Assigning
Economic Value to Biodiversity
By:
Nandita Singh
Biodiversity
refers to the diversity of life in all its forms and all its level of
organisation, not just plant, animal and microorganism species. At its most
elemental level, biodiversity, encompasses the varied assemblages of organic
molecules that comprise the genetic basis of life. On the other end of the
spectrum there are biomes- the vast stretches of tundra, desert, forest, ocean,
etc. In between come-population, race, sub-species, community, ecosystem.
Why is
biodiversity important?
For many
people the very questioning of the worth of biodiversity is illicit. They would
argue that humankind has a moral obligation to conserve biodiversity, an
obligation that comes with the fact that humans have the capability to destroy
much of that biodiversity. Others find a religious support for such a view
there is some stewardship responsibility on behalf of some deity. One problem
with these moral views is that they often conflict with other moral views
about, say, the right to earn a living, the right to have access to basic needs
such as food, cloth and shelter, and so on. If conserving biodiversity
conflicts with those rights, then some ‘meta-ethical’ principle is required for
deciding which moral view should prevail.
One aspect
of the process of changing popular perceptions about biodiversity resources is
to show that the sustainable use of biodiversity has positive economic value
and that this economic value will often be higher than the alternative resource
uses which threatens biodiversity.
Valuing
biological diversity conservation
The issue at
hand concerns the measurement of natural capital, great difficulties arise in
assigning values to natural capital precisely because the market in which it is
traded are limited.
In the past
few decades a number of techniques have been developed to place monetary value
to the benefits of conserving an area for biodiversity. Some rely on market
prices of related goods and services both to value benefits and to estimate
costs, while other rely on surveybased approaches to infer values.
Hedonic
pricing method
Property
values are affected by a number of variables including environmental quality.
After excluding other variables, including environmental quality, the residual
price difference can then be ascribed, at least theoretically, to differences
in environmental quality, e.g., the increased value of property located next to
natural areas. According to
a report by
Nelson (1982) traffic noise, measured in Leq (equivalent continuous sound
level), a one unit change produces property price depreciation of 0.5 - 1.0%.
Ravel - cost
method
This
approach looks at the pattern of recreation use of a natural parks and uses
this information to derive a demand curve to estimate the total amount of
consumer’s surplus. For example, travel behaviour reveals that Costa Rican
visitors are willing to pay USD 35 per household to visit a tropical rainforest
site in Costa Rica. Foreign visitation is likely to be worth far more than
domestic, as foreign visitors have higher travel costs.
Contingent
Valuation Method
The
Contingent Valuation Method (CVM) bypasses the need to refer to market prices
by asking individuals explicitly to place values upon environmental assets.
This is also referred to as an expressed preference method. An interesting
advantage of the CVM approach is that it can, in theory, be used to evaluate
resources, that people have never visited personally e.g. the Antarctica which
people are " Willing to Pay" to preserve but would not in general ever want to
visit.
Consumptive
benefit method
There are a
number of products which can be harvested on sustainable basis and marketed.
For example, a probable number of higher plant species, which are widely used
as basis for pharmaceutical drugs, is some 500,000. According to Pearce and
Moran (1994) economic value of these plants can be approached by looking at:
(i)
the actual market value of the plants when traded,
(ii)
the market value of the drugs of which they are the source materials,
(iii)
the value of the drugs in terms of their life-saving properties, and
using a value of a ‘statistical life’,
(iv)
the lost pharmaceutical value from disappearing species.
As there is
absence of ‘global markets’ in the benefits of biodiversity, the developing
countries face major problems of appropriating the global benefits of
sustainable use of biodiversity. As long as these global values cannot be
captured by host countries, biodiversity will be a risky investment in many
contexts.
Dr. (Mrs.) Nandita Singh is a scientist at the National
Botanical Research Institute, Lucknow - 226001 (India) |