The question of value has a long and turbulent history in economics, and nowhere is the nature of value more contentious than in the case of biological diversity. We know, of course, that all living organisms, including humans, depend on the rest of nature to survive—so ultimately, its value is infinite. But the value question becomes blurred when we begin to look at specific ecosystems and specific species. A basic difference exists between the way most biologists and most economists view biodiversity. Among biologists there is a consensus that biodiversity is critical to the health of ecosystems and to the long-run survival of the human species, and that biodiversity should be preserved even if its economic value is minimal. By contrast, economists generally view biodiversity as just one among many types of goods available for human use. We may value the species present in a tract of rain forest, for example, but we also value the income that might be generated from cutting the rain forest down and selling the timber. If the income generated from cutting down the rain forest is higher than the income generated by preserving it, then (with some qualifications)
most economists would argue that society is better off cutting it down.
Some of the differences between the biological and economic views can be resolved by a better appreciation on the part of economists of the narrowness of estimates of value based on market (or pseudomarket) prices, and a better understanding on the part of biologists of the logic behind the market allocation of scarce resources. The debate may be put into perspective by considering the value of biodiversity at three hierarchical levels. At the most narrow level is the so-called market value of biodiversity; next is its social value, including nonmarket or extramarket values; and finally is its ecosystem value to the total web of life on planet earth. Emphasis will be given here to market value and how it is estimated, but this is in no way meant to diminish the fact that biodiversity is different from other market goods. Markets work by substituting one good for another according to their relative scarcity as measured by market prices. For market goods, relative price is an indicator of relative scarcity. As prices rise for one good, substitutes become more attractive. However, there are no substitutes for many of the services provided by the biological world, and therefore the ability of the market system to ensure biodiversity preservation is limited. Also, a scarcity of most market goods can be corrected by producing more of these goods. Biodiversity loss, by contrast, is irreversible on any time frame relevant to the human species.
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