Economists Point to Biodiversity Values Beyond Price
6/2/98
*******************************
RELAYED TEXT STARTS HERE:
Title: Economists Point to Biodiversity Values Beyond Price
Source: The New York Times
Status: Copyrighted, contact source to reprint
Date: 6/2/98
Byline: Peter Passell
In the big picture and in the long run, it's true: to paraphrase Yosemite Sam,
there is
biological gold in them thar rain forests. The active ingredient in roughly one
in four
prescription drugs comes from plants. And biotechnology companies are eager to
gain
access to exotic environments containing tens of millions of plant and animal
species
that have yet to be scrutinized. In the most visible deal, Merck, the giant
pharmaceutical maker, is paying Costa Rica cash plus royalties to preserve the
country's
fragile tropical forests.
But economists speak with virtually one voice in warning that biodiversity is
not going
to pay for itself. The creation of property rights in the wilderness can play
only a
minor role in protecting endangered habitats. "The potential return to
bioprospecting has
been greatly exaggerated," argued David Simpson, a senior fellow at Resources
for the
Future, an environmental research organization in Washington.
As a result, the major contribution of economics in the biodiversity debate will
likely
be the forcing of policy makers to deal more realistically with intangible,
nonuse
values. That is the kind of thing usually left to philosophers. And since such
intangibles are more immediately interesting to the citizens of affluent
countries than
to the largely poor custodians of tropical "hot spots" of biodiversity, the
lesson's
starting point is that there are no free rain forests.
"In the end, species preservation comes down to trade-offs -- in deciding how
much we are
willing to sacrifice in the name of preserving natural habitats," concluded
Martin
Weitzman, an economist at Harvard.
Like everyone else, economists assume that the keys to everything, from more
effective
drugs to more nutritious, disease-resistant crops, are secreted in tropical
forests. Why,
then, isn't the repository for these natural wonders valued accordingly?
What counts, Mr. Simpson said, is scarcity. And while there may be millions of
potentially useful species, there is also vast biochemical redundancy in the
environment.
Thus the value of any acre is limited by the fact that an identical species
probably
grows on thousands of other acres, and that many of the useful chemicals will
show up in
hundreds or even thousands of species. Evolution decreed, after all, that both
coffee
and tea contain caffeine as a defense against predators. And where naturally
occurring
chemicals are extremely rare, the value of looking for them is offset by the
high cost of
such a task.
Mr. Simpson and Roger Sedjo and John Reid, his colleagues at Resources for the
Future,
estimated the potential value of preservation in 18 biodiversity hot spots
around the
world. And while their figures are necessarily crude -- extrapolating from
useful new
chemicals found in exotic environments and the cost of developing drugs from
them -- they
are deliberately designed to err on the high side.
Whatever the ultimate value of undiscovered species might be, the three
researchers
calculate that the current bioprospecting rights for pharmaceuticals are worth a
maximum
of $8 an acre in western Ecuador to $2 an acre in the Philippines to a mere 40
cents an
acre in the eastern Himalayas. That may be enough to justify biosurveys, but
hardly
counters pressure for other uses like grazing or gathering firewood.
"If anything," Mr. Simpson said, "exaggerated claims of the pharmaceutical
companies'
willingness to pay to preserve exotic environments has been counterproductive,"
as poor
countries balk at what they view as efforts to claim their natural treasures for
a song.
In the stalemate, rain forests continue to be destroyed by farmers and
prospectors
seeking short-term gains.
This doesn't mean biodiversity has little value, said Robert Stavins, an
environmental
economist at the Kennedy School of Government at Harvard. But it implies that
"the lion's
share of the value is intangible," Mr. Stavins said.
That said, what can economists contribute to the debate? For one, they can help
a society
sort through its priorities by looking at what people are willing to pay to
support those
values. The evidence is that public policy toward endangered species reflects
only the
narrowest of concerns.
In research to be published this summer in the Journal of Economic Perspectives,
Mr.
Weitzman and Andrew Metrick, a Harvard colleague, look for the priorities
reflected by
the United States Fish and Wildlife Service's spending to protect 142
invertebrate
species that are listed as endangered. You would expect that the biological
distinctiveness of a species would increase its standing. So ought the
probability that
intervention would preserve the species. Last but hardly least is cost: with
limited
funds, priorities should reflect the resources needed to keep the species
intact.
IN fact, the Metrick-Weitzman analysis shows that the more endangered a species
is, the
less money is spent to preserve it. And the higher the cost of preserving a
species in
terms of dislocating economic activities, the higher the priority the species
gets.
Genetic uniqueness seems to play little or no role in priority. Think of the
northern
spotted owl.
What seems to count most in determining spending priorities are size (the bigger
the
better) and taxonomy. Mammals and birds, which economists dub "charismatic
megafauna,"
are popular with preservationists, while amphibians and fish go to the rear of
the class.
Mr. Stavins put it more plainly. The species we defend most aggressively, he
said, are
"warm and cuddly."
That may worry biologists who are concerned about the potential disappearance of
broad
categories of plants and smaller animals that help knit healthy ecosystems. But
the focus
on fur balls may or may not bother taxpayers. Economists have no business
telling people
what they should value, Mr. Weitzman argued, but they have plenty to contribute
on the
subject of rationality.
If we are committed to biodiversity, economists can help make the cost-benefit
calculations critical to obtaining the most bang for a buck. And they can help
people to think seriously about how to provide the financial incentives to poor
countries
to preserve habitats that matter little to peasant farmers. "If not," Mr.
Weitzman said,
"then we should be honest about our desire to have charismatic megafauna effects
dominate
our decisions."
Peter Passell writes about economics for The New York Times.