Göran Bostedt Dept. Of Forest Economics SLU

Göran BostedtDept. Of Forest Economics

SLU

ECONOMIC ASPECTS ON THE CONSERVATION OF

BIOLOGICAL DIVERSITY

Sveriges lantbruksuniversitetwww.slu.se

A comparison between conservation of biodiversity and climate change

• UN Conference on Environment and Development (UNCED) in 1992, the so called Earth Summit, produced two binding conventions:

– United Nations Framework Convention on Climate Change, the so called climate convention.

– UN Convention on Biological Diversity, the so called biodiversity convention.


The story of two conventions...• The climate convention: on the big stage in

research and politics.– Led to the so called Kyoto protocol in 1997, that

emissions of greenhouse gases should be reduced

– Summit in Copenhagen 2009 aiming to find a successor to the Kyoto protocol failed.

– UN’s climate panel, IPCC, aims to give scientific support to the political negotiations.

• Biodiversitety convention: the small stage– Led to the Cartagena protocol in 2003, which among other

things aims at protecting biodiversity against modern biotechnology.

– Led 2005 to the Millennium Ecosystem Assessment, an attempt at giving support to political negotiations, in a similar way as the IPCC.


The story of two conventions...

• The conservation of biological diversity is seen as extremely important in the scientific community.– “The central environmental challenge of our time is

embodied in the staggering losses, both recent and projected of biological diversity at all levels, from the smallest organisms to charismatic large animals and towering trees.” Levin (1999): Fragile Dominion: Complexity and the Commons



• The view that conservation of biodiversity is a central challenge is not shared by policy

makers and the general public.

• Why the difference?

• Why has the climate change issue received the political attention that conservation of biodiversity is lacking?



• Two aspects can help to explain the difference:

• The link from human activities to environmental changes.

• The link from environmental changes to human welfare.


Climate change• Link from human activities to environmental changes:

• Emissions of greenhouse gases cause increasing atmospheric concentration of these gases – this is uncontroversial.

• Increasing concentration of greehouse gases leads to climate change - in principle uncontroversial, but the question is how

fast.

• Link from environmental changes to human welfare:

• List is long: Sea level changes

• Increased storm intensity

• Chnages in rainfall, with drought in some places


Biodiversity• Link from human activities to environmental changes:

• Clear and perceivable evidence – more on this later.

• Link from environmental changes to human welfare:

• Less obvious, so far – how are we affected when a species we never heard about goes extinct in the Amazon due to deforestation?

They're running out of rhinos - what do I care?Let's hear it for the dolphin - let's hear it for the treesAin't running out of nothing in my deep freezeIt's casual entertaining - we aim to pleaseAt my parties(Dire Straits)


Milllenium Ecosystem Assessment 2005

• Ecosystems and biodiversity are essential for human welfare.

• Ecosystem services is the central organising principle.

• Contains a comprehensive account of the status and trends when it comes to

biodiversity, in particular when it comes to habitat changes.


Factors behind the loss of biodiversity

• Habitat destruction

• Invasive species

• Pollution (including Climate Change)

• Population

• Overharvesting


Human activities and loss of biodiversity

• How can we claim to have a ”biodiversity crisis” when we today know about more species than ever before in the history of mankind?

• To calculate extinction rates:

• Species-area curves: n = c * Az where n is the number of species and A is the area of a certain region. The rate of change when A is reduced is then z.

• The value of the parameter z has been estimated for areas like islands.

• If z = 0,25 the rate of change in n is 25 times higher than the rate of change in A.

• If we know the rate of change in A – e.g. the deforestation rate in the Amazon, we can say something about the rate of loss in biodiversity.

• Large uncertainties in this method.


Loss of biodiversity and human welfare

• In the Millennium Ecosystem Assessment this link is largely missing.

• An inconvenient truth:

• Rich countries have relatively low biodiversity (Europe, Japan, USA).

• Poor tropical countries have high biodiversity (Afrika, Asia, Latin Amerika).


Plants in some countries

• Developing countries Vascular plants Land area (km2)

• Brasil 56,215 8,456,510

•Malaysia 15,500 328,550

•Costa Rica 12,119 50,660

• OECD-countries

• USA 19,473 9,158,960

• Japan 5,565 374,744

• UK 1,623 241,590


Loss of biodiversity and human welfare

• Direct benefits:

• Consumptive benefits: Harvest for food, fibres, medicin, etc.

