Can we put a Value on Biodiversity?

The Post-2015 Consensus' tenth set of papers explore the value of biodiversity, and estimate the benefits and costs of conservation.

Biodiversity – the range of species we share our planet with – is important, but can we put a value on it? And can we estimate the benefits and costs of conservation? In a series of new studies for the Copenhagen Consensus Center’s Post-2015 Consensus, Economists Anil Markandya, Luke Brander and Alistair McVittie argue that reducing the loss of coral reefs, wetlands and forests are worthwhile targets for the UN’s development agenda, each providing benefits to society greater than the costs of conservation.

What's the smartest target?

Stemming the loss of coral reefs by 50% will return at least $24 for every dollar spent. Coral reefs act as fishery hatcheries and fishing resources while storing abundant numbers of species. At the same time, coral reefs have large value for tourism. The costs of stemming coral reef loss are about $3 billion per year, but the total benefits likely run to at least $72 billion, producing the number of $24 dollars back for every dollar invested. Likewise, the researchers find that reducing future loss of forests by half would likely do about $10 of good for each dollar spent.

Humans don’t live separately from the natural world. Rather, we rely on it for many different benefits or what experts call ‘ecosystem services’. For example, forests don’t just provide timber and firewood but also provide flood protection because they can soak up intense rainfalls – for instance, a big part of the reason Pakistan had such hugely damaging floods in 2010 was because large parts of its upper forests had been cut down. Here forests could have protected many of the poor that now saw their homes flooded or even their kids perish.

Forests also provide beauty experiences for residents near-by, while drawing in tourism, generating more benefits. At the same time, growing forests take up carbon dioxide from the air and lock it away for decades or even centuries while producing oxygen. And forests also provide refuge for enormous numbers of bird, animal and plant species, especially found in tropical rainforests.

All of these benefits can be valued. Timber has a commercial price, so that is straightforward. Locking away carbon can be priced based on likely costs of avoided climate damage, and likewise flood protection value shows up as reduced future floods. There is also a value for recreation and tourism but not all of this is paid for by the users. Moreover, preserving species clearly have a benefit but typically not one we pay for. This is where putting a price on natural resources become more difficult, and economists have to fall back on surveys which ask people how much they are willing to pay to keep forests in place.

Interestingly, the economist found that establishing environmental protected areas is not an effective way to go about preserving forests. Why? Because the costs of establishing and administering national parks are very high and the opportunity cost of land is enormous.

You can read the all the reports here. In them Anil Markandya, Scientific Director at Basque Centre for Climate Change writes the main report, peer-reviewed in perspective papers by Luke Brander, environmental economist affiliated to VU University Amsterdam and to Hong Kong University of Science and Technology and by Alistair McVittie, Environmental Economist at Scotland’s Rural College. Additionally, experts from the International Institute for Environment and Development present a viewpoint paper concerning Markandya’s analysis.