david pearce and the economic valuation of biodiversity david pearce was a pioneer in the economic valuation of biodiversity his work powerfully influenced both later economists who worked in the field and natural scientists and practitioners who gained and appreciation of the importance of economics to their efforts pearce often applied the paradigm of demonstration followed by appropriation the values of biodiversity must first be demonstrated to those who make decisions concerning its survival and then appropriated by them the later step will be possible when market and policy failures are rectified so as to allow the realization of conservation values while pearce wrote extensively on these themes he was also acutely aware of the limitations of the paradigm rosy projections of values that could not be realized and appropriated would be of little practical use and pearce often cautioned against excesses of optimism yet he also clearly believed that there are compelling if not always easily demonstrated reasons for conservation i argue in this paper that pearce s seminal work on the valuation of biodiversity cannot be understood without some appreciation of his philosophical perspective pearce would have described himself as a pragmatist however his pragmatism was grounded in the belief that it is both expedient and ethical to recognize that communities in some of the poorest corners of the world will only conserve biodiversity if they are justly compensated for the sacrifices they must make to do so

the expansion of modern agriculture and global biodiversity decline an integrated assessment the world is banking on a major increase in food production if the dietary needs and food preferences of an increasing and increasingly rich population are to be met this requires the further expansion of modern agriculture but modern agriculture rests on a small number of highly productive crops and its expansion has led to a significant loss of global biodiversity ecologists have shown that biodiversity loss results in lower plant productivity while agricultural economists have linked biodiversity loss on farms with increasing variability of crop yields and sometimes lower mean yields in this paper we consider the macro economic consequences of the continued expansion of particular forms of intensive modern agriculture with a focus on how the loss of biodiversity affects food production we employ a quantitative structurally estimated model of the global economy which jointly determines economic growth population and food demand agricultural innovations and land conversion we show that even small effects of agricultural expansion on productivity via biodiversity loss might be sufficient to warrant a moratorium on further land conversion

multinationals productivity advantage scale or technology this study decomposes the productivity advantage of foreign multinationals into a technology and a scale effect and analyses the causal relationship between foreign ownership and these two components this is done by analyzing the effects of an acquisition of a domestic establishment by a foreign multinational using a combined propensity score matching and difference in differences estimation the main results show that any positive impact of acquisition is predominantly due to changes in technical efficiency and not in scale and that the preacquisition productivity of the target plays a role in mediating the rate of technology transfer from the multinational jel f23 l22

search bioprospecting and biodiversity conservation abstract to what extent can private sector bioprospecting incentives be relied upon for the protection of biological diversity the literature contains dramatically different estimates of these incentives from trivial to quite large we resolve this controversy by isolating the fundamental source of the discrepancy and then providing empirically defensible estimates based on that analysis results demonstrate that the bioprospecting incentive is unlikely to generate much private sector conservation thus other mechanisms are likely required to preserve the public good of biodiversity

modelling the joint determination of household labour supplies and commodity demands in addition to choosing the allocation of total expenditure between commodities households may also be able to make decisions over the allocation of their time between market work and leisure in both theoretical and empirical work it has often been the case that these decisions have been analysed separately in this paper we stress the theoretical attractions of considering the joint determination of the allocation of time between work and leisure and the allocation of total expenditure between commodities in a utility maximising framework using a sample of individual households we attempt to evaluate the empirical importance of the joint determination model over the separate determination of labour supplies and commodity demands our approach follows that of abbott and ashenfelter i976 phlips i978 barnett i979 deaton and muellbauer i980 and atkinson and stern i980 here we pay particular attention to the following four important aspects of household decision making over commodity demand and labour supply the first concerns the commonly assumed restriction on the household s preferences of weak separability between goods and leisure this assumption allows the estimation of commodity demand systems and engel curves that exclude wage rate variables in cross section household budget data with large variation in wage rates across the sample the invalidity of this assumption would involve a serious mis specification any correlation between the excluded wage variable and the included price income and demographic variables would lead to biased parameter estimates and hence biased estimated elasticities similarly this assumption allows the estimation of labour supply curves that exclude relative price variables and its invalidity could produce biased labour supply elasticities a second aspect of household decision making which we wish to highlight arises from the suspicion commonly alluded to in labour economics texts that primary male workers may not be free to choose their hours of work thus we estimate a matched pair of rationed and unrationed systems following the work of neary and roberts i 980 and deaton and muellbauer i 979 the separability restriction is not unrelated to this point since without it we will see that the rationed hours of work enter demand systems in a complex fashion in effect

fdi as an outcome of the market for corporate control theory and evidence abstract much foreign direct investment fdi takes the form of mergers and acquisitions m a it is commonplace in finance to view acquisitions as manifestations of the market for corporate control following on that insight we propose a model of fdi in which headquarters bid to control overseas assets we derive an equation for bilateral fdi stocks that resembles the recently developed fixed effects approach to modelling bilateral trade flows we estimate the model and use its parameters to construct benchmarks for evaluating multilateral inward and outward fdi

