American Economic Review: Vol. 93 No. 5 (December 2003)
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Valuing Biodiversity from an Economic Perspective: A Unified Economic, Ecological, and Genetic Approach
Brock, William A., and Anastasios Xepapadeas. 2003. "Valuing Biodiversity from an Economic Perspective: A Unified Economic, Ecological, and Genetic Approach." American Economic Review, 93(5): 1597-1614.
We develop a conceptual framework for valuing biodiversity from an economic perspective. We argue for a dynamic economic welfare measure of biodiversity that complements the literature on benefit-cost approaches and genetic distance/phylogenic tree approaches. Using a unified model of optimal economic management of an ecosystem under ecological and genetic constraints, we identify gains from management policies leading to a more diverse system, using the Bellman state valuation function of the problem. We show that a more diverse system could attain a higher value although the genetic distance of the species in the more diverse system could be almost zero.
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Brock, William A.