TITLE:
A Macroeconomic Model of Biodiversity Protection
AUTHORS:
David Martin
KEYWORDS:
Biodiversity Protection; Natural Capital; Conservation; Macroeconomics; Sustainable Development
JOURNAL NAME:
Theoretical Economics Letters,
Vol.3 No.5A,
September
18,
2013
ABSTRACT:
Many biodiversity researchers have
responded to the financial constraints faced by policy makers to develop models
based upon the “Noah’s Ark” metaphor, implying that society can save only a
limited amount of biodiversity. Unfortunately, as Herman Daly (Land Economics, 1991) pointed out, such
microeconomic rules can allow an ark to sink albeit in some optimal fashion.
So, I step back to look at the macroeconomic question, how big should the ark
be? I start with Norgaard’s (Ecological
Economics, 2010) framework, which is based upon the concept of a production
possibility frontier combined with a sustainability criterion. I develop a
model from that starting point by shifting to an isoquant framework while
maintaining the strong sustainability criterion. I demonstrate how this model
allows for identifying and addressing the key biodiversity protection policy
criteria at the macroeconomic level. One key conclusion from this modeling is
that Daly’s analysis remains remarkably prescient.