Göran Bostedt Dept. Of Forest Economics SLU

1. ECONOMIC ASPECTS ON THE CONSERVATION OF BIOLOGICAL DIVERSITY Göran Bostedt Dept. Of Forest Economics SLU

2. 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.

3. 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.

4. 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

5. The story of two conventions... • 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?

6. The story of two conventions... • Two aspects can help to explain the difference: • The link from human activities to environmental changes. • The link from environmental changes to human welfare.

7. Climate change • Link from human activities to environmentalchanges: • Emissions of greenhousegases cause increasingatmosphericconcentration of thesegases – this is uncontroversial. • Increasingconcentration of greehousegasesleads to climatechange - in principleuncontroversial, but the question is how fast. • Link from environmentalchanges to human welfare: • List is long: Sea levelchanges • Increased storm intensity • Chnages in rainfall, with drought in someplaces

8. 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 trees • Ain't running out of nothing in my deep freeze • It's casual entertaining - we aim to please • At my parties • (Dire Straits)

9. 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.

11. Factors behind the loss of biodiversity Habitat destruction Invasive species Pollution (including Climate Change) Population Overharvesting

12. 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.

13. 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).

14. Plants in some countries • Developing countriesVascular plantsLand 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

15. 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

16. 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

18. 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.

19. Beyond species richness – taking uniqueness into account • One can argue that species without close relatives should be prioritized: uniqueness is valuable

20. A genetic diversity measure can also be based on pairwise distance, for instance in DNA*Applying Weitzman’s measure on cranes (from Weitzman, 1993):

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

24. 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.

26. 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.

27. A framework for valuing ecosystem services

28. Three challenges in valuing ecosystem services

29. 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”.

30. 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.

31. 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.

32. Conservation strategies

33. 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

34. 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)

37. 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.

38. *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.

41. 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.

44. 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.

50. Concluding thoughts