CHAPTER 21
ECONOMICS AND THE PRESERVATION OF BIODIVERSITY

W.MICHAEL HANEMANN

Associate Professor, Department of Agricultural and Resource Economics, University of California, Berkeley, California

Aanalysis of the value of preserving biodiversity requires the attention of many disciplines. The chapters that follow in this section define the role of economics in this endeavor and assess its contribution. In this chapter, I offer a brief overview of some of the issues involved in the economics of biodiversity.

There are many different questions that economists ask in connection with biodiversity. Is economic growth harmful to biological diversity? What are the reasons why it may turn out to be harmful? How can harmful impacts be avoided? What institutions are required to ensure a better outcome? At a more specific level, the questions tend to focus on project analysis and specific environmental policy decisions. For example, what are the benefits and costs of a particular investment project or conservation program? Should they be undertaken?

These questions involve a mixture of normative and positive analyses. For the normative issues, economists have something to contribute—the criterion of economic efficiency—but we recognize the fundamental role of equity considerations and value judgments. Our theories reserve a place for the equity criterion and are capable of tracing its implications for private and public decisions, but as economists, we do not have a theory to explain what those value judgments should be. The positive issues are different, however; these fall squarely within our bailiwick and within those of the other social sciences that seek to explain and predict human behavior. As resource economists, it is one of our direct obligations to measure, explain, and predict how individuals and institutions manage natural resource systems, value biological diversity, and make decisions affecting its preservation.



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