ECONOMICS OF SPECIES EXTINCTION

1. ECONOMICS OF SPECIES EXTINCTION “Extinction is an economic problem precisely because it is a resource allocation problem”

2. Clark Model (1973) • Takes into account: • Extinction of individual well-recognised species • Biodiversity loss • Based on 3 factors: • Open access to resource • Relative price to cost of harvesting the resource • Relative growth rate of the resource

3. Policies derived from Clark´s Model • Decrease the price of the resulting products • Increase the costs of the production process • Criminalisation of the production process • Example: African Elephant • Little to be done affecting resource growth rates or habitat conditions

4. Timothy Swanson´s Model • Although these policies, the world was heading toward a period of severe mass extinctions • Investment based model • Species as a productive asset Conclusion Slow growth rates relative to other assets in the economy is a route to species extinction.

5. Humans control basic necessities to survive: food, water, light, air,... EXTINCTION AS A HUMAN RESPONSIBILITY Bioeconomic model: Investment on resources for the survival of the species or competing uses for the resources????????????????????

6. Logistic Growth Function: H (x) = x(R-x) H (x): flow from a stock X: existing stock R: available carrying capacity - Niche to be filled: energy to fill it - Niche is filled: energy to maintain it “Growth rate is linked to the available niche”

7. Revise model of extinction • Best alternative use of the resources: implicide cost. “If a species is using some resources, it must be able to afford a competitive return of them” Marginal rate of return

8. Revised model of extinction • Three routes of extinction: • Stock disinvestment • Management resources diversion • Base resource conversion

9. Stock disinvestment • Resources with HIGH VALUE and LOW GROWTH • Invest the funds in other assets???????? • ‘Resource mining’ Deforestation of the tropical hardwood forests

10. Management resources diversion • Resources of MEDIUM VALUE and LOW GROWTH • Not individual investment or commitment of public resources • Species used for trading African elephant, rhinoceros, wild birds

11. Base resource conversion • LITTLE OR UNKNOWN individual VALUE to humans • Better alternatives for resources • Land is being deforested and changed into other forms of use. Unknown life forms such as plants and insects

12. Conclusion • Biological resources into economical resources • Species which are worthy to survive • Key of extinction: HUMAN INVESTMENT

13. THE UNDERLYING CAUSES OF BIODIVERSITY DECLINE

14. The causes of biodiversity decline are many and diffuse. • Even in the absence of human pressures. • There are several natural mechanisms that can result in biodiversity loss or species extinction. But our interest lies in human induced processes.

15. Each of the following processes can induce biodiversity decline: • Land conversion away from high diversity supporting uses • Exploitation of wild species (overexploitation) • Introduction of exotic species into new environments • Homogenisation of agricultural practices • Air, water and ground pollution • Climate change.

16. Extinction in the context of marine resources : Overexploitation is the main causefishing and hunting oceanic species at unsustainable levels. Open access resource was likely to be unsustainable if two conditions occur: • The prices/cost ratio of harvesting the resource was high. • The natural growth rate of the resource was low.

17. Extinction in the context of terrestrial resources: • No reason to adopt an open access regimeone nation has the responsibility of the territory. • The regulation of natural resources is an investment decision It cannot be assumed that all existing resources are going to be protected. SELECT The choice on how to allocate the resources determines which species will proliferate an which will perish.

18. Three routes to extinction for terrestrial species: • Diversion of supporting capital: high price/cost ratios but low growth rates. • Divestment of capital: low growth and net value low. • Conversion of capital: little or no known value.

