Conservation: Economics, Science, and Policy (2021) PDF

Conservation Conservation Economics, Science, and Policy Charles Perrings and Ann Kinzig 1 3 Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and certain other countries. Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America. © Oxford University Press 2021 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by license, or under terms agreed with the appropriate reproduction rights organization. Inquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above. You must not circulate this work in any other form and you must impose this same condition on any acquirer. Library of Congress Cataloging-in-Publication Data Names: Perrings, Charles, author. | Kinzig, Ann P. (Ann Patricia) author. Title: Conservation : economics, science, and policy / Charles Perrings and Ann Kinzig, Tempe, Arizona. Description: New York : Oxford University Press, 2021. | Includes bibliographical references and index. Identifiers: LCCN 2020046931 (print) | LCCN 2020046932 (ebook) | ISBN 9780190613600 (hardback) | ISBN 9780190613617 (paperback) | ISBN 9780190613631 (epub) Subjects: LCSH: Conservation of natural resources. | Conservation of natural resources—Decision making. Classification: LCC S936.P47 2020 (print) | LCC S936 (ebook) | DDC 333.72—dc23 LC record available at https://lccn.loc.gov/2020046931 LC ebook record available at https://lccn.loc.gov/2020046932 DOI: 10.1093/oso/9780190613600.001.0001 1 3 5 7 9 8 6 4 2 Paperback printed by LSC Communications, United States of America Hardback printed by Bridgeport National Bindery, Inc., United States of America In memory of Georgina Mace (1953–2020) and Karl-Göran Mäler (1939–2020) two wonderful people whose enduring contributions to science have influenced much of our thinking Contents Preface xi List of Figures xv List of Tables xix List of Abbreviations xxi 1 Environmental Conservation and Environmental Change 1 1.1 Introduction 1 1.2 The biological record 7 1.3 Implications for conservation 10 1.4 Plan of the book 19 PART I TH E E CON OMIC THEOR Y OF CO NSER VATI O N 2 The Decision Problem 27 2.1 Introduction 27 2.2 Elements of the decision problem 29 2.3 A numerical example: the wine storage problem 41 2.4 Summary and conclusions 44 3 Hotelling Conservation 47 3.1 Introduction 47 3.2 The Hotelling arbitrage condition 48 3.3 Hotelling prices and quantities 53 3.4 Renewable natural resources and the Hotelling arbitrage condition 56 3.5 Connecting Hotelling conservation and conservation biology 67 3.6 Summary and conclusions 69 4 The Conservation of Renewable Resources 72 4.1 Introduction 72 4.2 Marine capture fisheries 74 4.3 Forests and forestry 86 4.4 Rangelands 94 4.5 Summary and conclusions 100 PART II VA LUAT ION 5 The Valuation of Environmental Goods and Services 107 5.1 Introduction 107 5.2 The basis of value 108 5.3 Ecosystem services and the value of nonmarketed environmental resources 114 viii Contents 5.4 The valuation of provisioning and cultural services 117 5.5 Revealed preference methods 119 5.6 Stated preference methods 124 5.7 The valuation of regulating services 130 5.8 Summary and conclusions 134 6 The Valuation of Environmental Assets 140 6.1 Introduction 140 6.2 Sustainability and the value of environmental assets 141 6.3 The value of environmental assets in the national accounts 145 6.4 Inclusive wealth 148 6.5 Environmental assets and total factor productivity 152 6.6 Summary and conclusions 156 7 Substitutability and the Valuation of Natural Capital 159 7.1 Introduction 159 7.2 Substitution in production 160 7.3 Substitution in a generalized model of joint production 168 7.4 Substitution and public goods 170 7.5 Net substitutes and complements 173 7.6 Conditional substitutes and complements 176 7.7 Summary and conclusions 178 PART III A LIG NIN G T HE PR IVAT E AN D SO C I A L VA LUE OF NATURA L RESOUR CES 8 Environmental Public Goods 185 8.1 Introduction 185 8.2 The optimal provision of public goods 187 8.3 Types of public goods 192 8.4 Strategic behavior and the provision of public goods 198 8.5 Resolving the public goods problem 202 8.6 Summary and conclusions 204 9 Environmental Externalities 207 9.1 Introduction 207 9.2 The nature of environmental externalities 210 9.3 Unidirectional externalities 211 9.4 Positional externalities 216 9.5 Public externalities 219 9.6 Aligning private and social value 223 9.7 Summary and conclusions 230 10 Poverty, Value, and Conservation 234 10.1 Introduction 234 10.2 Income effects and poverty 237 10.3 Poverty-population-environment 240 Contents ix 10.4 Per capita income growth and conservation 243 10.5 Wealth, property rights, and conservation 246 10.6 Summary and conclusions 250 11 Conservation in Protected Areas 255 11.1 Introduction 255 11.2 Protected area design: ecological principles 257 11.3 Protected area design: economic principles 261 11.4 Protected areas and the supply of ecosystem services 268 11.5 Protected areas and poverty 271 11.6 Summary and conclusions 274 12 Conservation Beyond Protected Areas 279 12.1 Introduction 279 12.2 Conservation of threatened wild species outside protected areas 280 12.3 Conservation in agriculture 287 12.4 Habitat substitutability 298 12.5 Summary and conclusions 300 13 Conservation at the National Level 305 13.1 Introduction 305 13.2 Property rights 307 13.3 Legal restrictions on land use 309 13.4 Environmental offsets 314 13.5 Economic incentives 318 13.6 Summary and conclusions 326 14 Conservation at the International Level 331 14.1 Introduction 331 14.2 Migratory species 334 14.3 Transboundary and linked ecosystems 338 14.4 Trade, travel, and the movement of species 342 14.5 Strategic behavior and transboundary conservation 346 14.6 Funding conservation as a global public good 353 14.7 Summary and conclusions 357 15 Conservation in the Future 361 15.1 Introduction 361 15.2 Environmental trends 364 15.3 Economic trends 371 15.4 The population affected by conservation decisions 382 15.5 The optimal scale at which to conserve and the governance of conservation 387 Index 401 Preface As we finalize this book, the world economy has been rocked by the emer- gence and spread of yet another novel zoonotic disease—COVID-19—with origins at the interface between humans, their domesticates, and wildlife. It reminds us that conservation is as much about the control of invasive pests and pathogens as it is about the preservation of endangered wild plants and animals. It also reminds us that every choice we make to promote or de- grade life forms involves a social cost. In the COVID-19 case, the costs of our attempts to control the disease have involved major economic dislocation worldwide. The book starts from the premise that the conservation of any re- source involves an opportunity cost—the benefits that could have been had by converting that resource to a different use. The conservation of natural re- sources, like the conservation of works of art, or historic buildings, involves trade-offs. The book is, first, a study of how people decide to conserve or convert re- sources. Without worrying about the characteristics of particular resources, we ask when and for how long it may be optimal to conserve resources. In other words, we consider the general principles involved in making conserva- tion decisions. The book is, second, a study of the conservation of resources of the nat- ural environment. This includes both directly exploited resources such as ag- ricultural soils, minerals, forests, fish stocks, and the like, and the species and ecosystems put at risk when people choose to convert natural habitat, or to discharge waste products to water, land, or air. Conservation is as much about the problem of how much or how little to extract from the environment as it is about how much to leave intact. The book is, third, a study of the context in which people make conserva- tion decisions. Just as the decisions people make about investment in finan- cial assets are influenced by the tax rules established in different countries, so too decisions about the conservation of natural resources are influenced by property rights, laws, and customs. This includes environmental regulations within countries, and environmental agreements between countries. We con- sider how conservation relates to environmental governance, and how gov- ernance structures have evolved over time. xii Preface We have aimed the book at three audiences. The first is graduate students in any of the disciplines bearing on conservation. While the arguments may be most familiar to those studying environmental, resource, or ecological economics, it is intended to be accessible to geographers, ecologists, conser- vation biologists, political scientists, those studying environmental law, and to those in the comparatively new field of sustainability science. The second audience we have in mind