leads to better outcomes
Minimum set problem or maximum coverage problem
free market economics
Free exchange of goods and services (prices set by supply and demand)
Revolves around voluntary transactions
Why can’t the value of goods and services provided by nature be regulated by supply and demand?
Damage to the natural environments is ignored as a cost
the problem of externalities
Economic theory assumes costs and benefits of transactions are borne only by participants
Pursuit of self-interest drives prosperity
Externalities are hidden costs or benefits to others - leads to market failure
game theory
What causes people to act in certain ways?
Cooperate or don’t cooperate
People want to maximise their benefits but don’t know how others will behave
One person’s contribution is not sufficient to make a big difference
Contribution to conservation is negligible for individual but the contribution is not negligible for the donor
This problem manifests in inaction over climate change
triage
Allocate resources where they will do the most good
Ignore those who can’t be saved to help those who can be
Saves most lives but sacrifices some
Invest in most critically endangered: most costly, lowest probability of success while other vulnerable species become endangered
Conservation triage accepts some extinctions are inevitable
market based instruments
Can we make free market economics work for us?
These are policy instruments that use markets to reduce externalities
Direct taxes such as the carbon tax
Licenses such as water licenses
Tax concessions for plantations
Create market - emissions trading, tradable permits, biodiversity banking, auctions
Certification such as the rainforest alliance - Bette outcomes for coffee farmers and rainforest, compensate for lost productivity, compliance checking required
Incentives and direct payments eg. Caring for Country
why should we consider costs?
Low value of natural services encourages short term exploitation
Climate change is the repercussion of this debt
costs to conservation
Acquisition costs
Management costs
Personnel costs
Support costs
Transaction costs
Opportunity costs = spend here, cannot spend there
The most effective solution is not always the most efficient —> cost benefit analysis
cost effective analysis
Best outcome for a given budget
Benefits: easier to do because we keep cost in their own units
Challenges: how do you compare number of species vs area of forest? Often uses proxies that assume conservation outcomes are homogenous but it ignores things like intrinsic value
Can be used to rank actions
Cost efficiency: achieve outcome for lowest cost
Cost-effectiveness: best outcome for given budget
Cost-benefit: more $$ value of benefits per $ spent
ecosystem services
Goods and services we get from nature
Provisioning services (products obtained), regulating services, cultural services and supporting services
provisioning servises
Food
Freshwater
Timber
Biochemicals
Fiber
Genetic resources
regulating services
Climate regulating
Disease regulating
Water purification
Pollination
Biocontrol
cultural services
Spiritual and religious
Educational
Recreation and tourism
supporting services
Soil formation
Nutrient cycling
Primary production
why assign value to nature?
Undervalued ecosystems get exploited
Putting a value on nature helps communicate it is valuable and communicate the costs of losing biodiversity
Can provide critical inputs to policy decisions