19. MODELLING SPECIES EXTINCTION: THE CASE FOR NON-CONSUMPTIVE VALUES (By Robert R. Alexander)

20. OBJECTIVE To come up with a bioeconomic model of species extinction STEPS 1º)The causes of why certain species don´t tend toward extinction based in tha Clark & Swanson theories 2º) The conceptual model based on non-consumptive values 3º) Implications for species extinction Example: The African Elephant model

21. 1- THE CLARK MODEL • Clark based his models of extinctiion on Gordon´s seminal fisheries model • Extinction of species results from three factors • having open access to the resource • relationship between price and marginal cost of nesting the resource • growth rate of the resource relative to the discount rate • If price always overpaseses unit cost, and if the discount rate is large enough, then, maximizing rate is relative to the grotwh rate, so the larger the discount rate, the lower the growth rate

22. 1- THE CLARK MODEL • Problems: • Sine ivory is the principal resource making the elephant valuables, eliminating the markets for ivory tends to remove one of the major incentives to protect these species • The revenues used to protect the elephants are now not available; this reduces its stock value and reduces its availabillity to compete against alternative usses of land

23. 2- THE SWANSON MODEL • Swanson proposes ways to adpat this model to terrestrial species • He includes resources coming from the erath taht are needed by the endangeres specie´s survival. • Terrestrial species have to generate growth to compete with other capital opportunities and to compete with the opportunity costs of resources they need for survival

24. 3- THE CONCEPTUAL MODELS • Clark and Swanson models consider only the consumptive value • But some of the values of many species are non-consumptive • Tourism use value and non-use existence value.

25. 4- IMPLICATIONS FOR SPECIES EXTINCTION • The Africant Elephant... • The elephant growth rate has to be equal of return on capital at some positive level • But it is hard to keep the equation equal • We cannot change the growth rate of the elephant. • Since the population growth in Africa is expected to double by 2050, this will increase the cost of the land for wich the elephant must compete, wich, turnos out to be the biggest threat to the survival of the elephant

26. SUMARIZING.... • These models demonstrate tha we have to consider both, consumptive and non-consumptive values, when exploring the potencial that endangeres species have to compete succesfully for the resources they need to survive

27. PRESENT- VALUE MAXIMIZATION RESULTS IN EXTERMINATION OF THE RESOURCE?

28. INTRODUCTION TO THE MODEL • Bioeconomic model: mathematical model for the commercial exploitation of a natutural animal population • Assumptions: • Equilibrium population level, Rent- maximitation level, Maximum- yield level and the zero equilibrium population • Notion of a reproduction curve • Fix price • Unit cost depens only on populaion size

29. PROCESS THAT FOLLOWS THE EXPLOITATION 1. Stage of expanding harvest 2. Increase of the exploitation 3. Solutions are required • Conservation mesures are taken quite rapid • Action is taken too late

30. CONCLUSION EXTINTION MAY RESULT FROM PRESENT VALUE MAXIMIZATION

31. CONCLUSION • The main conclusion of the analisys is that exploitation leads to economic inefficiency and sometimes to the over-exploitation. However, few studies consider explicity the possibility of complete extermination of population. • THE MODEL IS NOT A WELFARE MODEL; we can not afirm that the extintion is socially optimal.

32. THE CASE OF THE ANTARTIC BLUE WHALE • In 1964 the Committee of Three estimated that the population would increase by 10% annually; an annual discount rate of 21% would be enough to cause the whalers to prefer extinction to conservation. • The IWC was unable to adopt regulations to prevent near complete extermination of the blue whale.

33. THE CASE OF THE ANTARTIC BLUE WHALE • Fortunatly, in 2003 the IWC suggested that the number of Antartic blue whales may have been risen from about 500 animals a quarter of a century ago to around 1.500 then. The committee agreed that there was evidence for an increase in blue whales, but without enough time to analyze the situation, it was not possible to accept specific estimates of abundandce and trends.

34. THE AFRICAN ELEPHANT CASE

35. THE AFRICAN ELEPHANT • Elephants are all across Africa • From Savannahs to rain forests • Adult male: 12.000 pounds • Social behaviour remains the same • Adult males leave at the age of 14 • The whole herd prtects the children

36. THE AFRICAN ELEPHANT • Famous for their big ivory tusks • Problem of poaching • 1977: 1,3 million elephants • 1997: 600.000 remained • Two big issues: Poaching problem and limited trade of ivory

37. THE AFRICAN ELEPHANT:Problems and Solutions • Increasing population of Africa and lack of land to eat • Ways to keep elephants out of the crops • Sport Hunting • Solution: Green Hunting • GPS and fake tusks