• Non-comsumptive benefits: Animal watching, ecoturism

• Indirect benefits:

• Ecosystem services: Nutrient circulation, purification of water, climate stabilisation

• Non-use benefits:

• Existence benefits


Biodiversity and economics – issues for the economist

• What are the consquences of biodiversity loss and what are the consequences of conservation? (costs and benefits)

• Which policy measures can be taken and which ones should be taken? (management and policy)

• Tools of the economist:

•Cost-efficiency analysis

•Cost-benefit analysis

•Analys of incentives and institutions


What is biodiversity?

- Species diversity

- Genetic diversity

- Eco system diversity

Noahs ark- problem – Maximizing genetic diversity (Weitzman, 1998)

The problem:

max ( )V D a c ai ii

n

1

V = Net benefit

D(a) = Diversity of the set a of conserved species ci = Cost of conserving species i


How do we measure D(a), the diversity of the set of conserved species?

• The easiest way is just the number of conserved species – species richness.

• Species richness is probably the most common measure of biological diversity.

• Ecologists are quick to point out that there are more important aspects than species richness.

• Why care about species richness?

• Species richness is connected to productivity, measured as biomass/area.

• Species richness is important for bioprospecting and gives greater resilience.


Beyond species richness – taking uniqueness into account

* Genetisk diversitetsmått kan baseras på evolutionära träd

Figur 6.3 Släktträd f ör hominoider (f rån Weitzman, 1992)

Diversitetsmått baserat på evolutionärt träd

Art Antal noder inodernoder

Människa 4 17/4 = 4,25

Chimpans 4 17/4 = 4,25

Gorilla 3 17/3 = 5,67

Orangutang 2 17/2 = 8,5

Gibbon 2 17/2 = 8,5

Siamang 2 17/2 = 8,5

Summa 17 39,67

• One can argue that species without close relatives should be prioritized: uniqueness is valuable


A genetic diversity measure can also be based on pairwise

distance, for instance in DNA *Applying Weitzman’s measure on cranes (from Weitzman, 1993):* Weitzman's diversity measure:

Pairwise distances Nearest neighbour A-B: 3 A-B + C + D = 8

A-B + D + C = 8 A-C: 1 A-C + B + D = 8

A-C + D + B = 8 A-D: 4 A-D + C + B = 8

A-D + B + C = 8 B-C: 4 B-C + A + D = 9

B-C + D + A = 9 B-D: 4 B-D + C + A = 9

B-D + A + C = 8 C-D: 5 C-D + A + B = 9

C-D + B + A = 10 * The diversity of the set {A, B, C, D} = 10


The crane family

Species Latin name Geographical area Probability of extinction

Black crowned crane

Balearica pavonina Central Af rica 0,19

Grey crowned crane

Balearica regulorum Souteast Af rica 0,06

Demoiselle crane

Anthropoides virgo Central Asia 0,02

Blue crane Anthropoides paradisea Southern Af rica 0,1

Wattled crane

Bugeranus carunculatus Southeast Af rica 0,23

Siberian crane

Grus leucogeranus Asia 0,35

Sandhill crane

Grus canadensis North America 0,01

Saurs crane Grus antigone Southeast Asia 0,05

Brolga crane Grus rubicunda Australia 0,04

White-naped crane

Grus vipio East Asia 0,21

Eurasian crane Grus grus Europe, Asia 0,02

Hooded crane

Grus monachus East Asia 0,17

Whooping crane

Grus americana North America 0,35

Black-necked crane

Grus nigricollis Himalaya 0,16

J apanese crane Grus japonesis East Asia 0,29

Applying Weitzman’s measure on cranes (from Weitzman, 1993):


*Bevarandediagnostik för tranfamiljen: Species Probability of

Extinction in 50 years

Marginal diversity Elasticity of diversity (% increase in diversity from 1% decrease in probability of extinction)

Black crowned Crane (Africa)

0.19 8.7 11.3

Grey crowned Crane (Africa)

0.06 14.1 5.8

Demoiselle crane (Asia)

0.02 7.0 0.9

Blue crane (Africa)

0.10 4.8 3.3

Wattled crane (Africa)

0.23 7.8 12.3

Siberian crane (Asia)

0.35 10.3 24.6

Sandhill crane (North America)

0.01 11.1 0.8

Saurus crane (Asia)

0.05 4.7 1.6

Brolga crane (Australia)

0.04 6.5 1.8

White- naped Crane (Asia)

0.21 9.2 13.1

Eurasian crane (Eurasia)

0.02 1.3 0.2

Hooded crane (Asia)

0.17 1.4 1.6

Whopping crane (North America)

0.35 4.5 10.7

Black- necked Crane (Asia)

0.16 5.8 6.3

Red- crowned Crane (Asia)

0.29 2.9 5.7

Sum 100 100


Some analytical conclusions:

Compare the Sandhill crane and the Whopping crane (bothNorth American species). Although the marginal diversity ofthe Sandhill crane is larger, a dollar is better placed on theWhopping crane since it is more endangered.

