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

American Economic Review · 2003 · Volume 93 · Issue 5

Abstract

We develop a conceptual framework for valuing biodiversity from an economic perspective. We argue for a dynamic economic welfare measure of biodiversity that complements the literature on benefit-cost approaches and genetic distance/phylogenic tree approaches. Using a unified model of optimal economic management of an ecosystem under ecological and genetic constraints, we identify gains from 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 although the genetic distance of the species in the more diverse system could be almost zero.

Keywords

Valuation of Environmental Effects, Ecological Economics: Ecosystem Services, Biodiversity Conservation, Bioeconomics, Industrial Ecology

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