The private and public insurance value of conservative biodiversity management

Stefan Baumgärtner and Martin Quaas

No 27/2005, UFZ Discussion Papers from Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS)

Abstract: The ecological literature suggests that biodiversity reduces the variance of ecosystem services. Thus, conservative biodiversity management has an insurance value to risk-averse users of ecosystem services. We analyze a conceptual ecological-economic model in which such management measures generate a private benefit and, via ecosystem processes at higher hierarchical levels, a positive externality on other ecosystem users. We find that ecosystem management and environmental policy depend on the extent of uncertainty and risk-aversion as follows: (i) Individual effort to improve ecosystem quality unambiguously increases. The free-rider problem may decrease or increase, depending on the characteristics of the ecosystem and its management; in particular, (ii) the extent of optimal regulation may decrease or increase, depending on the relative size of private and external effects of management effort on biodiversity; and (iii) the welfare loss due to free-riding may decrease or increase, depending on how biodiversity influences ecosystem service provision; it increases, unless higher biodiversity greatly decreases the variance of ecosystem services.

Keywords: biodiversity; ecosystem services; ecosystem management; free-riding; insurance; public good; risk-aversion; uncertainty (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: The Private and Public Insurance Value of Conservative Biodiversity Management (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ufzdps:272005

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