Economic aspects

II. Economic aspects

Biodiversity as an economic good

Economic science (see module Object of Study of Economic Science) studies the satisfaction of human needs by scarce means which have alternative uses. Hence, biological diversity can be considered an economic good, provided it (1) can be used to satisfy human needs, (2) is scarce, and (3) has alternative uses. A few selected examples will be presented in the following to demonstrate to what extent the above-mentioned criteria can be applied to biodiversity.

(1) Satisfaction of human needs

On the one hand, biological diversity provides mankind with essential resources for sustainable food (see module Food) security, for the development of new medicines (see module Medicines) and for the discovery and development of industrial raw materials (see module  Industrial Raw Materials) on the other hand, biodiversity plays a major role in the fields of bionics (see module Bionics) and bioindication (see module Bioindication). Furthermore, the so-called ecosystem services (II) (see module Ecosystem Services II) are of major direct or indirect importance for agricultural and industrial production processes. In addition to its being utilised for economic purposes, biodiversity is also associated with aesthetic and recreational values, which are difficult to measure in a commercial sense. The beauty of plants and animals, for example, is appreciated by many people who use the natural environment to go on a trip or on holiday.

(2) Scarcity and (3) alternative uses

In economics, scarcity of a good basically means relative scarcity compared to other goods, supposing that the goods are, to a limited extent, substitutable. Against this background, scarcity always has to be considered as a problem of exchange: in order to obtain an additional unit of one good, a certain amount of other goods must be spent (money, consumer goods, time etc.). The focus of economic science on the problem of relative scarcity has also influenced the way in which biodiversity is perceived in economics: in this context, relative scarcity means that the provision or the conservation of biodiversity necessarily involves (opportunity) costs. Thus, the creation of additional biological diversity, e.g. by setting up biotopes, requires the renunciation of other goods, such as money or alternative uses of the area where the biotope is established. 

 
The economic value of biodiversity

The total economic value of biodiversity consists of both use and non-use values. Use values are generated from the actual or potential use of an economic good and can be broken down into direct use value(see module Direct Use Value), indirect use value (see module Indirect Use Value), and option value (see module Option Value). The attribution of non-use values to a good, on the other hand, is not related to a potential use; non-use values include: perceived use value (see module Perceived Use Value), bequest value (see module Bequest Value), and existence value (see module Existence Value).

 
The contribution of economics to the protection of biological diversity

Since the rapid loss of biological diversity (see module Biodiversity Loss) over the last decades has led to increased public awareness, efforts to analyse the available options for the conservation of biological diversity by applying economics have intensified. In consideration of the fact that a comprehensive protection of the existing biodiversity cannot be achieved due to natural, economic, legal and political constraints, the establishment of well-thought-out priority lists (see module Priority Lists) of species that deserve protection plays a particularly significant role. In addition, economics contributes to the political implementation of protection and conservation concepts by providing instruments to create incentives (see module Economic Incentives).

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