spatial distribution of species populations relative economic values and the optimal size and number of reserves we examine the tradeoff between the number and average size of nature reserves when the costs of enforcing reserve boundaries are negligible we find analytically that the relative price of biodiversity has a positive impact on the optimal total reserved area but an ambiguous impact on the optimal number of reserves simulation modeling of floral diversity in a tropical timber concession reveals that the resolution of this ambiguity depends on spatial distributions of the populations of tree species whether or not they are spatially aggregated clumped the impact of biodiversity price on optimal reserve number remains analytically ambiguous when enforcement costs are not negligible multiple reserves being economically superior to a single reserve now requires in addition to aggregation a biodiversity price that is sufficiently high to offset the effects of enforcement costs most of our simulation scenarios generate threshold biodiversity prices that do not exceed a leading estimate of the marginal value of a higher plant species in the bioprospecting literature several smaller reserves evidently can be economically superior to a single larger one even in the presence of enforcement costs

intra industry foreign direct investment we use a new firm level data set that establishes the location ownership and activity of 650 000 multinational subsidiaries close to a comprehensive picture of global multinational activity a number of patterns emerge from the data most foreign direct investment fdi occurs between rich countries the share of vertical fdi subsidiaries which provide inputs to their parent firms is larger than commonly thought even within developed countries more than half of all vertical subsidiaries are only observable at the four digit level because the inputs they are supplying are so proximate to their parent firms final good that they appear identical at the two digit level we call these proximate subsidiaries intra industry vertical fdi and find that their location and activity are significantly different to the inter industry vertical fdi visible at the two digit level these subsidiaries are not readily explained by the comparative advantage considerations in traditional models where firms locate their low skill production stages abroad in low skill countries to take advantage of factor cost differences we find that overwhelmingly multinationals tend to own the stages of production proximate to their final production giving rise to a class of high skill intra industry vertical fdi

more than total economic value how to combine economic valuation of biodiversity with ecological resilience abstract the assessment of total economic value has become a pragmatic and popular approach in nature valuation yet criticisms have been raised one major point of critique is that total economic value bases the monetary value of ecosystems purely on the flow of human benefits of services of ecosystems and consequently ignores questions of sustainable use of natural capital per se this paper explains why total economic value by itself is in principle an inadequate concept to guide sustainable use of ecosystems and gives an overview of essential ecological theory that needs to be taken into account in addition to total economic value to fully include ecosystem sustainability the paper concludes with a framework for combining ecological theory with economic valuation the key elements here are theoretical ecological insights about ecosystem resilience and portfolio theory which offers an economic perspective on investment in biodiversity portfolio theory puts total economic value in a framework where investment in biodiversity is expanded to cover functional diversity and mobile link species in order to maintain ecosystem resilience and so fosters sustainable use of ecosystems

foreign direct investment heterogeneous workers and employment security evidence from germany we analyze how foreign direct investment fdi affects employment security using administrative microdata for german employees measuring fdi intensity at the industry level enables us to take into account the sum of direct effects at multinationals as well as indirect effects of fdi throughout the affected industry we find that both inward and outward fdi significantly reduce employment security this is particularly the case for inward fdi coming from the western part of the european union as well as for outward fdi going to central and eastern europe the effects are sizeable for older and low skilled workers

reconciling conservation and development a dynamic hotelling model of extractive reserves the instrument of extractive reserves has been advertised as a novel approach to reconciling biodiversity conservation and economic development the empirical literature analyzing extractive reserves however delivers an ambiguous assessment of its success this paper asks whether extractive reserves are capable of delivering long term development benefits even in theory the analysis is carried out by assessing the long run viability of an extractive reserve under a set of favorable conditions through a dynamic model of spatial competition we show that for extractive reserves to be even theoretically viable a number of restrictive conditions have to be fulfilled

returns from hay cultivation in fertilized low diversity and non fertilized high diversity grassland recent ecological experiments suggest that theinterannual stability of ecosystem productivitymay be determined by the diversity of organismspresent in the system we investigate whethersuch effects of biotic diversity on ecosystemstability may translate into economic valuesand possibly into an economic argument for themaintenance of biodiversity in managedhabitats applying a stochastic model fromfinancial economics to long term harvest datafrom a grassland ecosystem we examine thepotential insurance value of plant diversityon the stability of yields and economic returnsin a drought sensitive agricultural setting putative insurance premiums priced as putoptions on revenues from hay yield were higherfor fertilized low diversity grassland than forunfertilized species rich glassland from thisperspective the annual insurance value differential insurance premiums required tolock in specific rates of returns of diverseplant communities may amount to 3 50 to 6 00 per acre the results suggest thatincreased costs of risk in species poorfertilized grassland may affect the optimumlevel of fertilization making lower fertilizerinput and concomitantly higher plant communitydiversity more desirable

the effectiveness of access and benefit sharing in costa rica implications for national and international regimes the convention on biological diversity provides an international framework to ensure conservation and sustainable use of genetic resources the realization of these objectives is based on the state s sovereignty over its biological resources and the idea of a fair and equitable sharing of the benefits arising out of the utilization of genetic resources due to the enormous technical progress in biotechnology the demand for genetic resources increases especially within the pharmaceutical industry and the agribusiness whereas the biological diversity and with it the supply of diverse genetic resources decreases the concept of access and benefit sharing takes these developments into consideration and creates a market for biological resources we identify critical factors which can influence the effectiveness of this concept such as assignment of property and intellectual property rights enforcement problems and bargaining power applying these factors to evaluate the access and benefit sharing regime in costa rica we identify the specifications of these critical factors which favor economic development and sustain biodiversity at the same time we then discuss possible lessons of the costa rican experience for other biodiversity rich countries

