The insurance value of biodiversity in the provision of ecosystem services

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The insurance value of biodiversity in the provision of ecosystem services. / Baumgärtner, Stefan.
in: Natural Resource Modeling, Jahrgang 20, Nr. 1, 03.2007, S. 87-127.

Publikation: Beiträge in ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet

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@article{e14400c2bf8a42eb8f63b7571454f233,
title = "The insurance value of biodiversity in the provision of ecosystem services",
abstract = "Biodiversity provides insurance against the uncertain provision of ecosystem services which are being used by risk-averse economic agents. I present a conceptual ecological-economic model that combines (i) current results from ecology about the relationships between biodiversity, ecosystem functioning, and the provision of ecosystem services with (ii) economic methods to study decision-making under uncertainty. In this framework I (1) determine the insurance value of biodiversity, (2) study the optimal allocation of funds in the trade-off between investing into biodiversity protection and the purchase of financial insurance, and (3) analyze the effect of different institutional regimes in the market for financial insurance on biodiversity protection. I conclude that biodiversity acts as a form of natural insurance for risk-averse ecosystem managers against the over- or under-provision with ecosystem services. Therefore, biodiversity has an insurance value, which is a value component in addition to the usual value arguments, such as direct or indirect use or non-use values. In this respect, biodiversity and financial insurance are substitutes. Hence, the availability, and exact institutional design, of financial insurance influence the level of biodiversity protection.",
keywords = "Sustainability sciences, Management & Economics, biodiversity, ecosystem functioning, ecosystem services, risk aversion, insurance, uncertainty, Economics, biodiversity, ecosystem functioning, ecosystem services, risk aversion, insurance, uncertainty",
author = "Stefan Baumg{\"a}rtner",
year = "2007",
month = mar,
doi = "10.1111/j.1939-7445.2007.tb00202.x",
language = "English",
volume = "20",
pages = "87--127",
journal = "Natural Resource Modeling",
issn = "0890-8575",
publisher = "John Wiley & Sons Inc.",
number = "1",

}

RIS

TY - JOUR

T1 - The insurance value of biodiversity in the provision of ecosystem services

AU - Baumgärtner, Stefan

PY - 2007/3

Y1 - 2007/3

N2 - Biodiversity provides insurance against the uncertain provision of ecosystem services which are being used by risk-averse economic agents. I present a conceptual ecological-economic model that combines (i) current results from ecology about the relationships between biodiversity, ecosystem functioning, and the provision of ecosystem services with (ii) economic methods to study decision-making under uncertainty. In this framework I (1) determine the insurance value of biodiversity, (2) study the optimal allocation of funds in the trade-off between investing into biodiversity protection and the purchase of financial insurance, and (3) analyze the effect of different institutional regimes in the market for financial insurance on biodiversity protection. I conclude that biodiversity acts as a form of natural insurance for risk-averse ecosystem managers against the over- or under-provision with ecosystem services. Therefore, biodiversity has an insurance value, which is a value component in addition to the usual value arguments, such as direct or indirect use or non-use values. In this respect, biodiversity and financial insurance are substitutes. Hence, the availability, and exact institutional design, of financial insurance influence the level of biodiversity protection.

AB - Biodiversity provides insurance against the uncertain provision of ecosystem services which are being used by risk-averse economic agents. I present a conceptual ecological-economic model that combines (i) current results from ecology about the relationships between biodiversity, ecosystem functioning, and the provision of ecosystem services with (ii) economic methods to study decision-making under uncertainty. In this framework I (1) determine the insurance value of biodiversity, (2) study the optimal allocation of funds in the trade-off between investing into biodiversity protection and the purchase of financial insurance, and (3) analyze the effect of different institutional regimes in the market for financial insurance on biodiversity protection. I conclude that biodiversity acts as a form of natural insurance for risk-averse ecosystem managers against the over- or under-provision with ecosystem services. Therefore, biodiversity has an insurance value, which is a value component in addition to the usual value arguments, such as direct or indirect use or non-use values. In this respect, biodiversity and financial insurance are substitutes. Hence, the availability, and exact institutional design, of financial insurance influence the level of biodiversity protection.

KW - Sustainability sciences, Management & Economics

KW - biodiversity

KW - ecosystem functioning

KW - ecosystem services

KW - risk aversion

KW - insurance

KW - uncertainty

KW - Economics

KW - biodiversity

KW - ecosystem functioning

KW - ecosystem services

KW - risk aversion

KW - insurance

KW - uncertainty

UR - http://www.scopus.com/inward/record.url?scp=39449100219&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/d610009d-a73a-362c-a221-a0f11860a69b/

U2 - 10.1111/j.1939-7445.2007.tb00202.x

DO - 10.1111/j.1939-7445.2007.tb00202.x

M3 - Journal articles

VL - 20

SP - 87

EP - 127

JO - Natural Resource Modeling

JF - Natural Resource Modeling

SN - 0890-8575

IS - 1

ER -

DOI