is conservation practitioners, and professionals whose remit includes the management of the natural environment and the use of natural resources. We hope that the book will help those charged with the conservation of the natural environment to think about the trade-offs in- volved, the better to balance the protection of endangered species and other societal goals, like economic development or poverty alleviation. The third audience we have in mind is the substantial environmentally informed and aware general public who are interested in digging beneath the superficial treatment of conservation often encountered in the media. For people who want to understand the balance that should be struck between preservation and exploitation, between the protection of beneficial species and the control of harmful species, the book offers a set of principles that can be applied in most circumstances. By including a somewhat formal and fully general theory of conservation, we hope to show what is needed to make rational conservation decisions. By including applications to a range of environmental resource allocation problems, we hope to illustrate the many and varied factors that need to be taken account of in the process. While our discussion of the theory of conser- vation includes formal mathematical arguments, these are always paralleled by a nonmathematical development of the same arguments. We hope that readers will be able to select the approach that best suits them. The first draft of the book was largely written while we on sabbatical in Italy and Greece in 2018, and we thank our hosts in Siena and Volos, Simone Borghese and George Halkos, for the opportunity to work in such congenial environments. We also thank our home institution, Arizona State University, for funding and logistical support during the preparation of the book. Our thinking has been influenced over the years by many won- derful people, too numerous to mention here. You know who you are, and we thank you. Finally, the book is the culmination of many years of work on different aspects of the conservation problem, undertaken with the support of a range of funding agencies. Three projects undertaken with colleagues at a number of institutions have been particularly important: Advancing Conservation in a Social Context, funded by the Macarthur Foundation; Preface xiii Modeling Anthropogenic Effects in the Spread of Infectious Diseases, funded by the National Institutes of Health (Grant 1R01GM100471); and Risks of Animal and Plant Infectious Diseases through Trade, funded by the National Science Foundation’s Ecology and Evolution of Infectious Diseases program (Grant 1414374). Charles Perrings and Ann Kinzig, July 2020 Figures 1.1 The proportion of national land under crop and livestock production in 2013 8 1.2 Terrestrial and marine hotspots 18 2.1 The marginal rate of substitution 33 2.2 The income and substitution effects of a change in the commodity prices 34 2.3 The optimal wine storage period 43 3.1 The Hotelling arbitrage condition and optimal conservation in a two-period problem 52 3.2 The Hotelling price path 54 3.3 The Hotelling extraction path 55 3.4 Compensatory and critically depensatory density dependent population growth 59 3.5 Harvest and stock size in the steady state 66 4.1 The high seas or sea areas beyond national jurisdiction (light gray) 74 4.2 Global capture fisheries, production 1950–2015 75 4.3 Global whale harvest, 1950–2015 76 4.4 Logistic growth function 77 4.5 Net price and fish stock conservation 80 4.6 Fleet size and fishery profits 82 4.7 Aggregate fleet size and profitability under open access conditions 84 4.8 Tree canopy cover 2000–2010 87 4.9 The stock benefits of forests and optimal rotation lengths 91 4.10 Effect of amenity value and fire risk on rotation length 93 4.11 Rangelands of the world 94 4.12 The discount rate and conservation in rangelands 99 5.1 Trade-offs between different goods and services 110 5.2 The value of a change in a marketed good or service 111 5.3 The value of a change in a nonmarketed good or service 112 5.4 Perfect complements and substitutes 113 5.5 Direct and indirect use and nonuse value typology 116 5.6 Willingness to pay to avoid risk 132 5.7 The portfolio effect and the trade-off between mean and variance in yields 134 xvi Figures 6.1 Adjusted net savings rates in different income groups, 1990–2015 150 6.2 Natural resource rents and agricultural value added as a percentage of GDP by income group, 2015 151 6.3 Share of land area accounted for by protected areas (panel A) and forest (panel B) across income groups 153 7.1 Marginal rates of technical substitution between natural and produced capital 161 7.2 Diminishing marginal rates of technical substitution 162 7.3 Substitution and output effects, and differences in the private and social cost of natural capital for budget-constrained output maximizers 166 7.4 Short-run limitations on the substitutability of natural and produced capital 168 7.5 The production possibility frontier and the rate of product transformation 174 7.6 Functional similarities between dominant and minor species 178 7.7 The impact of environmental conditions on production 179 8.1 The Nash-Cournot reaction curve for the ith individual’s contribution to the public good 189 8.2 The demand for public goods 191 8.3 The Great Limpopo Transfrontier Park in Southern Africa 194 8.4 Payoffs to conservation in a binary nonrepeated game 198 8.5 Types of two-by-two nonrepeated games 199 8.6 Payoff structures in two-by-two nonrepeated games 200 8.7 The incremental cost of increasing supply of local conservation effort 203 9.1 Externalities of land-based output on capture fisheries via the carrying capacity of marine ecosystems 212 9.2 Pollution externalities affecting fish mortality alter marine stock dynamics 213 9.3 Privately optimal employment of Kx when externalities are ignored 214 9.4 Socially optimal employment of Kx when externalities are internalized 215 9.5 Indifference curves for a public bad, Y 220 9.6 Compensating and equivalent surplus for public bads 221 9.7 The efficiency of property-rights based solutions to externalities 225 9.8 Taxation of environmentally damaging externalities 226 9.9 Inducing the socially optimal employment of resources with positive external effects 227 9.10 Penalties for noncompliance with a regulatory restriction 228 10.1 The geographical distribution of species richness (inset) and per capita GDP 235 10.2 Engel curves for normal, luxury, and inferior goods and services 238 10.3 Inferior goods 239 10.4 Total fertility, medium projection, 2020–2025 241 Figures xvii 10.5 The demographic transition 242 10.6 Relation between the number of threatened species and per capita income (OLS estimates) 244 10.7 Quantile and ordinary least squares regression estimates for threatened species (including mean coefficient values and 95% confidence intervals) 245 10.8 Realized and projected average annual rates of change in the size of the rural population by income group, 1970–2030 247 11.1 Marine and terrestrial protected areas, 2016 256 11.2 Area spanned by the Kavango-Zambezi Transfrontier Conservation Area (KAZA), showing the location of national parks, wildlife management areas, and forest reserves in Angola, Botswana, Namibia, Zambia, and Zimbabwe 262 11.3 Net benefits of protected areas 264 11.4 Optimal structure of protection in the Rottnest Island Marine Park, Western Australia 267 12.1 The distribution of protected areas in the United States (panel A), and species of mammals, birds and amphibians (panel B) 281 12.2 Modeled responses of the richness (b) and abundance (c) of local diversity to human pressures in selected sites (a) 283 12.3 Willamette Basin: land-use patterns associated with specific points along the efficiency frontier (A–H) and the current landscape (I) 285 12.4 Occurrence (A), habitat suitability (B), and potential biocorridors (C) for the Eurasian Lynx in the Czech Republic 286 12.5 The number of accession to ex situ collections of plant genetic resources worldwide, 1920–2007 290 12.6 (A) Nitrogen fertilizer consumption, tonnes, 1981–2011; (B) pesticide use per hectare of cropland, 1991–2011 293 12.7 Freshwater withdrawals as a percentage of internal resources 294 13.1 Great Barrier Reef Marine Park Zones 314 13.2 Volume of biodiversity, wetland, and stream credits transacted in the United States 315 13.3 US Conservation Reserve Program county average soil rental rates (2012) 320 14.1 Parties and range states of the Convention on Migratory Species 337 14.2 Transboundary river basins 340 14.3 The Colorado River Basin showing the seven US States (California, Arizona, Nevada, Utah, Wyoming, Colorado, and New Mexico) and two Mexican states (Baja California and Sonora) affected by transboundary management 341 14.4 Nash equilibria in two-by-two nonrepeated games 