The Siberian crane has very high elasticity of diversity, andtherefore very high conservation potential. Combinesuniqueness with high probability of extinction.

Note that the above table gives no information about themarginal cost of decreasing the extinction probability – anecessary piece of information to complete an economicanalysis.

Today, instead of making a systematic trade-off betweenuniqueness and extinction risk, we simply wait until a species ison the brink of extinction and then decide to save it, almostregardless of the cost.

It makes sense to look hard at indicators such as expecteddiversity gain per conservation dollar.


Conserving species for genetic prospecting

*A commong argument is that biodiversity is important as a source for future medical drugs – genetic prospecting.

*In USA almost 25% of all prescribed medicin contain active ingredienses from plants.

*As a source of clues in agricultural and medical research and certain other areas natural organisms are very hard to replace. In this sense there is simply no substitute for biodiversity as a wholes.

*However, the decision is usually marginal – should a marginal hectare of rain forest be cut down or conserved for genetic prospecting? In such a situation it is not the huge value of all biodiversity in the tropics that counts, but the benefits and cost for genetic propecting on the margin.


*The expected value of preserving a marginal hectare for genetic prospecting depends on: 1) The expected value of the medical drug 2) The probability that the source of the drug is in

that marginal hectare. Even if 1) is high the probability in 2) is very low unless the number if alternative hectares of rain forest are low. A variant of the ”water- diamond paradox”. Conclusion: This type of argument doesn’t hold up, other benefits are more important on the margin, like the benefits of ecosystem services and existence values.


Ecosystem services• In the Millennium Ecosystem Assessment ecosystem services are devided into four different categories: supporting, regulating, cultural och providing.

• Supporting (understödjande): ecosystem functions that serve as a kind of base and are essential for other functions. Can be nutrient and water circulation.

• Regulating (reglerande): more specific functions, e.g. pollination, air and water purification.

• Cultural (kulturtjänster): all use for emotional wellbeing, e.g. estetic and recreational values.

• Providing (tillgodoseende): the most obvious ecosystem services, like food and raw materials, which become goods.


A framework for valuing ecosystem services


Three challenges in valuing ecosystem services


Challenge 1

• To understand the ecological system and how it contributes to goods and services that benefits humans.

• To understand how changes in the ecosystem leads to changes in the production of these goods and services.

• The ”ecological production function”.


Challenge 2

• To understand the value of the goods and services that the ecosystem produces.

• To understand the distributional effects – who gets the ecosystem services?

• The ”value of ecosystem services”.

• Some have market prices, but many have not.

• Today few non-market priced ecosystem services have been valued.


Challenge 3

• An integrated analysis – to combine ecology (and other natural sciences) with economics and other social sciences) in an integrated analysis.

• To convert this analysis to policy recommendations.

• Much of this research remains to be done.


Conservation strategies


Conservation strategies• Assume we have decided on a goal and we have an operational definition of this goal.

• How can we:• Maximize the goal fulfillment given limited resources

(cost-efficiency analysis.

• Reach a socially efficient outcome (CBA).

• Conservation strategies can imply:• Land-use changes

• Control of invasive speciesKontroll av invasiva arter

• Harvest policies

• Emission control


Cost-efficient conservation strategies• Is focused on habitat conservation through the creation of reservations/protected areas.

• More known as:THE RESERVE SITE SELECTION

PROBLEM(RSSP)


*RSSP is based on the idea that the only way to conserve biodiversity is to establish protected areas. *The baseline assumption is that today’s reserve system is inoptimally chosen. Historically researvations have of ten been established because: The opportunity cost was low since the land had f ew competing

uses. This can explain why many protected areas have been established in the mountain region, while a relatively small share of the nature in southern Sweden has been protected. Similar trends can be f ound in other countries.

Estetic reasons may have been important. A certain nature area

may have been protected because of a majestic waterf all or some strangely shaped rocks were there. This type of nature conservation can be motivated on recreational grounds.

Other reasons. The recreational needs of citizens in large cities

can motivate the establishment of protected areas near such cities. Chance can also play a role, like if areas have been donated to the state.


Land area of Sweden divided in ownership categories and geographical areas, share in reservations (% res), according to the Swedish National Forest Inventory


Guiding principles behind a reserve network

Complementarity. With limited resources to establish new reservations they should be chosen to complement already existing ones. Reservations in mountain regions can be complemented with reservations in the forest land, reservations in the northern part of a country can be complemented with reservations in the southern part, etc. Together the reservations can encompass most nature types in a country.

