ECONOMIC VALUATION OF BIODIVERSITY

TABINDA SHABBIR
DEPT. OF ENVIRONMENTAL SCIENCE
FUUAST KARACHI, GULSHAN CAMPUS

26TH May 2016

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INTRODUCTION:

Biodiversity has constituted the focal point of

environmental economics and public politics
increasingly over recent years. Social science need
to be incorporated into conservation science and
practice.
Biodiversity requires our attention for two reasons.
First, it provides a wide range of indirect benefits
to humans. Second, human activities have contributed,
and still contribute, to unprecedented rates of
biodiversity loss, which threaten the stability and
continuity of ecosystems as well as their provision
of goods and services to humans.
Suggestions are made about which economic valuation
methods can address which type of biodiversity value.
It need to provide comparable and quantitative
evidence of the benefits, not just the costs, of
stricter environmental safeguards instigated a major
new research effort within economics aimed at
developing methods for valuing nonmarket public goods
such as environmental quality.

METHODOLOGY:

➢ Edwards and Abivardi (1998) analyzed the high

economic value of wildlife and economic and
social pressures which threaten it. They
categorize value from the biodiversity into
direct extractive uses, such as the production of
timber or the collection of plants and animals
for food. Direct non-extractive uses, such as
their importance for recreation or tourism.
Indirect uses included the role of organisms in
providing ecosystem services such as flood
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control, pest control or protection against

erosion. Optional uses which concern the possible
use of a resource at some point in the future.
Then they argued on two points:
● If we protect natural areas because of the
ecosystem services they provide, we will,
incidentally, help to preserve many species, even
though they may have no important role in
maintaining those services.
● We simply do not know how important species
diversity is for the long-term stability of
ecosystems; if for no other reason, caution would
urge the preservation of as much diversity as
possible.
In the end, it was agreed that it is essential to
develop understanding of the importance of
wildlife resources in economic terms. However, it
should not be taken to extremes; there are things
that economics cannot do, and never will be able
to do.

➢ Bockstael, Freeman, Kopp, Portney and Smith

(2000) discussed how economists ascribe values to
the things people can choose. The economic value
of an ecosystem function or service relates to
the contribution it makes to human welfare, where
human welfare is measured in terms of each
individual’s own assessment of well-being. Their
arguments were developed using recent studies
that attempted to estimate economic values for
ecosystems on a global scale. One implication of
this evaluation was that there is a need for
greater communication between ecologists and
economists. Cooperation is impossible without a
better appreciation and respect for each other’s
discipline. But neither discipline will actually
provide the exclusive organizing principles for
how people will in fact interact with ecosystems
in practice.
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➢ Nunes and Van Den Bergh (2001) critically

evaluated the monetary valuation of biodiversity.
They consider four levels of diversity that
included genes, species, ecosystems, and
functions. After that they took different
perspectives on biodiversity and characterized
them on a number of factors: instrumental vs.
intrinsic values, local vs. global diversity, and
life diversity vs. biological resources. The
framework was the starting point for a survey and
evaluation of empirical studies at each of the
four levels of diversity. At first, the resulting
monetary value estimates seem to give unequivocal
support to the belief that biodiversity has a
significant, positive social value but the
empirical literature fails to apply economic
valuation to the entire range of biodiversity
benefits. In the end, it was concluded that
monetary valuation of changes of biodiversity can
make sense. This requires a clear life diversity
level must be chosen, a concrete biodiversity
change scenario is formulated, and a
multidisciplinary approach seeking the
identification of direct and indirect effects of
the biodiversity change on human welfare must be
used.

➢ Lopez, Montes, and Benayas (2007) addressed the

controversies surrounding the economics valuation
of biodiversity, by performing an extensive meta-
analysis of contingent-valuation studies.
Contingent-valuation is a survey-based economic
technique for the valuation of non-market
resources. This study was based on a hypothetical
market in which people were asked through
questionnaires to express their maximum WTP
(Willingness to pay) for the protection of
biodiversity. It differed significantly with the
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choice of benefit. WTP was significantly higher

for coercive payments than voluntary payments.
Similarly, WTP for biodiversity conservation was
significantly greater for one-time payments than
for annual payments. It seems contingent-
valuation method in biodiversity conservation
policies can provide useful information about
alternative conservation strategies.

➢ Aynur Demir (2013) based a research on an

extensive literature evaluation. Some published
data was collected through the internet from
between 1992 to 2012. The compiled literature was
evaluated systematically and analytically and
classified according to the ecosystem and its
functions, genetic diversity and bio-prospecting,
species and habitats showing that, biodiversity
should be evaluated using an interdisciplinary
approach. In this way, biodiversity has been
formulated with the other different components
and has been transformed to an economic value.
The results were that the most economical
studies, using the monetary valuation have
actually confused biodiversity with biological
resources. This situation has led to a scarcity
of studies focused principally on biodiversity.
Additionally, it seems clear that in assessment
of economic valuation studies, the evaluation of
biodiversity values does not give a stable or
clear monetary value for biodiversity.

CONCLUSION:

From the review of economic valuation studies it is

clear that the assessment of biodiversity values does
not lead to a univocal, unambiguous monetary
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indicator. Nevertheless, economists, the ecologists,

and other vested interests must work together using
integrated approaches for a clearer understanding of
the importance of these studies. Only in this way can
we expect full social benefit-sharing, together with
effective and useful policy implementation.

REFERENCES

Aynur D.,(2013). Economic of biodiversity: the importance

of studies aimed at assessing the economic value of
biological diversity. African Journal of Agricultural
Research 8(43), pp. 5375-5385.
Peter J.E., Cyrus A.,(1998). The value of biodiversity:
where ecology and economy blend. Biological Conservation
83(3), pp. 239-246.
Berta M.L., Carlos M., Javier B.,(2007). Economic
valuation of biodiversity conservation: the meaning of
numbers. Conservation Biology 22(3), pp. 624-635.
Paulo A.L.D. N., Jeroen C.J.M. V.D.B.,(2001). Economic
valuation of biodiversity: sense or nonsense?. Ecological
Economics 39. 203-222.
Nancy E.B., A. Myrick F., Raymond J.K., Paul R.P., V.
Kerry S.,(2000). On measuring economic values for nature.
Environmental Science and Technology 34(8).
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