valuation of natural resource improvements in the adirondacks for 20 years acid rain in the adirondack park has been a central issue in the debate about clean air regulation based on a contingent valuation survey of new york residents our study quantifies the total economic value of expected ecological improvements in the park from forthcoming policies our preferred estimates of the mean household willingness to pay range from 48 to 107 annually which imply total statewide benefits ranging from 336 million to 749 million annually alternative assumptions about ecological changes yield benefits up to 1 1 billion the instrument passes external scope sensitivity to bid and sample selection tests

natural resource economics and conservation contributions of agricultural economics and agricultural economists research by agricultural economists on natural resources has been distinguished by an interdisciplinary emphasis and a dynamic perspective it has recognized technological and institutional constraints has been oriented toward solving concrete resource management and policy problems and has emphasized empirical and quantitative analysis agricultural economists have introduced methods for evaluating natural resource conservation efforts for predicting adoption of resource conservation technologies and for designing efficient and sustainable resource management policies they have identified ways of improving land management and preventing land degradation proposed reforms of institutions governing water allocation and water quality and introduced policies for balancing environmental and efficiency considerations in the management of pests biodiversity and livestock diseases their research has had substantial impacts on the formulation of resource conservation policies

climate change and the insurance industry the cost of increased risk and the impetus for action abstract a convincing economic argument for taking action to prevent or ameliorate climate change has not developed because of both uncertainty about the degree of change and its timing recent costly weather related catastrophes with consequent negative impacts on the insurance industry has made the insurance industry a potential advocate for slowing what has been identified as a causal factor in climate change emissions of greenhouse gases however rising costs of claims without a longer term trend of such catastrophic losses will make it difficult to present a strong case for taking costly economic action using the black scholes option pricing model it is shown that increasing levels of climate variability as embedded in the anticipated variability of damage to insured assets will have an immediate economic cost that could serve to bolster the argument for more immediate action that cost is shown to be economically justified higher insurance premiums

valuing research leads bioprospecting and the conservation of genetic resources bioprospecting has been touted as a source of finance for biodiversity conservation recent work has suggested that the bioprospecting value of the marginal unit of genetic resources is likely to be vanishingly small creating essentially no conservation incentive this result is shown to flow specifically from a stylized description of the research process as one of brute force testing unaided by an organizing scientific framework scientific models channel research effort toward leads for which the expected productivity of discoveries is highest leads of unusual promise then command information rents associated with their role in reducing the costs of search when genetic materials are abundant information rents are virtually unaffected by increases in the profitability of product discovery and decline as technology improvements lower search costs numerical simulation results suggest that under plausible conditions the bioprospecting value of certain genetic resources could be large enough to s

sensitivity of optimal commodity taxes to relaxing leisure goods separability and to the wage rate abstract this paper uses a new labour augmented demand functional form to calculate optimal commodity taxes for india the optimal taxes which are far from uniform are extremely sensitive to deviation from leisure goods separability and to variation in the wage rate parameter

property rights issues involving plant genetic resources implications of ownership for economic efficiency the economic theory of property rights is applied to the issue of the conservation of plant genetic diversity an issue often discussed in terms of benefit sharing in order to demonstrate that the assignment of property rights is important for reasons of efficiency as well as for equity given the existence of transaction costs within an industry the location of a property rights assignment is a crucial factor determining the incentives for efficient levels of investment at various levels of that industry in the context of plant genetic resources this means that property rights that are located at the retail end of the pharmaceutical and plant breeding industries may not have sufficient effect to generate the incentives to supply adequate amounts of plant genetic resources to the research and development sectors at the base of these industries

economic valuation of biodiversity sense or nonsense this paper critically evaluates the notion and application of economic monetary valuation of biological diversity or biodiversity for this purpose four levels of diversity are considered genes species ecosystems and functions different perspectives on biodiversity value can be characterized through a number of factors instrumental vs intrinsic values local vs global diversity life diversity vs biological resources etc a classification of biodiversity values is offered based on a system of logical relationships among biodiversity ecosystems species and human welfare suggestions are made about which economic valuation methods can address which type of biodiversity value the resulting framework is the starting point for a survey and evaluation of empirical studies at each of the four levels of diversity the contingent valuation method is by far the most used method an important reason is that the other valuation methods are unable to identify and measure passive or nonuse values of biodiversity at first sight the resulting monetary value estimates seem to give unequivocal support to the belief that biodiversity has a significant positive social value nevertheless most studies lack a uniform clear perspective on biodiversity as a distinct concept from biological resources in fact the empirical literature fails to apply economic valuation to the entire range of biodiversity benefits therefore available economic valuation estimates should generally be regarded as providing a very incomplete perspective on and at best lower bounds to the unknown value of biodiversity changes 2001 elsevier science b v all rights reserved

