Are diverse ecosystems more valuable? A conceptual framework for economic valuation of biodiversity

Abstract

Biodiversity is an important environmental public good. However, the literature suggests that it is not clear how its economic value should be estimated; there is no established framework for doing this. This paper summarises concepts of biodiversity value from the ecological and economic literatures and combines them to a comprehensive and consistent framework. It is argued that biodiversity is the main carrier of insurance value, option value and spill-over value, and also influences the aesthetic appreciation of ecosystems. On that basis, an extension of the TEV framework is proposed to incorporate biodiversity values better. Furthermore, a number of specific challenges of biodiversity as an economic good are identified and used as criteria to inform the choice of suitable valuation methods.