The economics of conservation debt: a natural capital approach to revealed valuation of ecological dynamics

Abstract

Some species are valued for their direct usefulness to society, through immediate financial returns from market activities such as harvesting or ecotourism. But many are valued for their passive usefulness, i.e., their mere existence contributes to supporting, regulating or cultural environmental services that support human well‐being. Hence, there is inherent social value to conserving such species as natural assets. However, such species are seldom priced as natural assets, and thus not accounted for in sustainability wealth measures because deriving non‐market prices is challenging. We overcome this limitation by presenting a new approach for natural asset pricing of species with passive value that can be incorporated into national sustainability wealth accounting. We explicitly consider the relationship between prevailing institutions, species interactions, and ecosystem dynamics. Our approach is illustrated with the case of threatened woodland caribou in the Alberta Oil Sands. We show that conservation can be considered an investment while destructive activities can lead to a loss or conservation debt; and forgoing destructive activities can be considered a capital gain, increasing future wealth. Our approach reveals that caribou conservation in Alberta is leading to a conservation debt on the order of CA$800 million.

The Population Health And The Environment Quality: Construction Of Mathematical Assessments

“…From this it follows that investments in environmental protection are becoming important sources of economic dynamics. This is also stated in study of Maher et al (2020) and research of Danilova et al (2020).…”

Valuing natural capital when management is dominated by periods of inaction

“…We follow convention in subtracting , but the function could have a positive sign for human actions that add to the stock. Furthermore, can be a vector of stocks (Do Yun et al, 2017; Maher et al, 2020). The full vector of stock may enter the growth function, the feedback rule, or both.…”

“…16 Insley (2002) and 13 Fenichel et al (2018) argue that such a direct amenity flow is not necessarily a non-use type value but may simply be a reduced form approximation to a complex production processes that is heavily dependent on the stock, for example, water filtration from a forest. Maher et al (2020) show how this could work in the case of species of conservation concern. 14 Though Hartman's analysis could capture any passive use value.…”

“…To be useful in capital accounting, the prices must also be based on observed behavior driven by real institutional settings so as to be comparable to the market (Muller and Mendelsohn, 2011;Nordhaus, 2006;Obst and Vardon, 2014) rather than hypothetical, partial-equilibrium optimization models. To meet these conditions, existing methods rely on observable, continuous, and differentiable management adjustments, for example, applications to groundwater (Addicott and Fenichel, 2019;Fenichel et al, 2016), fisheries (Do Yun et al, 2017;Kvamsdal et al, 2020), endangered species (Maher et al, 2020), and coastal wetlands (Bond, 2016). 1 Yet, natural resource management often involves doing nothing most of the time, or waiting, followed by non-marginal adjustments to the size of the standing stock.…”

Valuating Natural Resources and Ecosystem Services: Systematic Review of Methods in Use

“…The classical stage (early 18th C.-early 19th C.) is characterized by the works of such titans of economic science as A. Smith, D. Ricardo, T. Malthus, and K. Marx, who addressed the question of the land's value and methods of its (value) assessment. The neoclassical stage, which began in the 19th century with works of K. Menger, S. Jevons, A. Marshall, R. Coase, and others, continues to this day by the elaboration of the evaluation theory and value theory of natural resources [2], employing and improving such concepts as ecosystem services [3][4][5][6][7][8][9][10][11][12][13], total economic value [14][15][16][17][18][19], natural capital [20][21][22], and a range of biophysical approaches presented in the study [23]. However, despite the almost four-century history of evaluation theory's and value theory's elaboration, evaluation methods are still the subject of scientific disputes and research [23][24][25][26].…”