the non use benefits of enhancing forest biodiversity a contingent ranking study until recently the majority of commercial forestry in the uk has comprised blanket planting of non native coniferous species which typically do not offer a high level of biodiversity however the uk government and consequently the uk forestry commission are committed under various international agreements to conserve and enhance biodiversity in british forests the study reported in this paper estimates that substantial non use values would be generated if the forestry commission were to continue in its current efforts to develop management practices that promote an increase in biodiversity across a large area of its commercial holdings in remote parts of the country which are seldom visited rather than adopting a referendum type contingent valuation method a discrete choice contingent ranking approach is used to estimate the general public s willingness to pay to increase the area of these forests managed under each of three forest management standards designed to offer increasing levels of biodiversity at the expense of commercial timber production this permits relative preferences for different forest management standards to be measured at the same time as willingness to pay to enhance biodiversity

the effect of foreign acquisition on employment and wages evidence from finnish establishments employee characteristics by skill groups makes it possible to disentangle the effect of foreign ownership on wages from its effects on the quality of the workforce furthermore this information allows us to examine the heterogeneity of the effect of foreign acquisition on wages and employment third the long timespan of our data thirteen years enables us to consider the effects of foreign acquisition in the long run hiring and firing costs may delay the effects of foreign acquisition by looking at the effects of acquisition in several periods after it has taken place these delays can be taken into account we believe finland to be an interesting case study for the effects of foreign ownership it is a typical example of a small open economy where foreign investment plays an important role furthermore our data cover the years 1988 2001 when the share of foreign direct investments rose rapidly in finland this increase is depicted in figure 1 and it partly reflects the worldwide trend in foreign direct investment but the years 1988 2001 were also characterized by two phenomena which undoubtedly led to the increase in the share of foreign owned firms first finland experienced a very severe recession in the early 1990s and the recovery from this crisis was associated with a rapid restructuring of the economy and a growth of new industries in particular the export oriented high tech sector 2 second finland joined the european union in 1995 which naturally removed a considerable number of barriers to foreign investment in the finnish economy the results derived by both matching and regression methods indicate that foreign acquisition has a positive effect on wages in all skill groups this wage increase is not immediate but occurs within one to three years after the acquisition the magnitude of this effect increases with the level of schooling of the workers the results indicate that there is a small decrease in the share of highly educated workers after foreign acquisition the decrease in the share of highly educated workers after acquisition also seems to hold for domestic acquisitions the paper is organized as follows the next section briefly describes the theoretical background for the analysis and reviews some previous empirical findings the third section describes the statistical framework and the fourth section presents the data sets the results are provided in the fifth section the last section concludes the paper

capturing the pharmaceutical value of biodiversity in a developing country the conservation of biodiversity is increasingly being defined as a process made up of three components saving studying and sustainably using biodiversity if the conservation of process is expanded to incorporate the need for both the protection of biodiversity either in situ or ex situ and the generation of valuable information about biodiversity an important issue is the correct balance of investment in these two types of activities this paper explores this issue by focusing on efforts in a developing country to capture the pharmaceutical potential of biodiversity and species information a model of biodiversity investment choice is developed and an analysis of royalty returns to effort in biodiversity protection taxonomic information and the collection of biotic samples is conducted based on data from costa rica the results suggest that although a country can be adequately compensated for its investment in the generation of taxonomic information it is unlikely that pharmaceutical prospecting alone will cover the high opportunity costs of biodiversity protection

valuing biodiversity for use in pharmaceutical research biodiversity prospecting has been touted as a mechanism for both discovering new pharmaceutical products and saving endangered ecosystems it is unclear what values may arise from such activities however evidence from transactions is incomplete and existing theoretical models are flawed we calculate an upper bound on the value of the marginal species even under favorable assumptions this bound is modest slightly modified assumptions lead to drastically lower estimates we extend our findings to the value of the marginal hectare of habitat and find that the incentives for habitat conservation generated by private pharmaceutical research are also at best very modest

the biodiversity bargaining problem we employ cooperative bargaining theory and nash s rational threats idea to cast light on the biodiversity bargaining problem the problem of global environmental negotiations is argued to be of the nature of a bargaining problem in which bargainers must agree on the distribution of cooperative surplus in order to move to the bargaining frontier we discuss the importance of both efficiency bargaining frontier and fairness recognition of characteristics of bargainers in the choice of the appropriate contract we show that the incremental cost contract used to resolve the biodiversity bargaining problem is of the form of an extreme point contract that fails to recognise the contributions of the south to the production of cooperative surplus a rational response to such a contract is the use of threats of biodiversity destruction contracts must evince both efficiency and fairness in order to represent lasting solutions

optimally uniform commodity taxes and non linear engel curves a generalisation of the linear case abstract a sufficient condition for optimally uniform commodity taxes is derived in the more realistic non linear engel curve case and in a form that allows easy checking from the various parameter estimates this general condition is shown to yield certain well known sufficient conditions as special cases

the theory of reform and indian indirect taxes abstract given a set of value judgements an initial state and a model of the economy one can ask whether some feasible tax change would increase welfare we do this by defining the marginal cost in terms of welfare of raising an extra rupee from the i th good the inverse optimum problem is the calculation of non negative welfare weights on households which imply that the initial state is optimum if no such welfare weights exist then a pareto improvement is possible we illustrate the concepts and results using data from the indian economy for 1979 1980 directions of tax reform for a number of specific social welfare functions and for pareto improvements are presented

new firm survival new results using a hazard function a limitation of audretsch s 1991 study of new firm survival was the level of aggregation to industries this precluded linking establishment specific characteristics such as organizational structure and size to post entry performance the purpose of this paper is to relate the post entry performance of individual establishments not only to their technological and market structure environments but also to establishment specific characteristics we do this by estimating a hazard duration function for more than 12 000 individual establishments in u s manufacturing started in 1976 by tracking their subsequent performance over a ten year period we conclude that establishment specific characteristics which audretsch was not able to capture in his earlier study play an important role in shaping the exposure to risk confronting new establishments copyright 1995 by mit press

structural models and endogeneity in corporate finance the link between managerial ownership and corporate performance this paper presents a parsimonious structural model that isolates primary economic determinants of the level and dispersion of managerial ownership firm scale and performance and the empirical associations among them in particular variation across firms and through time of estimated productivity parameters for physical assets and managerial input and corresponding variation in optimal compensation contract and firm size combine to deliver the well known hump shaped relation between tobin s q and managerial ownership to assess the effectiveness of standard econometric approaches to the endogeneity problem we apply those remedies to panel data generated from the model the unfortunate conclusion is that at least in the ownership performance context proxy variables fixed effects and instrumental variables do not generally provide reliable solutions to simultaneity bias

foreign acquisition plant survival and employment growth this paper analyses the effect of foreign acquisition on survival probability and employment growth of target plant using data on swedish manufacturing plants during the period 1993 2002 an improvement over previous studies is that we take into account firm level heterogeneity by separating the targeted plants into those within swedish mnes swedish exporting non mnes and purely domestic firms before foreign takeover the results controlling for possible endogeneity of the acquisition dummy using an iv and propensity score matching approach suggest that acquisition by foreign owners increases the lifetime of the acquired plants only if the plant was an exporter the effect differs depending on whether the acquisition is horizontal or vertical we also find robust positive employment growth effects only for exporters and only if the takeover is vertical not horizontal

market based conservation and local benefits the case of argan oil in morocco abstract market based approaches to biodiversity conservation gained popularity in the 1990s the success of these strategies hinges on first the successful creation or expansion of target markets and second the beneficial involvement of local stakeholders in these markets so that improved incentives induce conservation this paper evaluates these two key elements in the case of argan oil commercialization in southwestern morocco the principal finding is that even when locals appear well positioned to reap ex post benefits one can reject the hypothesis that successful resource commercialization necessarily stimulates local development and reduces poverty most locals participate only superficially in the new and expanded markets for argan oil and the benefits that do trickle down to local households appear to be regressively distributed both regionally and between households the key lies in understanding how opening or expanding markets may induce endogenous product differentiation that easily excludes locals especially the poor and how ex ante market access a variable commonly correlated with wealth conditions households capacity to participate in market induced producer windfalls

optimally uniform commodity taxes taste differences and lump sum grants abstract optimal commodity taxes for an economy with many households should be at a uniform proportional rate under certain conditions these include i linear and parallel engel curves with intercepts dependent on household composition ii separability between goods and labour and iii optimal demogrants

economic valuation of biodiversity a comparative study abstract in recent years an intensive debate on the economic valuation of biodiversity has entered the environmental economics literature the present paper seeks to offer first a critical review of key concepts that are essential for a proper understanding of such evaluation issues particular attention is given here to various monetary valuation approaches and to comparative i e meta analytical methods from the perspective of conservation and sustainable use of biodiversity several illustrative examples are presented in order to highlight the usefulness of the various approaches discussed next an attempt is made to infer general findings and lessons from past applied research by means of meta analysis in this context a multi dimensional technique originating from the field of artificial intelligence is deployed it allows us to identify the most important variables responsible for changes in economic estimates of biodiversity

sensitivity of optimal commodity tax rates to alternative demand functional forms an econometric case study of india this study investigates on a nine commodity disaggregation of indian budget data nss 28th round the sensitivity of optimal commodity tax rates to alternative demand systems les and rnlps optimality is used here in the very special sense of being conditional on observed expenditure and fixed consumer prices the alternative sets of tax rates agree at low levels of inequality aversion but disagree widely at rawlsian levels les is heavily rejected in favour of its one parameter generalisation rnlps the results suggest that les price elasticities should not be used in optimal tax calculations the optimal tax rates imply only a modest redistribution

managing increasing environmental risks through agrobiodiversity and agrienvironmental policies abstract agro biodiversity can provide natural insurance to risk averse farmers by reducing the variance of crop yield and to society at large by reducing the uncertainty in the provision of public good ecosystem services such as e g co2 storage we analyze the choice of agro biodiversity by risk averse farmers who have access to financial insurance and study the implications for agri environmental policy design when on farm agro biodiversity generates a positive risk externality while increasing environmental risk leads private farmers to increase their level of on farm agro biodiversity the level of agro biodiversity in the laissez faire equilibrium remains inefficiently low we show how either one of two agri environmental policy instruments can cure this risk related market failure an ex ante pigouvian subsidy on on farm agro biodiversity and an ex post compensation payment for the actual provision of public environmental benefits in the absence of regulation welfare may increase rather than decrease with increasing environmental risk if the agroecosystems is characterized by a high natural insurance function low costs and large external benefits of agro biodiversity

