ECONOMICS OF BIODIVERSITY &
THE VALUE OF SPECIES:
HOW DO WE ALLOCATE FUNDS TO PROTECT DIVERSITY?
â€œEverything, whether measured in monetary or physical units, is amenable to economic reasoning provided it is scarce (or may become so in the future) and is appreciated by at least some members of the human community.â€ (Hampicke 1994: 219)
Economics and the environment are inextricably linked, as natural resources are the basis of production, manufacturing, and waste disposal. Conceivably the reason why economics is central to biodiversity conservation is because unless it makes definite economic and financial sense for people to conserve biodiversity, it is highly ...view middle of the document...
This resource-based production forms the foundation for survival at the local economic level, as it accounted for more than 11% of the total income (GDP) in South Africa in the year 2000, and employed more than 33 percent of the labour force. According to Hassan and Blignaut (2002) "when the contribution of tourism is accounted for, the total value of natural resources and environmental services in South Africa jumps to more than one third of GDP, and more than 50 % of export earnings and total employment."
If funds are to be allocated to the preservation of biodiversity it is imperative to know what this term actually means. It is generally synonymous with nature, or simply put as the â€œrichness and variety of life-of genes, species and ecosystemsâ€ (Pearce and Moran 1997).
The UN Convention on Biodiversity (1991) define it as â€œThe variability among living organisms from all sources including, inter alia , terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystemsâ€
The Convention on Biodiversity (CBD) seeks to protect genetic diversity, slow the rate of species extinction and conserve habitats and ecosystems. The CBD is made up of 42 Articles which set out a programme to reconcile economic development with the need to preserve all aspects of biological diversity. Article 1 states the following objectives:
â€¢ The conservation of biological diversity;
â€¢ The sustainable use of its components; and
â€¢ The fair and equitable sharing of the benefits arising from the use of genetic resources. (EU CBD report 2006)
There are for types of biodiversity: genetic, species, ecosystem and functional. Genetic biodiversity refers to the: degree of genetic variability within a species and is important as it is the means by which evolutionary processes occur. Species biodiversity refers to the variety of species/living organisms while ecosystem biodiversity refers to the variety of communities of organisms and the physical habitats they live in. the last type, functional biodiversity refers to an ecosystemâ€™s resilience i.e. its capacity to absorb shocks and disturbances.
The total economic value of biodiversity illustrates the benefits associated with its conservation and highlights the wide range of individuals and groups they accrue to, on and off-site. Valuation also shows the high and wide-ranging economic costs associated with the loss or degradation of biodiversity as well as the expenditures necessary to replace or mitigate lost biodiversity goods and functions.
The valuation techniques that are used for biodiversity can be categorized into three groupings: market-based, revealed preference and stated preference based valuation. In the market based valuation the benefits generated by biodiversity have to be sold within a market however markets have imperfections thus the true...