349 14.5 An assurance game in which the benefit to one-sided cooperation equal the benefit to one-side defection 350 xviii Figures 14.6 An extensive form of the prisoners’ dilemma without shared pay-offs 351 14.7 An extensive form of the prisoners’ dilemma with shared pay-offs 351 14.8 The difference between the noncooperative (Ai) and cooperative (Ai* ) level of conservation where there are n symmetric countries 352 14.9 Incremental cost 355 15.1 Measures of human impacts on biodiversity, habitat, and soils relative to pre-existing conditions 365 15.2 Total sulfur and nitrate deposition 367 15.3 The proportion of assessed species threatened with extinction 368 15.4 Trends in the appearance of alien species in North America and South America from 1800 to 2000 370 15.5 The KOF globalization index for the world, including the overall index, the de facto index, and the de jure index 373 15.6 Imports of goods and services as a percentage of gross domestic product, by income group 374 15.7 Exports of goods and services as a percentage of gross domestic product, by income group 375 15.8 Export dependence on agriculture and natural resources 376 15.9 The KOF globalization index for world trade flows, including the overall index, the de facto index, and the de jure index 377 15.10 Tourist arrivals 1995–2017 377 15.11 Numbers of people internally displaced by conflict and natural disasters in 2016 379 15.12 Foreign direct investment, net inflows 1970–2017, as a percentage of GDP by income group 381 15.13 Foreign direct investment, net inflows 1970–2017, measured in billions of current US$ by income group 381 15.14 The simulated spread of an infectious disease originating in Hong Kong across the air transport network, modeled as the shortest path tree (effective distance) from the origin 385 15.15 Global trend in the state of world marine fish stocks monitored by FAO (1974–2013) 393 Tables 1.1 The growth of biodiversity hotspots 17 5.1 Valuation methods applied to ecosystem services 118 6.1 SEEA Central Framework environmental assets 147 9.1 Watershed payments for ecosystem services programs, 2005–2015 228 13.1 Domestic species delisted under the Endangered Species Act due to recovery 312 Abbreviations AAFC Atlantic Africa Fisheries Conference ABS Access and benefit-sharing AFTA ASEAN Free Trade Area APFIC Asia-Pacific Fisheries Commission ASEAN Association of Southeast Asian Nations BSE Bovine Spongiform Encephalopathy CBD Convention on Biological Diversity CCAMLR Commission for the Conservation of Antarctic Marine Living Resources CCSBT Commission for the Conservation of Southern Bluefin Tuna CDC United States Centers for Disease Control CECAF Fishery Committee for the Eastern Central Atlantic CFC Chlorofluorocarbon CGIAR Consultative Group on International Agricultural Research CGRFA Commission on Genetic Resources for Food and Agriculture CI Conservation International CIAT International Center for Tropical Agriculture CIMMYT Centro Internacional de Mejoramiento de Maíz y Trigo CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora CMS Convention on Migratory Species of Wild Animals CO2 Carbon Dioxide COREP Regional Fisheries Committee for the Gulf of Guinea CRP Conservation Reserve Program CSIRO Commonwealth Scientific & Industrial Research Organization, CTMFM Joint Technical Commission for the Argentina/Uruguay Maritime Front CWA Clean Water Act CWP Coordinating Working Party on Fishery Statistics ECOWAS Economic Community of West African States ESA Endangered Species Act EU European Union FAO Food and Agriculture Organization of the United Nations FFA South Pacific Forum Fisheries Agency GATT General Agreement on Tariffs and Trade GBA Global Biodiversity Assessment GCM General Circulation Model GDP Gross Domestic Product xxii Abbreviations GEF Global Environment Facility GFCM General Fisheries Commission for the Mediterranean GMO Genetically modified organisms GNP Gross National Product HDI Human Development Index HIV/AIDS Human immunodeficiency virus/Acquired Immune Deficiency Syndrome IAASTD International Assessment for Agricultural Science, Technology and Development IATTC Inter-American Tropical Tuna Commission IBSFC International Baltic Sea Fishery Commission ICCAT International Commission for the Conservation of Atlantic Tuna ICES International Council for the Exploration of the Sea ICRAF International Centre for Research in Agroforestry (now the World Agroforestry Centre) ICRISAT International Crops Research Institute for the Semi-Arid Tropics IHR International Health Regulations IITA International Institute of Tropical Agriculture ILRI International Livestock Research Institute IMF International Monetary Fund IMO International Maritime Organization INIBAP International Network for the Improvement of Banana and Plantain IOTC Indian Ocean Tuna Commission IP Intellectual property IPBES Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services IPCC Intergovernmental Panel on Climate Change IPGRI International Plant Genetic Resources Institute IPHC International Pacific Halibut Commission IPPC International Plant Protection Convention IRRI International Rice Research Institute ITPGRFA International Treaty on Plant Genetic Resources for Food and Agriculture ITQ Individual Transferable Quota IUCN International Union for Conservation of Nature IWC International Whaling Commission KAZA Kavango-Zambezi Transfrontier Conservation Area LME Large Marine Ecosystem MA Millennium Ecosystem Assessment MDG Millennium Development Goal MEA Multilateral Environmental Agreement N Nitrogen NABRAI National Biodiversity Risk Assessment Index NAFO Northwest Atlantic Fisheries Organization NAFTA North American Free Trade Agreement Abbreviations xxiii NAMMCO North Atlantic Marine Mammal Commission NASCO North Atlantic Salmon Conservation Organization NDP Net Domestic Product NEAFC North-East Atlantic Fisheries Commission NGO Nongovernmental organization NNI Net National Income NNP Net National Product NPAFC North Pacific Anadromous Fish Commission OECD Organization for Economic Co-operation and Development OIE World Animal Health Organization OLDEPESCA Latin American Organization for the Development of Fisheries PES Payment for environmental services PGR Plant Genetic Resources PICES North Pacific Marine Science Organization PPS South Pacific Permanent Commission PSC Pacific Salmon Commission RECOFI Regional Commission for Fisheries REDD Reducing Emissions from Deforestation and Forest Degradation RFMO Regional Fishery Management Organization SEAFO South East Atlantic Fishery Organization SNA System of National Accounts SO2 Sulphur Dioxide SPC Secretariat of the Pacific Community SPS Sanitary and Phytosanitary Measures Agreement SRCF Subregional Commission on Fisheries SWIOFC South West Indian Ocean Fishery Commission TBT Agreement on Technical Barriers to Trade TEEB The Economics of Ecosystems and Biodiversity TFCA Trans Frontier Conservation Area TFP Total Factor Productivity TNC The Nature Conservancy TRIPS Trade-Related Aspects of Intellectual Property Rights UK United Kingdom UN United Nations UNCCD United Nations Convention to Combat Desertification UNCED United Nations Conference on Environment and Development UNCLOS United Nations Convention on the Law of the Sea UNDP United Nations Development Programme UNEP United Nations Environment Programme UNFCCC United Nations Framework Convention on Climate Change UPOV International Convention for Protection on New Plant Varieties USA United States of America USDA United States Department of Agriculture USEPA United States Environmental Protection Agency USFDA United States Food and Drug Administration xxiv Abbreviations USMCA United States-Mexico-Canada Agreement WCMC World Conservation Monitoring Centre WCPFC Western and Central Pacific Fisheries Commission WECAFC Western Central Atlantic Fishery Commission WHO World Health Organization WIOTO Western Indian Ocean Tuna Organization WTA Willingness to accept WTO World Trade Organization WTP Willingness to pay WWF World Wildlife Fund 1 Environmental Conservation and Environmental Change It must always have been seen, more or less distinctly, by political economists, that the increase of wealth is not boundless: that at the end of what they term the progressive state lies the stationary state, that all progress in wealth is but a postponement of this, and that each step in advance is an approach to it.... The richest and most pros- perous countries would very soon attain the stationary state, if no further improvements were made in the productive arts, and if there were a suspension of the overflow of capital from those countries into the uncultivated or ill-cultivated regions of the earth. John Stuart Mill, Principles of Political Economy, 1848 1.1 Introduction In the fifth century bc Heraclitus of Ephesus observed that the only constant in the universe is change, and yet to manage change people have ever felt the need to hold some things constant. The list of things that societies have sought to preserve includes the natural environment and the resources it offers, but covers much more. A moral compass, religious faith, ties to kith and kin, personal and community health, and defensive capacity are all candidates for conservation. The factors that people need to take account of in making conservation decisions about such things are always the same. Whether the problem involves ideas, bricks and mortar, or germplasm is immaterial to how conservation decisions should be made. In all cases, the question to be asked is whether the decision-maker does better by keeping an object in some state, or by allowing its state to change. This book is first about the generic problem of conservation, and the prin- ciples that inform rational conservation choices—whatever the object of conservation. Second, it is about the application of those principles to the management of the natural world. Many intractable environmental conflicts around the world have their origins in the fact that different people make Conservation. Charles Perrings and Ann Kinzig, Oxford University Press (2021). © Oxford University Press. DOI: 10.1093/oso/9780190613600.003.0001 2 Conservation different conservation choices. The loss of biodiversity that is the stimulus for all efforts to protect wild living species is the result of historic decisions that individual land owners and land holders have taken about which species to promote and which to suppress, which gene stocks to build, and which to run down. Such decisions may lead to conflict for many reasons. Decision-makers are sometime ignorant of the wider and longer-term effects of their choices, sometimes neglectful of their effects on others, and sometimes deliberately perverse. In some cases, people have simply misunderstood the consequences of their actions. A pesticide application that solves one problem only to create another is an example. In other cases, people have understood the consequences of their behavior all too well, but have deliberately ignored those consequences. This is often because the consequences are borne by others. The effects of water diversion from the Syr Darya and the Amu Darya rivers on the Aral Sea, or from the Colorado River on the Gulf of California, are examples. In still other cases, people would have made different decisions if they could, but were forced to make strategic choices that left all society worse off. The fertilizer applications that lie behind massive marine pollution events, for ex- ample, have many features of the classic prisoners’ dilemma. Even though all would benefit from reductions in nutrient runoff, none has an incentive to lower their own fertilizer applications. We wish to understand how conservation decisions of this sort were made, and with what effects at different spatial and temporal scales. We wish to un- derstand how decisions of one person or one community at one time or place affect people or communities at other times or places. We also wish to under- stand why. That is, we wish to understand both the anatomy and pathology of conservation. Our touchstone is a paper of seminal importance for both the economics of natural resources and the economics of conservation. It is Harold Hotelling’s study of the economics of exhaustible resources (Hotelling 1931). The imme- diate goal of the paper was to investigate the conditions in which the owner of a nonrenewable resource, such as a mineral deposit, would be indifferent between extracting the resource and leaving it in place. In answering that question, however, Hotelling provided us with a fully general theory of con- servation. For the mining problem, he found that the owner of a mineral re- source would be indifferent between extracting it and leaving it in the ground if the value of the resource in place was expected to grow at the same rate as the return on mining proceeds when invested in the best alternative use. It has subsequently been shown that the argument extends naturally to the case of renewable resources—where the growth in value of the resource in place Environmental Conservation and Environmental Change 3 reflects not just a change in its price but also a change in its physical magni- tude (Perrings and Halkos 2012). For any asset, it will be optimal to conserve that asset if and only if the value of the asset in the conserved state is expected to grow at a rate at least equal to the rate of return on the asset when converted to an alternative state. The central insight from Hotelling’s work is that conservation decisions depend on the value of resources, and how that value is expected to change over time. For a community to know whether it is worth conserving some resource, it needs to know both the value of the resource to the community today, and how that value is likely to change tomorrow. In cases where re- sources are being depleted, for example, the expected change in their value can be driven by increasing scarcity. But it can also be driven by changes in demand triggered by changes in preferences, changes in peoples’ under- standing of the services yielded by the resource, or changes in environmental conditions. Climate change is altering the future value of many natural re- sources. Changes in temperature and precipitation are changing the value of land for agriculture or other uses. Sea-level rise and the increasing frequency of extreme weather events is changing the value of coastal areas for human habitation. By putting the expected change in the value of resources front and center, the Hotelling approach requires us to ask why a community confronted by a resource that could be either conserved or converted would want to conserve it. What are the ethical, moral, psychological, and other con- siderations that determine the value of resources to the community, and how might those change over time? What are the services (or disservices) offered by the resources, and how might those change with changes in tech- nology or environmental conditions? We need to understand what it is that makes resources valuable to different people, and how and why value is ex- pected to change. The Hotelling approach also requires us to ask whether the use being made of resources by those who have formal or informal rights to them reflects the value of the same resources to the community. The field of environmental ec- onomics has grown up around precisely this problem. When resource use involves positive or negative impacts on others that are not taken into account by the resource user, there are said to be externalities. We need to understand the value of those externalities, and whether they are increasing or decreasing over time. We need to understand whether the neglect of externalities means that too little or too much of the resource is being conserved. Many resources and the services they offer are public “goods” (or “bads”) and so involve incentives to free-ride on the efforts of others. We need to understand when 4 Conservation the public good nature of resources leads them to be undervalued, and so overused. To approach the anatomy and pathology of conservation the book first explores the principles behind Hotelling’s key result, as well as all the reasons why the decisions taken by people in the real world might get things wrong. It then applies these principles to a systematic review of the many dimensions of the problem of environmental conservation. It asks what decision-makers need to know if they are to make rational conservation choices, and what sci- ence currently tells us about the opportunity cost of conservation or devel- opment decisions. A decision to conserve implies that the expected growth in the value of the conserved resource is above the yield on alternative assets. A decision to convert implies the opposite. It follows that conservation and conversion decisions should both be informed by an understanding of what has to be given up in the process. We consider what is and is not known about the opportunity cost of large-scale environmental changes, and how this knowledge affects assessments about when and what to conserve. Environmental conservation decisions are not limited to protected areas or remnant wild lands. There are conservation decisions to be made about simplified or modified landscapes, just as there are for natural landscapes. It makes little sense, however, to have the same conservation objectives in agroecosystems, production forests, wild lands, and exclusive (marine) ec- onomic zones. This book offers a common way to approach the conserva- tion problem in different systems, while recognizing that the conservation problem itself will vary from ecosystem to ecosystem. The background against which the book is written is complicated. A se- ries of international assessments of the state of the science over the last three decades has revealed mounting evidence that all the earth’s biomes are chan- ging at rates unprecedented in recorded history, and that human agency is implicated in every case. Successive assessments by the Intergovernmental Panel on Climate Change (IPCC) have focused on the role of anthropogenic emissions to air and water, arguing their role in altering the general circu- lation system in ways that threatens the remarkable climatic stability of the Holocene. Climate change is both a consequence and a cause of many of the issues addressed in the book. Agriculture and forestry are responsible for around 13% of carbon dioxide emission, 44% of methane emissions, and 82% of ni- trous oxide emissions, or roughly 12.0 Gt of CO2 equivalent per year. At the same time, climate change is leading to declining crop yields and lower an- imal growth rates in lower latitudes, but increasing crop yields and animal growth rates in higher latitudes. Agricultural pests and pathogens have also Environmental Conservation and Environmental Change 5 increased. Climate change exacerbates the degradation of land in coastal and estuarine areas, in drylands, and in permafrost areas. The area of drylands in drought, for example, has increased on average by around 1% per year over the last 50 years—adversely affecting 380 to 620 million people in South and East Asia, North Africa, and the Middle East. Coastal areas are particularly affected by increased rainfall intensity, flooding, rising sea levels, and stronger wave action (IPCC 2019). Climate change is also affecting many dimensions of biodiversity. Species distributions, phenology, population dynamics, community structure, and ecosystem function are all affected by changes in temperature and precip- itation. Moreover, these effects are increasing in marine, terrestrial, and freshwater ecosystems. The Global Biodiversity Assessment, the Millennium Ecosystem Assessment, and now the assessments of the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) have focused on the anthropogenic stresses on biodiversity and ecosystem functioning— the effect of land-use change, climate change, and species dispersal. Each is argued to have profound, negative consequences for the capacity of the planet to sustain the flow of services people obtain from ecosystems (IPBES 2019). In much the same period, concern over the sustainability of the use humans make of the natural world has moved from the wings to center stage. Between the Brundtland Commission (World Commission on Environment and Development 1987) and the second of two major international conferences on Sustainable Development (United Nations Conference on Environment and Development 1992, United Nations 2012), sustainability has become a central concern of nearly every segment of every society on the planet. The 17 sustainable development goals adopted by the United Nations in 2015 still include environmental goals: to combat climate change; to conserve and sustainably use the oceans, seas, and marine resources; and to sustainably manage forests, combat desertification, halt and reverse land degradation, and halt biodiversity loss. However, the vast majority of goals relate to other aspects of the human condition: poverty, hunger, health, education, gender inequality, income inequality, and peace and justice among them. They also include the goal to ensure sustainable consumption and production patterns (United Nations 2015). A papal encyclical in the same year the sustainable development goals were adopted similarly pointed to the importance of the social dimensions of the environmental problem. Aside from climate change and pollution, water scar- city, and biodiversity change, the encyclical identified societal breakdown, global inequality, and the weakness of international responses as the prin- cipal challenges to be addressed (Francis 2015). The increasing concentration 6 Conservation of wealth in the hands of a few in the Global North and the persistence of widespread poverty in the Global South are seen as much a part of the sus- tainability problem as the degradation of many ecosystem processes essen- tial for all life. Most recently, a major review of the economics of biodiversity commissioned by the UK Treasury, The Dasgupta Review, has underlined the threat posed by biodiversity change to economic growth (Dasgupta, 2021). We have come to see the central environmental challenges of our time as symptoms of a wider malaise of the global social-ecological system. Paul Crutzen famously dubbed the late Holocene as the Anthropocene, an epoch in which the dominance of humans on earth is expected to show in the geo- logical record (Crutzen 2002, Steffen et al. 2007). While human dominance has enabled the rapid growth of both the human population and the goods and services produced, it has also stressed the natural systems on which humans depend. Increasingly, that stress is being interpreted as threatening a set of biophysical limits within the system. Echoing the “Limits to Growth” conclusions of the Club of Rome Report (Meadows et al. 1972), the claim has been made that humans have already exceeded planetary boundaries for cli- mate change, biosphere integrity, biogeochemical flows, and land-system change (Rockström et al. 2009, Steffen et al. 2015). In this view, what is to be conserved at the global level is nothing less than the climatic and other biophysical characteristics of the Holocene. But if such boundaries are more than just lines in the sand—if they represent real tipping points between alternative stable states—then we may already be in a new basin of attraction. History is full of examples where people have exceeded tip- ping points quite blindly. It is also is full of examples where people have under- stood the consequences of their actions, but have been locked into behaviors that drive society beyond the point of no return. Jarad Diamond’s catalogue of societal collapses includes examples of both kinds (Diamond 2005). Against this background, the book explores both the central problem in all conservation decisions, and the many reasons why solutions to particular problems at particular spatial or temporal scales may be inconsistent with solutions to the same problems at different spatial or temporal scales. To set the scene for this we first summarize the evidence for large-scale, system- atic changes in biodiversity and ecological functioning across biomes and in different social systems. We do this the better to understand, at a very broad level, what elements of the biophysical system have and have not been con- served, how this differs from one society to the next, and what humanity has gained or lost in the process. We then probe, more deeply, the relation be- tween changes in the biological record and the way the conservation problem has been addressed by scientists. Environmental Conservation and Environmental Change 7 1.2 The biological record Successive assessments have established the main anthropogenic drivers of biodiversity change: direct hunting and harvesting habitat loss from the growth of agriculture and silviculture the dispersal of species between systems the diversion of water use for human needs emissions to land, water, and air. Of these, direct hunting and harvesting is by far the longest standing source of anthropogenic stress on other species. In the 40,000 years before the Holocene, hunting by humans was implicated in the decline of most of the large-bodied vertebrates (megafauna) that went extinct in Europe, Asia, Oceana, Africa, and the Americas (Pereira et al. 2012). From the beginning of the Holocene, however, hunting was displaced as the primary anthropogenic driver of biodiversity change by the loss of habitat due to the growth of agri- culture and silviculture. Starting from a number of different locations—the Vavilov “centers of or- igin” in Central and South America, the Mediterranean, the Middle East, Ethiopia, Central Asia, South and Southeast Asia, and East Asia (Vavilov 1926)—agriculture has grown to become the dominant land use across much of the world. The Millennium Assessment reported that by the end of the twentieth century, agriculture accounted for between 20% and 75% of the area of eleven of thirteen terrestrial biomes (tundra; boreal forests; tem- perate coniferous forests; montane grasslands and shrublands; tropical and subtropical moist broadleaf forests; deserts; tropical and subtropical conif- erous forests; temperate broadleaf and mixed forests; Mediterranean forests, woodlands, and scrub; tropical and subtropical dry broadleaf forests; tropical and subtropical grasslands, savannas, and shrublands; flooded grasslands and savannas; and temperate forest, steppe, and woodland). Only biomes rela- tively unsuited to agriculture, such as boreal forests and tundra, had remained relatively intact (Millennium Ecosystem Assessment 2005b). Currently the proportion of national land under crop and livestock production varies be- tween 0% and 82.5% (Figure 1.1). Since direct harvesting of wild species has remained an important source of protein throughout the Holocene, the advent of agriculture added another layer to the conservation problem confronting most communities. To the problem of which animal and plant species to promote and which to suppress 8 Conservation 0.50 82.10 Figure 1.1 The proportion of national land under crop and livestock production in 2013. Agricultural land refers to the share of land area that is arable, under permanent crops, and under permanent pastures. Arable land includes land defined by the FAO as land under temporary crops (double-cropped areas are counted once), temporary meadows for mowing or for pasture, land under market or kitchen gardens, and land temporarily fallow. Land abandoned as a result of shifting cultivation is excluded. Land under permanent crops is land cultivated with crops that occupy the land for long periods and need not be replanted after each harvest, such as cocoa, coffee, and rubber. This category includes land under flowering shrubs, fruit trees, nut trees, and vines, but excludes land under trees grown for wood or timber. Permanent pasture is land used for five or more years for forage, including natural and cultivated crops. Source: Constructed from data derived from World Bank (2014). (the problem facing farming communities) was now added to the problem of how to regulate current effort so as to protect future harvests of wild spe- cies (the problem facing hunting communities). The domestication of plants was a process that occurred more or less simultaneously in many different environments during the Holocene, and involved quite different species. Domesticated species originating in the Middle East, for example, included einkorn wheat, emmer wheat, barley, rye, lentil, pea, bitter vetch, chickpea, and flax (Lev-Yadun et al. 2000). Species originating in East Asia included rice, soybean, and foxtail millet (Jones and Liu 2009). Those originating in South America included squash, peanut, quinoa, and cotton in South America (Dillehay et al. 2007). In all cases, the selection of which species to encourage also implied the selection of which species to suppress. Promotion of particular plants or ani- mals implies the suppression of the competitors, predators, and pathogens of those plants or animals. In other words, the domestication of particular plants Environmental Conservation and Environmental Change 9 and animals in different parts of the world saw the decline of other species not as an incidental byproduct of farming but as a necessary concomitant of domestication. Effort to boost abundance of some species simultaneously im- plied effort to reduce the abundance of others. The dispersal of species, the third anthropogenic driver of biodiversity change, is a consequence of the decisions people have made to engage with others—whether for commerce or conquest. In many cases people have moved species deliberately from one part of the world to another. A common feature of the early European voyages of discovery for which we have written records, for example, is that they involved more or less systematic efforts to document the characteristics of species encountered along the way, and to take specimens where feasible.1 The identification of potentially usefully do- mesticated plants and animals was an important goal of the many voyages of discovery to the America’s in the wake of Columbus’s first voyage. Indeed, the Columbian Exchange—the movement of species between Europe and the Americas in the sixteenth century—was built around transfer of domesti- cated plants and animals in both directions. American species introduced to Europe included turkey, maize, manioc, potato, rubber, sunflower, tobacco, and tomato. European species introduced to the Americas included sheep, cattle, horses, goats, and pigs among animals, and bananas, barley, chickpeas, flax, hemp, millet, oats, rice, soybeans, tea, and wheat among plants (Crosby 1972, Crosby 1986). As the people of Central America discovered to their cost, however, do- mesticated plants and animals were not the only species exchanged. Along with crops and livestock came pests, pathogens, and harmful commensals, such as cats and rats. American diseases brought to Europe included bejel, Chagas disease, pinta, and syphilis. In exchange, the immunologically naïve populations of the Americas were exposed to bubonic plague, cholera, diph- theria, influenza, leprosy, malaria, measles, smallpox, typhoid, typhus, and yellow fever. It has been estimated that in the century after Columbus first landed in the Caribbean, the population of Central America was reduced by the effects of these diseases by as much as 90% (McNeill 1977, McNeill 2003). Any benefits conferred by the introduction of new crops and livestock strains were dwarfed by the costs of the new diseases. The net effect of the various stresses on natural ecosystems has been charac- terized as a mass extinction event—the sixth such event to appear in the geo- logical record. The Millennium Ecosystem Assessment reported that current rates of extinction are up to 1,000 times the rate observed in the fossil record. 1 Perhaps the best-known example is Darwin’s record of the third voyage of the Beagle (Darwin 1839). 10 Conservation It ascribed this primarily to the conversion of natural habitat to a range of productive uses, but noted that the changes recorded in the assessment were the combined effect of multiple stressors. It found that the number of species is declining everywhere, and that the population size and/or the range of the majority of surviving species continue to be reduced. Indeed, up to 30% of re- maining mammal, bird, and amphibian species are currently threatened with extinction, with freshwater aquatic species being most at risk. At the same time, it found that the distribution of remaining biodiversity is becoming more homogeneous due to the dispersal of species through trade—whether deliberately or accidentally—while genetic diversity among cultivated spe- cies has declined precipitately (Millennium Ecosystem Assessment 2005a). Nor have subsequent attempts to evaluate the state of biodiversity changed the story (Butchart et al. 2010, Secretariat of the Convention on Biological Diversity 2010). The most recent global assessment of biodiversity (IPBES 2019) identified four main impacts of anthropogenic stress: Extinction risks are increasing. Approximately 25% of animals and plants are threatened, implying that around a million species face extinction, often within decades. Local varieties and breeds of domesticated plants and animals are disap- pearing. Over 500 of the roughly 6,000 domesticated breeds of mammals used for food and agriculture have already gone extinct and around 1,000 more are threatened. Biological communities are becoming more similar to each other in both managed and unmanaged systems. Anthropogenic dispersal of species and the adoption of common management practices has led to the extir- pation of many locally adapted species. The rate of biological evolution is increasing. Anthropogenic evolution of species, particularly pests and pathogens, is occurring so rapidly its effects can be seen within months, in some cases. The sixth mass extinction event continues unabated. 1.3 Implications for conservation The conservation question raised by the biological record is: When is enough enough? This is not a trivial question. Many of the changes recorded by the Millennium Assessment involved conscious decisions by people to promote Environmental Conservation and Environmental Change 11 some species and to suppress others. The general aim of habitat conversion has been to increase the abundance of domesticated plants and animals, along with the species on which those plants and animals depend, and to reduce the abundance of competitors and predators—pests and pathogens. There have been many unintended consequences to these choices, but it is nonetheless reasonable to say that some level of habitat conversion is warranted by the benefits generated through the production of foods, fuels, fibers, freshwater, and the like. Have we exceeded the optimal level of conversion? To begin to answer this question, we need to know what the costs and benefits of conver- sion and conservation are. The Millennium Assessment approached the problem through the clas- sification of the benefits offered by different ecological communities and ecosystems. Termed “ecosystem services,” the benefits were argued to fall into four main groups: provisioning services, cultural services, supporting services, and regulating services. The provisioning services include produc- tion of foods, fuels, fibers, pharmaceuticals, and other consumable items. The cultural services include benefits such as recreation, amenity, and scientific understanding. These are benefits that do not necessarily deplete the envi- ronmental stocks that generate the services. The supporting services include processes such as photosynthesis and nutrient cycling—both essential to the functioning of the underlying ecosystems. The regulating services comprise the buffering functions offered by the diversity of genes, species, and func- tional groups within those ecosystems (Millennium Ecosystem Assessment 2005b). The provisioning and cultural services describe environmentally derived goods and services that enter final demand: that is, that directly satisfy peo- ples wants. The supporting and regulating services describe the ecosystem processes and functions that underpin production of the provisioning and cultural services. The provisioning services can be interpreted as the pro- cesses that generate plant and animal products—food and cash crops, live- stock products, timber, water, genetic material, and the like. Many are supplied through more or less well-functioning markets. The cultural services describe peoples’ nonconsumptive uses of the environment, including recrea- tion, tourism, education, science, and learning. They include more intangible benefits such as the spiritual, religious, aesthetic, and inspirational well-being that people derive from the world about them, and the moral satisfaction gen- erated by the preservation of threatened or endangered species. Some cultural services, like ecotourism, are supplied through well-functioning markets. Most are not served by markets, but are regulated by custom, or by traditional taboos, rights, and obligations. 12 Conservation The supporting and regulating services describe the ecological processes that underpin production of the provisioning and cultural services, and that moderate the impact of environmental variability on production. The supporting services include ecosystem processes and functions such as soil formation, photosynthesis, primary production, and nutrient, carbon, and water cycling. The regulating services depend on the diversity of functional groups of species, and moderate the effects of environmental perturbations on air quality, climate, water quality, erosion, pests and diseases, and nat- ural hazards. They reduce variability in the production of plant and animal products, or other provisioning services. The timing and magnitude of water runoff, flooding, and groundwater recharge, for example, is strongly affected by the composition of plants in watersheds. The value of both supporting and regulating services derives from the value of the provisioning and cultural services they support, and depends on the regime of stresses and shocks expe- rienced. But few are allocated through functioning markets. Many supporting or regulating services are public goods at scales that span national boundaries. From a conservation perspective, what is important about changes in the combination of goods and services consumed by any community is that they also imply changes in the combination of the assets needed to produce those goods and services—the natural capital needed to generate ecosystem serv- ices and the produced capital needed to generate other goods and services. Indeed, this point is critical to all that follows. In the same way that demand for labor stems from demand for the things that labor can produce, so de- mand for the environmental and nonenvironmental stocks that underpin consumption choices derives from demand for final goods and services. The demand for land for the production of food crops, for example, derives from the demand for food. The demand for land as habitat for wild species derives from demand for the conservation of wild species. The demand for watershed protection derives from the demand for water. It follows that the consumption of goods and services today has poten- tial implications for the consumption of goods and services in the future. Specifically, if consumption of goods and services today reduces the pro- duced or natural capital stocks available in the future, it may force a reduc- tion in consumption of the same goods and services in the future. A pattern of consumption is sustainable only if the implied use of capital stocks is sus- tainable. The classic conservation problem confronting pre-Holocene hunter- gatherer communities, and every community since, is to determine what can be harvested today without compromising harvests in the future. This is the problem of determining which natural assets to conserve from one time Environmental Conservation and Environmental Change 13 period to the next. In one form or another, it is the problem addressed in much of this book. The field of conservation biology was developed in the 1970s as a re- sponse to the growing anthropogenic pressure on wildlife. One of the architects of the new field, Michael Soulé, described its focus in the following terms: “Conservation biology... addresses the biology of species, communi- ties, and ecosystems that are perturbed, either directly or indirectly, by human activities or other agents. Its goal is to provide principles and tools for pre- serving biological diversity.... ethical norms are a genuine part of conserva- tion biology, as they are in all mission-or crisis-oriented disciplines” (Soulé 1985). Although the field is now changing, this description still stands. So, for example, one of the most successful texts in conservation biology describes it as a field developed in response to the challenge of preserving species and ecosystems that aims (a) to document the full range of biodiversity on the planet, (b) to uncover human impacts on species, genes, and ecosystems, and (c) to prevent species extinction, to maintain genetic diversity within species, and to protect and restore ecological communities and associated ecosystem functions (Primack 2014). While (a) and (b) describe objective scientific goals, (c) does not. Conservation biology may have become more human-centric in the intervening years but the normative goals remain: the prevention of extinction, maintenance of genetic diversity, and ecolog- ical restoration—the mission of a mission-oriented discipline (Cardinale, Primack, & Murdoch, 2020). The scientific problem identified by Soulé was to apply the principles of ecology, biogeography, and population genetics to the analysis of the causes and consequences of biodiversity change. Although biodiversity writ large is the diversity of genes, species and ecosystems (Wilson 1988), Soulé’s scientific problem pushes the field toward a particular aspect of diversity. Soulé argued that species are the result of coevolutionary processes, are interdependent, and frequently complementary in their functions. Because of this, the extir- pation or extinction of one species has the potential to ramify through the system (Soulé 1985). To understand the direct and indirect effects of species extirpation or extinction, conservation biologists have sought to understand the role of diversity in the functioning of ecosystems. The relevant measure of diversity this implies is less a measure of species richness and abundance, or of the taxonomic distinctness or phylogenetic distance between species, and more a measure of the functional traits that enable different species to perform in different ways. It is important to know the effects of a change in the number of species performing some function, and especially whether 14 Conservation there exist thresholds of diversity below (or above) which ecosystems lose functionality. The scientific problem therefore tends to privilege a classification of organisms that puts them into functional groups (such as grasses, C3 plants, C4 plants, and legumes). The number of functional groups in an ecological community then defines its functional diversity, and the number and rela- tive abundance of species bearing the traits of a particular functional group defines the diversity of that group. The consequences of change in the diver- sity of functional groups can then be measured in terms of the level and sta- bility and the functions performed by the group. We return to the evidence on the impact of changes in the diversity of dif- ferent functional groups in later chapters. Here we note only that the scientific agenda of conservation biology maps closely into the methods developed by economists to uncover the value of the biotic and abiotic stocks of ecosystems. Research on the consequences of changes in functional diversity and the di- versity of functional groups is effectively research on the production functions that underpin all provisioning