problems in valuing the benefits of biodiversity protection this paper considers two problems in valuing the benefits of biodiversity protection these are firstly that preferences for biodiversity protection may be lexicographic rather than utilitarian the more individuals for whom this is true the less is cost benefit analysis validated as a means of decision making for biodiversity protection since lexicographic preferences are incompatible with the kaldor hicks compensation test secondly people may be poorly informed about the meaning of biodiversity complicating the use of contingent valuation as a means of measuring preservation benefits this paper first discusses the meaning of biodiversity and trends in diversity over time we offer some empirical evidence with regard to lexicographic preferences consider the implications of having poorly informed consumers and then report the results of a contingent valuation study of biodiversity protection with varying levels of information we find that willingness to pay for biodiversity protection increases with the level of information provided

agricultural public policy green or sustainable the future of agriculture constitutes a major challenge to the achievement of sustainable development there are new perspectives on greening focusing on ecological objectives and sustainability combining both ecological and social goals academic papers rather study the ecological efficiency of agricultural public policies while real public policies such as in the european common agricultural policy examine both ecological and social considerations the objective of this paper is to consider economic social and ecological objectives within the design of agricultural public policies using a bio economic model applied to france we compare different optimal public strategies we show that when the biodiversity objectives are either very limited or very demanding grassland subsidies are the best instruments from both green and sustainable points of view however for medium objectives reducing crops subsidies is the cheapest way to green the cap while subsidies on grasslands are the only strategy from a sustainability perspective our work highlights new trade offs related to policy implementation such as social acceptance or technical difficulties and the spatial equity of performance among regions

risk management instruments for debt driven conservation efforts the case of india s project tiger abstract project tiger has been india s premier case of conservation success since mid 1990s select project tiger reserves in india were chosen for intensive funding by the global environment facility the international development agency ida and the government of india under the india eco development project this project marked a modest shift towards debt based funding the gef project has become a benchmark for tiger conservation in india both in terms of management outcomes and scale and scope of funding however in the absence of large scale budgetary support or self generating income flows it becomes difficult for the gef type of project to be replicated in other tiger reserves of the country debt instruments hold promise as enablers of conservation finance the paper proposes issue of tiger bonds to meet the financial requirements of tiger reserves though attractive as a debt instrument a tiger bond could nevertheless entail interest rate and default risks bioprospecting activities form good revenue sources for tiger reserves to pay off their debts however bioprospecting activities do not provide assured returns to tiger reserves pharmaceutical companies that prospect for genetic resources and practice real options approach to r d investment planning adopt multi phased investment systems and sequential searches that gives them the flexibility to abandon r d projects from the point of view of genetic resource providing entities like project tiger reserves the postponement value generated by real options enables a drug company to tap substitutes for the genetic resources that form the subject matter of bioprospecting contracts to obviate possible repayment risks by tiger reserves the paper advocates the institution of put bonds as a risk management tool for project tiger reserves in order to hedge themselves against loan defaults arising from possible loss in bioprospecting income the paper also brings out the mechanics of the issue of tiger bonds in the indian context it is argued that a put bond not only hedges default risks but would also aid value discovery and payment for ecosystem services as far as the project tiger reserves of india are concerned

biodiversity poverty and development biodiversity is crucial for the production of a range of marketed and non marketed ecosystem goods and services this paper reviews the empirical evidence for the role of terrestrial biodiversity and biodiversity conservation in economic development and poverty at both the macro e g country and micro e g farm scales it first examines general relationships between biodiversity and economic development before showing how biodiversity influences ecosystem services second future scenarios and challenges for biodiversity and development are examined given projections for further changes in global population economic growth and consumption third the relationship between biodiversity protection and incomes is investigated two specific policies protected areas and bioprospecting are reviewed with respect to their impacts on the welfare of the resource dependent poor in conclusion improvements in policy design and implementation could help minimize the possibility of earth s sixth mass extinction event at least within a few generations while ensuring that the poor are not made worse off as a result of policy implementation

intellectual property rights and the world trade organization retrospect and prospects this paper analyzes the main economic issues of intellectual property rights iprs protection in the context of the world trade organization wto a retrospective view on the establishment of the trips trade related aspects of intellectual property rights agreement a still controversial accomplishment of the uruguay round of trade liberalization is provided the paper reviews the economic rationale for the harmonization of iprs drawing both on economic theory considerations as well as emerging empirical evidence the logic of linking ipr protection and trade in the context of the wto is also re examined some specific attention is devoted to the implications of trips for agricultural and biotechnology innovations the impact that ipr protection can have in promoting growth and development and the relation of iprs with other economic policies is discussed the paper concludes with an analysis of the prospects for more or less iprs related consensus in the current round of wto negotiations

assessing the impact of management buyouts on economic efficiency plant level evidence from the united kingdom we assess the total factor productivity of 35 752 manufacturing establishments before and after management buyouts mbos mbo plants are less productive than comparable plants before the transfer of ownership they experience a substantial increase in productivity after a buyout which appears to be due to measures undertaken by new owners to reduce the labor intensity of production via outsourcing of intermediate goods and materials these findings which are pervasive across industries imply that mbos reduce agency costs and enhance economic efficiency our evidence is consistent with jovanovic and rousseau 2002 who suggest that ownership changes shift resources to more efficient uses and to better managers

