Viewpoint

What is the "Value" of Biodiversity?

By David M. Forsyth

The term "biodiversity" refers to Earth's collection of unique species. Interactions between these species and the physical environment produce ecosystems, which provide both goods (like food) and services (like waste assimilation) essential to human survival.

Species are going extinct at an unprecedented rate. Moreover, extinctions are expected to become more frequent as human activity affects an ever-increasing proportion of the biosphere. But, if biodiversity is so valuable, why are we letting so many species go extinct? Understanding how society values biodiversity can help both to explain the current extinction crisis, and to suggest how future losses might be minimised.

One means of assessing the value of biodiversity is through the commercial marketplace. This is a good place to start because it is here that decisions are made, on a daily basis, that determine the survival -- or not -- of species.

Economic value is merely a measure of the relative worth of goods and services in the marketplace. Economies could not function without the services of ecological life-support systems, so the total economic value of all biodiversity must be infinite. Humans could not survive without biodiversity.

Until recently, biodiversity was thought valuable because it might harbour products, as yet unknown, that would be useful to humans. However, of the 7-10 million species alive today, only a tiny fraction are expected to possess medicinal or otherwise useful compounds.

The economic value of specific ecological services has been estimated, albeit crudely. A recent study, published in Nature, estimated the minimum annual value of the services that Earth's ecosystems provide to be US$33 trillion (10¹²) per year, or about double the annual global gross national product. Examples of these ecosystem services are climate regulation, waste treatment, pollination, natural pest control, and the production of food and raw materials. Many recreational and cultural activities also utilise biodiversity.

However, most of these services are essentially free to the commercial market. The study concluded that if ecosystem services were actually paid for in terms of their contribution to the global economy, then the global price system would be very different from what it is today. The price of anything that depends on ecosystem services would be far higher.

How many species can be lost before these critical life-supporting functions are affected?

Quite simply, nobody knows. The effects of incremental losses of species are difficult to predict. Some species can be lost with no apparent impact on ecosystem services, yet the loss of others is likely to have tremendous impacts. At some unknown threshold the loss of species is likely to have widespread and probably irreversible impacts on the human economy.

In the short term, it is seldom in the best economic interest to conserve species and habitats. Indeed, when a natural resource grows slower than money in the bank, the most profitable strategy is to convert the resource to capital. (This truism was responsible for the massive over-exploitation of slow-growing stocks of whales earlier this century.)

To compound the problem, government incentives often encourage development. The resulting loss of habitat is the major cause of modern extinctions. If biodiversity continues to be chronically undervalued in the marketplace then the rate of extinction is unlikely to be reduced.

One response to habitat loss involves protecting land in reserves. However, it is easiest to protect areas that humans can derive little economic benefit from, so reserves seldom protect the most threatened species. Even the act of reservation does not necessarily protect species. Some reserves are too small for particular species to survive in, and human activities at the edges can erode the value of others.

Biodiversity is increasingly being recognised for the options it provides to future generations. The outcome of most short-term economic evaluations of the worth of species and natural areas is a loss of biodiversity, and hence a reduction of options for the future. Unfortunately, modern theories of justice give little regard to what we owe future generations and how our actions now might compromise options in the future.

What does the present generation owe to future generations in terms of promoting and preserving biodiversity? If we have a responsibility to maintain Earth's life-supporting ecological services, minimising the loss of biodiversity is crucial to achieving that goal.

Not knowing the impacts of incremental losses of species is not a reason for inaction. When an activity has great risk the best tactic is to avoid that activity. Given our current state of knowledge, minimising the loss of biodiversity is the only sensible action. There are many proponents of market solutions to concerns about biodiversity. Commercial markets value only the preferences of the current generation and disregard the options available to future generations. Furthermore, commercial markets largely ignore the contribution of biodiversity to the production of economic goods and services, thereby reducing the incentive to conserve species and their habitats. Commercial markets, in their present form, are unlikely to protect biodiversity.

The above arguments presuppose that biodiversity is a market good, the value of which should be determined in the commercial world. Biodiversity can be considered a non-market good, like the air that we breathe. The use of non-market goods is characterised by government legislation to enforce standards for the general good of society. Legislation such as the United States' Endangered Species Act indicates that some governments already treat biodiversity as a non-market good. Thus, government actions can also conserve biodiversity.

When the market fails to meet the values or best interests of society, governments legislate. That is why we have anti-monopoly and anti-pollution laws. Yet, because biodiversity is not fully valued in commercial markets, the goal of conserving species is given little weight in policy decisions.

The life-supporting capacity of Earth will be reduced if species continue to be lost at the current rate. Although many nations already have laws designed to conserve species and their habitats, there are compelling arguments for stronger government action to minimise the global loss of biodiversity.

David M. Forsyth is a New Zealand Science and Technology Post-Doctoral Fellow at the Centre for Biodiversity Research, University of British Columbia, Canada.