317 – The worth of wildlife

What is a threatened species worth? It may seem like a strange question, but it’s one that environmental economists have done a fair bit of research on.

If you measured their worth in commercial terms, the answer would be, probably nothing in most cases. But most of us care about threatened species and would be willing to pay something to prevent them from going extinct. There have been many studies conducted by environmental economists to estimate just how much people are willing to pay to protect particular threatened species. PhD student Vandana Subroy is lead author on a new study in the journal Ecological Economics where we conducted a “meta-analysis” – a review of 109 willingness-to-pay estimates from 47 studies around the world.

We found that the average willingness to pay to protect a species was US$414 per household (once off, not per year). Over a large population, this adds up to very large budgets being justified – vastly larger than the current budget for threatened species recovery in Australia.

Of course, the range across different species in different studies in different countries was enormous: as low as US$1 per household and as high as US$4,400.

Photo: J.J. Harrison (CC BY-SA 3.0)

Not surprisingly, people’s willingness to pay was much higher for “charismatic” species. Determining which species are “charismatic” is clearly subjective, but it’s safe to say they are typically large vertebrates that instinctively appeal to humans (e.g., elephants, pandas, and whales). In our study, species were treated as charismatic if they had been characterized as such in the original study, or elsewhere. The average willingness to pay was US$572 for charismatic species compared with US$106 for non-charismatic species.

Surprisingly the difference in willingness to pay between developed and developing countries was small, and not statistically significant.

One of the most surprising things we learned from doing the study was just how poorly done many of the studies were. In many cases, it was not at all clear in the question that was asked of survey respondents what was being valued. An amazing number of surveys were not clear about the base case – e.g. if there was no new intervention, what would be the probability of extinction of the species? Without that, you can’t give a meaningful willingness-to-pay response. Many surveys asked vaguely about “protecting” the species, but without saying what it was being protected from, or how protected it would be. Because of these and other weaknesses, we had to leave a lot of studies out of the meta-analysis. I commented to my colleagues that I wanted to cancel the economics degrees of the people who did these studies (assuming they had economics degrees).

If you’re interested, the paper can be downloaded for free even without a subscription, until August 30, 2019: here.

Further reading

Subroy, V., Gunawardena, A., Polyakov, M., Pandit, R. and Pannell, D.J. (2019). The worth of wildlife: A meta-analysis of global non-market values of threatened species, Ecological Economics (forthcoming). Journal web page

316 – Resources for agri-environmental schemes

I’ve been asked to present a talk in Ireland in two weeks, on the topic “The Design of Effective Agri-Environment Schemes”. In putting the talk together, it struck me that I (with help from colleagues) have developed quite a few resources in this space, so I’ve collected them on a new web site to make them easily accessible.

Agri-environmental schemes (or programs or policies) aim to reduce the adverse impacts of agriculture on the environment. There are many such schemes around the world, but often they are not very efficient or effective. We could often do a lot better if we did a smarter job of designing and implementing these schemes.

Not that it’s easy. There are so many aspects to consider: the effectiveness of different practices at reducing environmental damage, their attractiveness (or otherwise) to farmers, the mechanisms to be used to promote the best practices, the costs and risks of different approaches, which environmental issues are the priorities, and so on. In my view, most designers of agri-environmental schemes don’t appreciate what a difficult task they are trying to do, and make do with relatively quick and dirty approaches to the design.

The resources I’ve included on the web site address a wide range of relevant issues, including:

  • Lessons from past agri-environmental schemes
  • The selection of appropriate policy mechanisms
  • Measuring environmental values
  • Ranking projects, including the choice of an appropriate metric
  • Additionality
  • Understanding and predicting farmers’ adoption of new practices
  • Dealing with uncertainty and including systems for learning from experience
  • The need to pull off that together in a coherent framework

It includes journal articles, books, reports, frameworks, computer tools, web sites, and blog posts, plus links to my free online course on “Agriculture, Economics and Nature”.

Overall, if an organisation wanted to design and deliver an agri-environmental scheme that would really deliver outcomes, they could benefit greatly from the material on this site. The URL is www.resources4aes.net.

Further reading

Pannell, D.J. (2008). Public benefits, private benefits, and policy intervention for land-use change for environmental benefits, Land Economics 84(2): 225-240. Full paper (140K) * IDEAS page