Flexibility. Often several sites can fulfill the same biodiversity goals. One should therefore not be locked at certain areas in say, the mountain region, if there are substitute sites that give the same protection of biodiversity.

Irreplaceability. Certain areas may be irreplaceable in a reserve network, for instance in the sense that certain threatened species only exist in a certain area. For these areas no substitutes exist and complete coverage of all threatened species cannot be achieved (in the sense that they are represented in the reserve network) cannot be reached unless they are chosen.


*The problem – called the Maximum Coverage Problem (MCP):

Find a set of reserves that ”covers” as many species as possible in as small an area as possible (MCP1).

Maximize the number of ”covered” species within a given budget, where different areas have specific cost associated with setting them aside (MCP2).

*Information requirements: -MCP1: A geographical species data base.

-MCP2: As in MCP 1 + a geographical land value data base.


Example of a geographical species data base.

Species 1 Species 2 ………. Species n

Area 1 1 0 ………. 1

Area 2 0 1 ………. 1

:

:

:

:

:

:

:

:

Area m 0 0 1


*One way to fi nd the optimal solution is through integer programming using branch-and-bound algoritmer computer intensive method if the number of species and/ or areas is large. *A number of heuristic ( approximative) algorithms exist, which can fi nd a nearly optimal solution.

The Greedy Algorithm: First choose the area with the most species, then the area with the most species that didn’t exist in the fi rst area, and so on.

The Rarity Algorithm: Weigth each species by 1N j

, then

choose the area with the largest sum of “species weights”. Remove the “covered” species f rom the process and redo the iteration.


Simple example: choose 2 out of 4 areas as reserves

A och B är hotspots.

According to the Greedy Algorithm we should choose either A or B, then either C or D

But the obvious optimal choice is C and D.

Illustrates the importance of complementarity.


*the Oregon study – some results: -Optimal solution: 90% of the species could be covered with 5 areas out of 441, i.e. 1,1% of the area of Oregon. All the species could be covered with 23 areas out of 441, 5,2% of the area of Oregon. The Greedy Algorithm was nearly optimal when only a f ew areas could be selected, so that

not all species could be covered.

• The Rarity Algorithm was nearly optimal when it came to covering all species (24 areas

rather than the optimal 23 was needed).


250

270

290

310

330

350

370

390

410

430

450

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Antal områden i reservatsnätverket

An

tal

rep

rese

nte

rad

e ar

ter

Girighetsalgoritmen

OvanlighetsalgoritmenOptimal lösning - heltalsprogrammering

Species accumulation curves


The Rarity Algorithm gives high weight to unusual species.

There is not only one but 144(!) optimal solutions.

How come? Several areas are perfect substitutes to each other.

But 19 of the 23 areas appear in all the 144 solutions and are thus irreplaceable in a reserve network.


Irreplaceability values for Oregon reserves.


*I f costs are included the problem changes (MCP2): Max yi

i I

. (1)

s t x y i Ijj N

ii

. . (2)

c x Bj jj J (3)

yi = species i I = tot. number of species x j = area j

J = tot. number of areas N Ji = areas where species i exist, subset of J c j = cost f or conserving area j

B = budget restriction


*Example - County USA study (Ando et al., 1998, Science)

*Based on occurrence data on the 911 species

That are listed under the Endangered Species Act.

*USA has 2851 counties. Land value = value of agricultural land.

*Assumption: Species are evenly distributed within a county. I t is therefore

Enough to conserve arbitrarily large area in every chosen

county. The size of this area does not influence the choice of

counties.

*Results: The cost of conserving 50% of the threatened species is only

7,5% of the cost of conserving all of them.

Reason: To conserve all threatened species some counties

with extremely high land values, like

San Fransisco county must be included.


Concluding thoughts


Conservation and economics

Economic research has much to contribute with when it comes to making rational decisions in conservation issues, for instance through cost-efficiency analyses and CBA.

Conservation biology – an established research field.

In a similar way one could talk about Conservation economics as a research field.

There are many challenges:

To measure the value of ecosystem services

To measure existence values

To integrate realistic ecological models with economics

Spatial issues (migration, reserve site selection, etc.)

Species interactions (predator-prey models under human harvesting, competition, etc.)


Conservation and economics (continued)

More challenges:

Irreversibilities (extinction etc.)

Incorporate climate change

Technological development

This requires cooperation between economists and ecologists!

Göran Bostedt Dept. Of Forest Economics SLU

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