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The Private and Public Insurance Value of Conservative Biodiversity Management

  • Abstract. The ecological literature suggests that biodiversity reduces the variance of ecosystem services. Thus, conservative biodiversity management has an insurance value to risk-averse users of ecosystem services. We analyze a conceptual ecological-economic model in which such management measures generate a private benefit and, via ecosystem processes at higher hierarchical levels, a positive externality on other ecosystem users. We find that ecosystem management and environmental policy depend on the extent of uncertainty and risk-aversion as follows: (i) Individual effort to improve ecosystem quality unambiguously increases. The free-rider problem may decrease or increase, depending on the characteristics of the ecosystem and its management; in particular, (ii) the size of the externality may decrease or increase, depending on how individual and aggregate management effort influence biodiversity; and (iii) the welfare loss due to free-riding may decrease or increase, depending on how biodiversity influences ecosystem service provision.

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Author:Stefan BaumgärtnerORCiDGND, Martin F. QuaasORCiD
URL: https://pub-data.leuphana.de/frontdoor/index/index/docId/444
Document Type:ResearchPaper
Year of Completion:2006
Date of Publication (online):2006/11/22
Release Date:2006/11/22
Tag:biodiversity; ecosystem management; free-riding; insurance; public good
GND Keyword:Ökosystem; Versicherung; Haftpflichtrisiko; Öffentliches Gut
Institutes:Universität / Frühere Fachbereiche
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft