being devastated by a psyllid insect pest. Similarly, the monocultures of cassava in West and Central Africa were ravaged when the cassava mealybug was inadvertently introduced from South America, the original home of cassava. The mealybug was brought under control only through the introduction of a natural parasitic wasp—a move that may have been worth billions of dollars and illustrates the importance of understanding the role of biodiversity in agroecosystem management (Norgaard, 1988; Neuenschwander et al., 1990).

As the resource depletion model of development has been adopted worldwide, the loss of biological diversity has accelerated. Ultimate socioeconomic reasons for this loss include the failure to consider environmental externalities in benefit-cost analyses; misguided government policies; land tenure systems that promote resource depletion; inadequate institutional infrastructure; ineffective communication among local, national, and international institutions; and inequitable distribution of political power and its attendant corruption. Highly destructive global economic forces, including the accumulated $1.2 trillion international debt and, since 1984, the flow of cash away from poor developing nations to wealthy industrialized ones, have reinforced these factors. It is fundamental, therefore, that the development community and the developing countries themselves evaluate the economic factors involved in the use or destruction of biological diversity.


Economic theory provides an analytical method for diagnosing when inefficient use of environmental resources is likely to occur. It holds that resources will be allocated efficiently when prices reflect true resource scarcity, when there exists a right of ownership to resources so that free trading of resources is possible, and when consumers have access to information about the total amount of a resource available. Economists will continue to argue if and when these assumptions are met, but the expanding threats to biological diversity and other natural resources have raised fundamental concerns about the limits of this method as practiced.

First, natural resources provide nonmarketed goods and services as well as commodities. Usually, however, only commodities are openly traded, and therefore priced, by markets. For example, harvested wood may be priced in the marketplace, but trees also provide medicine and other minor products for local peoples, and control soil erosion and flooding regimes. Thus, trees simultaneously provide commodities

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