Researchers suggest that governments adopt a novel approach to quantify the benefits of preserving biodiversity and natural environments for future generations.
The method can be used by governments in cost-benefit analyses for public infrastructure projects, in which the loss of animal and plant
Their approach, published in the journal Science, takes into consideration the increase in monetary value of nature over time as human income increases, as well as the likely deterioration in biodiversity, making it more of a scarce resource.
This contrasts with current methods, which do not consider how the value of ecosystem services changes over time.
Economic Principles and Value Adjustment
“Our study provides governments with a formula to estimate the future values of scarce ecosystem services that can be used in decision-making processes,” said Moritz Drupp, Professor of Sustainability Economics at the University of Hamburg and lead author on this study.
Two factors play a key role in this value adjustment: on the one hand, income will rise and with it the prosperity of the world’s population – by an estimated two percent per year after adjusting for inflation.
As incomes go up, people are willing to pay more to conserve nature.
“On the other hand, the services provided by ecosystems will become more valuable the scarcer they become”, said Professor Drupp. “The fact that scarce goods become more expensive is a fundamental principle in economics, and it also applies here. And in view of current developments, unfortunately, we must expect the loss of biodiversity to continue.”
According to the researchers, the present value of ecosystem services must therefore be set much higher in today’s cost-benefit analyses, to more than 130 percent if just including the rise of income.
Implications for Policy and Conservation Efforts
If also taking into account the impact on Red List Index endangered species, the value adjustment would amount to more than 180 percent.
Accounting for these effects will increase the likelihood of projects that conserve ecosystem services passing a cost-benefit test.
The research team includes three UK-based authors: Professor Mark Freeman (
The researchers say that as political decisions can alleviate the loss of biodiversity, it is important that governments are able to adequately assess the consequences of their decisions today and in the future.
Reference: “Accounting for the increasing benefits from scarce ecosystems” by M. A. Drupp, M. C. Hänsel, E. P. Fenichel, M. Freeman, C. Gollier, B. Groom, G. M. Heal, P. H. Howard, A. Millner, F. C. Moore, F. Nesje, M. F. Quaas, S. Smulders, T. Sterner, C. Traeger and F. Venmans, 7 March 2024, Science.
DOI: 10.1126/science.adk2086
Economist Professor Moritz Drupp has developed this research in collaboration with a team of international researchers from Germany, the UK, France, Denmark, the Netherlands, Norway, Sweden, and the United States.
The team advises, among others, HM Treasury, the US White House, and the German Federal Environment Agency.