Arkonomics

Does economics endanger species?

To economists, “sustainability” means leaving no generation worse off than ours. This may conduce us to preserve unique species. Kazakhstanis think of the snow leopard, endangered partly by poaching for pelts and for bones prized in Chinese folk medicine.

Species preservation may be getting harder. The number of species becoming extinct each year may be 10 to 1,000 times higher than in past eons. In Kazakhstan, sturgeon are in dangerous decline, partly due to poaching. Catches in 2003 were but half of the quota, although the fishing season was a month longer than usual. Most sturgeon caught in scientific studies of the Caspian Sea are juveniles, so maybe the fish old enough to reproduce have dwindled dangerously. Of 835 vertebrates in Kazakhstan, the government lists 15% as endangered, including falcons, eagles and vultures.

It’s tempting to try to save all species. This goal is enshrined in the Endangered Species Act, probably the most extreme of United States environmental laws. “It is clear from the Act’s legislative history,” wrote the Supreme Court, “that Congress intended to halt and reverse the trend toward species extinction -– whatever the cost.” The federal government banned a firm from cutting timber on a site because a pair of northern spotted owls had appeared on public land 1.6 miles away.

In reality, not all species can be preserved. In the distant past, five episodes of mass extinction claimed up to 84 percent of the genera in existence. Which species should we try hardest to preserve? How?

"What is biodiversity? In what units is it to be measured?” write two economists, Andrew Metrick and Martin Weitzman. “…At the end of the day, all the brave talk about ‘win-win’ situations, which simultaneously produce sustainable development and conserve biodiversity, will not help us to sort out how many children’s hospitals should be sacrificed in the name of preserving natural habitats.”

Metrick and Weitzman seek a way to preserve biodiversity cheaply, so that we can build more hospitals with the saved money. Of course, we should spend another tenge on biodiversity, and another, as long as the benefit of doing so exceeds a tenge. But what is the benefit?

It’s information. A species is like a library, with genes for books. A library generates direct value, from the building itself; and indirect value, from the diversity of shelf books. As aesthetes, we might like diversity in novels (science fiction, stream-of-consciousness), just as in the colors of a painting. As pragmatists, we might like diversity in print for creating ideas about new medicines and foods.

Here’s our goal, as Metrick and Weitzman see it: Maximize the degree of diversity (plus direct value), given our limited budget. Noah’s special case was an ark in which to save species from an impending flood. The Book of Genesis saith the ark was just 450,000 cubed cubits large (77,000 cubic yards or 101,000 cubic meters). How should Noah choose species to save?

First, measure the direct and indirect value of each species, encompassing commercial, recreational and emotional values. Then rank each species by its expected increase in direct value per cubed cubit in the Ark.

To measure diversity, consider three cases for each species:

1. For each “library” (species), acquire books by sampling an infinite number of them. Each species is isolated, so gene pools don’t mix. Genes evolve on their own.

2. Create a library by photocopying all books of the main branch. Again, each book is isolated from others.

3. Close a library. If we lose a species, we will lose all of its genes.

What is a species’ contribution to “diversity,” its distinctiveness from other species? To find out, measure its distance from its “neighbor,” a species with similar genes (a library with books like ours). In terms of an evolutionary tree, measure the species’ addition to diversity by the length of its branch from the trunk. When a species becomes extinct, this length measures the loss of diversity, as if the branch had snapped off.

In short, the total value of a species sums its direct utility and its contribution to diversity.

Finally, Noah must determine how much his attempts to save a species will increase its chances for survival. Can a giraffe endure the stormy voyage?

Now, to rank every species, multiply the change in the probability of its survival by its total value. Divide these expected gains of boarding the species on the Ark by the boarding cost. This is the expected gain per dollar spent.

The costs of any preservation project include the value of foregone development. Recently, entrepreneurs spent $1 billion in western Ukraine to build a ski resort with 26 lifts and 75 miles of trails. One cost of converting the area to a natural preserve instead would be the foregone value of skiing.

Noah, master bureaucrat

Noah’s formula captures four factors that should affect conservation plans: Utility, diversity, increase in survivability, and the cost of that increase. Do governments actually weigh these factors? Metrick and Weitzman look at how the U.S government ranks species.

To characterize the public decision, they consider: The number of public comments favoring a proposal to save an endangered species; the government’s decision of whether to list the species as endangered (yes or no); and the amount spent by the government to recover the species.

Now consider the variables that, according to Noah, should influence the decision to preserve. To gauge direct utility, categorize each species as mammal, bird, reptile, amphibian or fish. Presumably, people prefer large mammals. To measure diversity, note whether the species is the sole representative of its genus; and, if not, whether it is actually a subspecies. Finally, to measure the species’ prospects for survival, use a ranking, from 1 to 5, of the degree of endangerment of each vertebrate species. The ranking comes from a private conservation group.

Metrick and Weitzman find that large mammals and birds are especially likely to be listed as endangered. (Amphibians need not apply.) The government spends more to save larger animals -– but less, curiously, to save the most endangered species. Evidently, Noah is not running the U.S. Fish and Wildlife Service. -– Leon Taylor, tayloralmaty@gmail.com.

References

Bo, Wen. Undated. Illegal trade in snow leopards in China: An overview. http://www.snowleopardnetwork.org/bibliography/bwit02.pdf .

Brown, Jr., Gardner M., and Jason F. Shogren. 1998. Economics of the Endangered Species Act. Journal of Economic Perspectives 12(3): pages 3-20 (summer). Reprinted in Robert N. Stavins, editor, Economics of the environment: Selected readings, New York: W.W. Norton, fifth edition, 2005, pages 514-532. The source of the Supreme Court quote.

Caveat Emptor. 2003. Letter to the U.S. Fish and Wildlife Service on whether to list the beluga sturgeon as endangered under the Endangered Species Act, September 2, Caviar Emptor project, http://www.caviaremptor.org/sep03_letter.html. Data on sturgeon catches.

Metrick, Andrew, and Martin L. Weitzman. 1998. Conflicts and choices in biodiversity preservation, Journal of Economic Perspectives, 12(3): pages 21-34, summer. Reprinted in Economics of the environment: Selected readings, fifth edition, pages 533-546.

Pohl, Otto. 2006. Ukraine sees bright future on ski slope. The New York Times, March 6.

United Nations Environment Programme. 2005. http://enrin.grida.no/htmls/kazahst/soe/soee/nav/biodiv/typediv.htm. Data on endangered species in Kazakhstan.