Centre for Development Economics
Department of Economics

Delhi School of Economics


Lecture Series on the Economics of Biodiversity and Ecosystem Services


David Simpson
(American University, Washington DC)

August 8, 10, and 12, 2022 at 3:05 PM IST
Venue: AMEX Room

Economic Valuation of Biodiversity and Ecosystem Services I, II, & III


The term “biodiversity” was coined some forty years ago as a contraction of “biological diversity”. As the term, the concept it represents, and societal concern with a “sixth extinction wave” gained currency, scholars began to conduct research from a wide range of disciplinary perspectives. Economists were writing on biodiversity by the late 1980s. In the decades since, thousands of academic papers, government documents, and NGO reports have been published estimating the economic value of biological diversity and/or the ecosystem services to which it gives rise.
This body of work is evidence of a maturing field within environmental and resource economics and economics more broadly. This is a good time, then, to review the principles of economic valuation as they apply to the estimation of biodiversity and ecosystem service values. The topics of the three lectures in this series will be as follows: 

  1. Overview of biodiversity, ecosystem services, and related terms. Their contributions to utility directly and indirectly through their role in providing valuable products and services. Brief review of seminal contributions to the literature and prominent recent analyses and reviews. The fundamental distinction between use and passive nonuse values. Brief consideration of stated preference methods for the estimation of nonuse values and rationale for generally not addressing stated preference estimates in these lectures. Basics and conceptual equivalency of primal (production function), dual (cost and profit function), and hedonic (values embodied in asset prices) approaches. Illustrations of potential biodiversity values using simple functional forms.


  2. Valuation of biodiversity and ecosystem services in a variety of contexts: new product development, coastal protection, pollination, and pollution treatment. Sources and implications of diminishing returns. Econometric issues arising in primal, dual, and hedonic contexts. Prospects for identifying causal effects using instrumental variables, natural experiments, or controlled experiments. Comparing simple and complex production functional approaches. Deriving bounds on potential values. A paradox of efficiency.


  3. Biodiversity and ecosystem service values in conjunction with carbon sequestration and other values. Ecosystem service values in variegated landscapes. Von Thünen models, Ricardian rents, and the geographical distribution of values. General equilibrium considerations. Forestry models with both carbon and biodiversity values. Uncertain values and unknowable future conditions. Benefit transfer in biodiversity and ecosystem service valuation. Summary: What have biodiversity and ecosystem service valuation studies shown? When do values justify the opportunity costs of conservation? Are models and methods sophisticated enough to estimate values accurately? Will some important values of biodiversity likely remain beyond the capabilities of economists to estimate?

    For readings click here

    Lecture Slides

    [Monday, August 8, 2022]
    [Wednesday, August 10, 2022]
    [Friday, August 12, 2022]

    All are cordially invited.

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