biodiversity and international stakes a question of access abstract this paper examines three main questions is it possible to create a market for genetic resources is it a perfectly or an imperfectly competitive market what impact could this market have on the management of biodiversity in the context of sustainable development i analyse the conditions for access and use of knowledge of genetic resources and the genetic resources themselves i then consider the consequences on the management of genetic resources and social welfare trends in the context of sustainable development i present product and technology transfers in terms of access and user rights i show that the lack of information on the quality of biological resources and on their value on both the demand and supply sides lead to an imperfect market model i examine how benefit sharing can be achieved via public research institutions in developed countries and the conditions of their access to private patent licences my main conclusion is that a valorisation of developing countries genetic resources is a means among others of accomplishing a sustainable management of biodiversity by an equitable access and benefit sharing from the use of biodiversity direct use of natural and biological resources valorisation of genetic resources development of new economic sectors etc furthermore it enables taking part in the economic and social development of these countries increasing the social welfare in a context of sustainable development by widening the access to genetic resources

species preservation and biodiversity value a real options approach abstract we evaluate biodiversity in a real options framework when the resources in use are substitutable we examine optimal conservation decisions given that a biodiversity loss is irreversible and that future use values are uncertain while species substitutability has been shown to reduce the value of diversity we show that the flexibility associated with substitutability is a source of value marginal species value is decreasing in the number of species but rising and convex in the value of the marginal species as we show in the two species homogenous model increased volatility raises biodiversity value and a positive correlation between species values both reduces the value of the pool of species and the value of biodiversity the role played by the correlation between the value of a species and the value of other species is reminiscent of the beta of a financial asset just like an asset with a negative beta derives additional value by providing insurance against fluctuations in the market portfolio a species whose value tends to move in the opposite direction as the species in use derives additional value from its higher probability to be available for substitution if the value of the species in use diminishes

material transfer agreements an economic and econometric analysis this paper uses econometric analysis for understanding the determinants that affect the payment mechanism in material transfer agreements mtas these contracts regulate the exchange of peculiar ecosystem services genetic and biological materials between a provider and a recipient of the service the paper uses a set of model contracts from the late 2000s gathered from the u n world intellectual property organization wipo and the convention of biological diversity cbd empirical results show that the probability that a payment scheme is included in the contract negatively depends on the presence of an acknowledgment obligation to the provider of the material probably aware of the complexity and uncertainty of the recipient s research activity the provider and the cbd requires to be compensated through the recognition of his her important input to the research venture in economics this can be interpreted as payment in terms of moral satisfaction

agricultural biotechnology and poverty reduction in low income countries summary while biotechnology innovation is concentrated in high income tier i countries international diffusion of innovations to improve the diet health and incomes of the poorest will be largely driven by tier ii innovators such as china and brazil adoption of beneficial biotechnologies in tier ii and tier iii countries will increase as more transgenic versions of conventionally grown varieties become available and as costs decline which in turn will depend upon regulatory approvals being needed only once for each transformation event and transaction costs for accessing technologies being minimized investments in higher education and intellectual property clearinghouse institutions can greatly facilitate technology transfer

the marginal cost of species preservation the northern spotted owl abstract because species survival is not certain the decision to save a species is not an all or nothing choice but rather a marginal one the appropriate unit for both benefit and cost functions is the likelihood of survival and the appropriate question is how certain we want to be of species survival the intensity of the species preservation debate is also fired by strong equity concerns we illustrate these points for the case of the northern spotted owl by constructing a marginal cost curve for its survival and by disaggregating welfare loss by region and by market level

cross border mergers and acquisitions and the role of trade costs abstract cross border mergers and acquisitions m as have increased dramatically over the last two decades this paper analyses the role of trade costs in explaining the increase in the number of cross border m as in particular we distinguish horizontal and non horizontal m as and investigate whether trade costs affect these two types of mergers differently we analyse this question using industry data for 23 oecd countries for the period 1990 2001 our findings suggest that while in the aggregate trade costs affect cross border merger activity negatively its impact differs importantly across horizontal and non horizontal mergers the impact of trade costs is less negative for horizontal mergers which is consistent with the tariff jumping argument

diversity productivity and temporal stability in the economies of humans and nature abstract recent advances in ecology are of great potential relevance to economists here we present two ecological models of mechanisms of competition and coexistence and use these to derive how the primary productivity of ecosystems the amount of carbon dioxide removed from the atmosphere and stored by plants the efficiency of resource use and the spatial and temporal variability of productivity and resource use should depend on diversity we then discuss the relevance of these results to 1 ecosystem services and the economic value of diversity and 2 the functioning of any competitive system including the economy

relative and absolute scarcity of nature assessing the roles of economics and ecology for biodiversity conservation abstract our aim in this essay is to identify and analyze some of the difficulties with interdisciplinary integration of economic and ecological contributions to the study of biodiversity loss we develop our analysis from a widely accepted definition of economics which is based on the concept of scarcity taking a closer look at this notion we find that economics actually limits itself to a very particular aspect of scarcity which we denote as relative scarcity we describe in what respect the economic approach towards biodiversity is based on this notion and also reflect on the specific understanding of the relation of humans and nature behind the economic approach we then turn to absolute scarcity as another notion of scarcity and show that this is not within the scope of economics but has been a theme of ecology and ecological economics we describe in which way ecological and ecological economic approaches towards biodiversity are based on the idea of absolute scarcity and also reflect on the specific understanding of the human nature relationship behind this notion of scarcity against this background we discuss the roles of economics and ecology for nature conservation we conclude that the interdisciplinary integration of ecology and economics requires a philosophical underpinning and suggest a framework for further research

