The Value of Biodiversity: Markets, Society, and Ecosystems

Abstract

The of biodiversity is discussed at different levels including market value, non- market values to humans, and the of biodi- versity to ecosystems. The main conclusion is that, although market exchange values of environmental services may be used to justify biodiversity protec- tion measures, it must be stressed that exchange constitutes a small portion of total biodiver- sity value. The total of existing biodiversity is largely unknown but indications are that it is essen- tial to human existence. The various levels of biodi- versity point to the need for a hierarchical and pluralistic methodology to determine appropri- ate policies for its preservation. (JEL Q21) I. INTRODUCTION Among ecologists, there is a general con- sensus that biodiversity1 is of critical impor- tance to the health of ecosystems and even for the long-term survival of the human species. There is also a consensus that bio- diversity is being lost at a rate which is a cause for concern.2 Economists, on the other hand, generally view biodiversity as just an- other good which is to be placed in the basket of market choices just as any other. The discussion of the specifics of biodiver- sity policy has been unsatisfactory partly because of the different meanings of the word value used by economists and ecolo- gists. Many ecologists fail to understand the logic of market allocation and why biologi- cal resources are used in seemingly irra- tional ways. Many economists fail to ap- preciate the narrowness of the concept of economic as indicated by relative prices determined by market exchange. Fol- lowing Anderson (1966) and Brown (1984), the discussion below considers economic measures of to be species of the genus assigned which belongs to the family value. Many biologists and paleontologists be- lieve that we are at a critical point in the history of the human species, and perhaps even in the 600-million-year history of com- plex multicelled life on earth. If the paleon- tologists and biologists who study the phe- nomenon of mass extinction are correct, the current human-induced mass extinction may be of the same order of magnitude as the five other major extinction episodes which destroyed between 20 and 96 percent of existing species on the planet (Ehrlich and Ehrlich 1992; Ward 1994; Wilson 1992). We are living in a truly remarkable period in Earth's 41-billion-year history. The valua- tion decisions our species has made in the recent past and will make during the next few decades will determine the fate of life on Earth for the next tens of millions of years. It is critical to clarify the language and concepts we use to estimate the of biodiversity, and thus policies leading to its destruction or preservation. The importance attached to the issue of biodiversity preservation necessarily in- volves ethical judgments about duty to fu- ture generations and responsibility toward the nonhuman natural world. Although in- dividuals hold a variety of conflicting beliefs about human responsibility to the natural world, this does not mean that policy choices