Economics of Wildlife Resources

• Theme 1 is on the economics of wildlife resources

Economics

• Economics involves the science of allocating scarce resources among competing claims
• Increasing scarcity and competing demands necessitate the efficient use of wildlife resources
• A growing concern exists regarding the traditional "protectionist" approach to conservation, viewing it as expensive and insufficient
• The economic problem is that human wants are unlimited, while resources are limited or scarce
• Allocation is determined by demand and purchasing power

Purchasing Power

• Consumers dictate production
• Consumers include local and international communities, citizens, scientists, and others
• Customer sovereignty is the concept that consumers have some control over goods and are the best judge of their welfare
• Supply is driven by the Demand

Natural Resources

• Natural resources are not man-made
• Examples include wild trees, animals, mountains, rivers, oceans, and the biosphere
• A resource is something available, accessible, and capable of meeting a need
• Wildlife resources cover a broad range of biotic and abiotic components of functional ecosystems, plants, animals and their environments
• Opportunity cost is the tradeoff from every choice

Market Equilibrium

• Market equilibrium is achieved at the price where quantities demanded and supplied are equal
• Market in equilibrium can be graphically represented
• A surplus or shortage in a market drives the price down or up until equilibrium
• Equilibrium implies stability, though it is not necessarily desirable

Externalities

• Externalities, or external costs, are costs imposed upon 3rd parties or society, like pollution
• Wildlife engenders negative costs, such as loss of life, injury, property damage, and the spread of diseases
• When there are external costs, the cost to society is high
• Social costs are greater than private costs
• Private producers only consider private costs
• The equilibrium price will be low because it will not reflect the true costs of production to society
• Output will be higher than socially desirable

Essence of Price

• Market price is the current price at which goods or services are bought or sold
• The meeting point of quantity supplied and quantity demanded
• Market price is used to calculate consumer and economic surplus
• Value paradox is a situation where water is valued too low relative to gold and diamonds
• Vast differences exist in the prices of essential versus non-essential goods.
• Goods and services essential to human life may have a lower market price than non-essential items
• Wildlife resources don't typically have market prices and are often available for free
• Better evaluation of these resources will improve resource decision-making

Marginal Cost and Benefit

• The marginal cost of production is the change in the total cost from making or producing one additional item
• The marginal benefit is the maximum amount a consumer is willing to pay for an additional good or service
• It is also the additional satisfaction or utility from an additional item
• Net benefit= marginal benefit- marginal cost Economic incentives are what motivates you to behave in a certain way & preferences are your needs, wants and desires