valuing insurance services emerging from a gene bank the case of the greek gene bank abstract we develop a conceptual framework for determining insurance values associated with a gene bank and we apply the methodology to the greek gene bank ggb the largest ex situ conservation program in greece to evaluate the insurance value generated by the holdings of the ggb genetic resources the current study examined scenarios for alternative arrival probabilities of an adverse event that would negatively affect production of seven major staple crops held at the ggb within the next 100 years within the range of our estimates it is indicated that insurance values considerably exceed the current operating costs of maintaining the ggb

the social value of biodiversity for r d the value of genetic resources for use in research and development r d activities has been the subject of a literature modelling the activity as onewhere individual firms engage in optimal search here we develop a moregeneralised framework in which genetic resources are used in r d at thebase of an industry that addresses recurring problems of resistance as inthe pharmaceutical or plant breeding industries the r d process is onein which firms are engaging in a continuing contest of innovation againsta background of both creative destruction schumpeterian competition andadaptive destruction natural selection and adaptation this frameworkdemonstrates that the search model is conceptually inadequate because itfails to incorporate the important dynamic characteristics of biologicalphenomena we then demonstrate the important differences between firm based valuation of genetic resources and the social value of geneticresources for use in this contest of innovation there are six externalitiesin private patent based genetic resource valuation and five of theseindicate that private valuations will under estimate social values

alternative use systems for the remaining ethiopian cloud forest and the role of arabica coffee a cost benefit analysis this paper presents a cost benefit analysis of three different use systems for the remaining cloud forests in ethiopia which at present are being depleted at the rate of 8 per year these use systems are a traditional conversion to crop land b sustainable management of the forest e g by growing high quality semi forest coffee and c strict conservation we find that under business as usual conversion to cropland yields the highest net present income value for the local population taking into account watershed services sustainable forest use is in the best interests of the country for discount rates of 10 or lower taking into account the global benefits of biodiversity conservation and carbon storage sustainable forest management also yields the highest total economic value while strict conservation does not pass a cost benefit test even at a discount rate of 3 c 2012 elsevier b v all rights reserved

is bioprospecting a viable strategy for conserving tropical ecosystems many prominent scientists avidly advocate bio prospecting the systematic search for new com mercial applications for biota especially hithertounstudied species as a mechanism for inducingtropical biodiversity conservation by making itcommercially attractive wilson 1992 reid et al 1993 paho 1996 weiss and eisner 1998 bio prospecting s premise is that nature contains hid den assets of potentially huge yet unknownmagnitude to humankind that can motivate andeven nance biodiversity conservation in the trop ics this undiscovered genetic or biochemical in formation is commonly framed in the context ofpotential improvements in medicine or food thusde ning a massive global population of potentialbene ciaries it is further argued that bioprospect ing can affect social and economic development indeveloping countries by rewarding biota rich butincome poor tropical communities that preserveand wisely manage their genetic resources thepremise of bioprospecting coupled with the claimthat practically all of humankind stands tobene t and perhaps most especially the poorestof the poor naturally leads to an urgent desire toconserve tropical biodiversity in order to enablediscovery extraction and value adding transfor mation of tropical biota speci cally it is claimed that bioprospectingstimulates conservation through two mechanisms first bioprospecting rms should be willing topay to preserve biodiversity for its innovationoption value since they stand to reap direct nan cial bene ts from any marketable discoveries sec ond conditional on an increase in life sciences rms willingness to pay for conservation localinhabitants and landholders valuation of biodi versity will change to the extent that they asstewards over biodiverse habitats are compen sated for their contribution to bioprospecting ac tivities to date most attention with respect to

modelling loss of resilience in agroecosystems rangelands in botswana economists have recently begun to consider the questions raised by the ecological concept of resilience a measure of the degree to which a system can be perturbed before it switches from one stability domain to another at a theoretical level it has been argued that the loss of resilience in an ecological economic system involves a change in its long run productive potential but no consideration has yet been given to the empirical investigation of this this paper discusses an econometric approach to the problem using the example of semi arid rangelands the long run productive potential of the system is regarded as an unobserved state variable change in which is irreversible or at least only slowly reversible it is estimated by applying the extended nonlinear kalman filter the paper illustrates the approach using data from botswana for the period 1965 1993 the maximum likelihood estimates of the parameters associated with the loss of resilience mechanism are non zero they indicate a small loss of resilience event at the end of the long drought in the 1980s however these parameters are very imprecisely estimated and are therefore statistically insignificant we find that the sensitivity of the system to exogenous shocks varies with fluctuations in both economic and non economic parameters contrary to what is usually thought to be the case the sensitivity of the system to exogenous shocks is only weakly affected by variations in offtake prices but is very strongly affected by variations in the cost of herd maintenance this suggests that offtake prices may be a weak tool for controlling the size of cattle stocks and preventing a loss of resilience on the other hand taxes on cattle stocks or grazing fees may be very effective