The economic value of biodiversity: a scoping paper
Professor Jeff Bennett
Asia Pacific School of Economics and Government
The Australian National University, October 2003
9. Delivering biodiversity values
Whist biodiversity value estimation has struggled to get past the issues raised in the previous section and achieve a higher policy profile, the economic analysis of delivering biodiversity values to society has progressed rapidly in the last decade. This has been achieved through the development of policy tools that provide incentives for people to provide biodiversity values.
The predominant mechanism for delivering public goods – including biodiversity – has been government provision. In the case of biodiversity this was achieved through the creation of a network of parks and nature reserves. However, in recognition that such a ‘patchwork’ approach would not provide functional biodiversity protection (resilience) more policy emphasis has been put on biodiversity protection on privately owned land. Economists have provided assistance in this endeavour by bringing to the fore a suite of policy measures broadly known as ‘market based instruments’. These measures involve the use of financial incentives to promote biodiversity protection. They include the payment of targeted subsidies, the levying of taxes on biodiversity destructive practices and the introduction of trading and banking schemes in which property rights to biodiversity are created and then bought and sold amongst people who can supply biodiversity (for example, land owners) and those who want biodiversity (for example, society, as represented by their government, conservation clubs, and developers who want to use biodiversity in their development activities).
The advantage of using market-based instruments is that they are able to deliver biodiversity values to society at the lowest cost. They ensure cost-effective delivery. What they do not ensure is that the level of biodiversity protection delivered to society is the most efficient level. In other words, the level of biodiversity protection that is targeted by the market-based instruments may be either too little or too great. The decision regarding the efficient level of biodiversity protection requires the input of valuation information. It is only with value estimates that society can be assured that the additional benefits of biodiversity protection are worth the additional costs.