and cultural ecosystem services. In coupled social ecological systems, the diversity of functional groups includes the va- riety of cultivated crops, crop pests, wild crop relatives, and weedy species. It includes the variety of biologically derived fuels and fibers, and the variety of diseases that affect humans, animals, and plants. At the same time, however, human well-being is also affected by change in the diversity of functional groups that are not directly involved the pro- duction of highly valued ecosystem services. The microorganisms that move carbon, nutrients, and water into and out of ecosystems are as important for ecological functions that support the production of valued ecosystem services as they are for the functioning of systems without humans. By understanding the biogeochemical processes involved in ecosystem functioning, and by un- derstanding the linkages between ecosystem functioning and the production of valued ecosystem services, we are able to derive the value of the underlying biotic and abiotic stocks—the atmospheric, lithospheric, and hydrospheric pools of carbon, nutrients, and water, together with the plants, animals, and microorganisms that move carbon, nutrients, and water into and out of the ecosystem. But what of the normative goals of conservation biology? How do they map into the science of conservation? Soulé’s normative statements are clearly not refutable by reference to evidence. They are statements of what should be, based on opinion not fact. They are beliefs, not testable hypotheses. They are also deeply and widely held convictions about the ethical response to the increasing number of species extinctions with long antecedents in American Environmental Conservation and Environmental Change 15 philosophy and ethics, reaching back to Ralph Waldo Emerson and Henry David Thoreau, to John Muir and Aldo Leopold. To get a sense of what these convictions imply for the science of conser- vation, consider the statements made by a group of scientists (Mangel et al. 1996) who set out to elucidate the principles of conservation biology origi- nally suggested by (Holt and Talbot 1978). Their starting point was a simple assertion that “The consequences of resource utilization and the implementa- tion of principles of resource conservation are the responsibility of the parties having jurisdiction over the resource or, in the absence of clear jurisdiction, with those having jurisdiction over the users of the resource.” The prin- ciples of resource conservation were then spelled out as a series of norma- tive statements, the gist of which was that any resource utilization should be constrained by an obligation to maintain the state of ecosystems so as to pre- serve future options, to guard against irreversible change, to embed a safety factor to account for uncertainty and imperfect information, and to avoid un- necessary waste (Mangel et al. 1996). The protection of future options mirrored the main criterion for sustaina- bility asserted in the Brundtland Report (World Commission on Environment and Development 1987). Indeed, this was used as the primary justification for maintaining biodiversity at genetic, species, population, and ecosystem levels within “natural boundaries of variation” (Mangel et al. 1996). It was also clear, however, that the principles privileged naturalness. The goals of conservation were to avoid fragmentation of natural areas, to maintain natural processes, to avoid disruption of food webs, and so on. The corresponding scientific agenda was to understand the behavior of natural systems, and the response of nat- ural systems to anthropogenic stress. Since many biological processes were recognized to be nonlinear, involving critical thresholds, it was argued that the principles implied the need to identify, understand, and accommodate complex natural ecosystem dynamics (Mangel et al. 1996). To see what the normative goals of conservation biology imply for the so- cial dimensions of the problem, consider the value that species conservation has for people. Mangel et al. recognized that human resource use decisions are value-driven, implying the need to understand the basis of value and the incentive effects of changes in value. Since conservation is a use much like any other, the goals of conservation biology imply values that favor conservation over other uses. Within the field of conservation biology this is reflected in a two-pronged approach, only one of which has implications for science. One strategy has been to assert the existence of values that are suppos- edly independent of the values that drive all other uses of natural resources. Therefore, Soulé argued that biodiversity has intrinsic value independent of 16 Conservation any instrumental or utilitarian value it might have: “Species have value in themselves, a value neither conferred nor revocable, but springing from a spe- cies’ long evolutionary heritage and potential or even from the mere fact of its existence” (Soulé 1985). We consider the question of the intrinsic value of species in more detail in later chapters. Here we note only that this is a statement of faith rather than fact. A second strategy has been to identify the conservation value of species through the adoption of criteria that include rareness, endangerment, rich- ness, endemicity, and the like. Examples include the geographical distribution of taxa, and the number of taxa in some location. The more restricted the geo- graphical distribution of a taxon, the greater its conservation value. The larger the number of taxa in some location, the greater the conservation value is of that location. This strategy engages the scientific agenda in ways that are much easier to see. Given a set of criteria, it becomes possible to identify the relative conservation value of both species and geographical areas. Indeed, two of the most widely used instruments for guiding conservation effort—biodiversity hotspots and the International Union for Conservation of Nature (IUCN)’s Red List of endangered species—are a direct result of efforts to identify the relative conservation value of species and habitats. The biodiversity hotspots, originally introduced by Norman Myers (Myers 1988), reflected a broad-brush attempt to identify the areas of the world of greatest conservation value by two criteria: the number of endemic species they contain, and the extent of habitat loss they experience (Table 1.1). Since that time the effort to extend the classification of habitats using either the same or different criteria has led to a proliferation of hotspots, and the identification of more areas of high conservation value due to the presence of restricted range species. In 1988 Myers identified just 10 hotspots. By the end of the twentieth century the number had risen to 25 and covered 44% of all vascular plant species, and 35% of all species in four vertebrate groups on 1.4% of the earth’s land surface (Myers et al. 2000). By 2015, 35 hotspots cov- ered 17% of the earth’s land surface, and maintained 77% of all endemic plant species, 43% of vertebrates (60% of threatened mammals and birds, and 80% of threatened amphibians) (Marchese 2015) (Figure 1.2). In a parallel development, the IUCN Red List of endangered species classifies individual taxa on the basis of threat (or a mixture of threat and rarity) (Robbirt et al. 2006). As is the case with hotspots, there have been changes in both the criteria by which Red List assessments have been made, and the way that the Red List is used to generate an index of extinction prob- abilities, the Red list Index (Butchart et al. 2007). Successive lists report Environmental Conservation and Environmental Change 17 Table 1.1 The growth of biodiversity hotspots. (Myers 1988) (Myers 1990) (Myers 2000) (Mittermeier et al. 2004) Uplands of Western Uplands of Western Tropical Andes Tropical Andes Amazonia Amazonia Western Ecuador Western Ecuador Choco/Darien/West Ecuador Colombian Choco Colombian Choco Tumbes-Choco- Magdalena Atlantic Coast Brazil Atlantic Coast Brazil Atlantic Coast Brazil Atlantic Forest Brazilian Cerrado Cerrado Central Chile Central Chilea Chilean Winter Rainfall and Valdivian Forest Mesoamerica Mesoamerica Madrean Pine-Oak Woodlands Caribbean Caribbean Islands California Floristic California Floristic California Floristic Province Province Province Ivory Coast Guinean Forest of Guinean Forest of West Africa West Africa Cape Floristic Region Cape Floristic Cape Floristic Region Province Succulent Karoo Succulent Karoo Maputaland‚ Pondoland‚ Albany Tanzania Eastern Arc and Eastern Afromontane Coastal Forest Coastal of Tanzania/Kenya Forests Horn of Africa Eastern Madagascar Eastern Madagascar Madagascar & Indian Madagascar & Indian Ocean Islands Ocean Islands Mediterranean Basin Mediterranean Basin Caucasus Caucasus Irano-Anatolian Mountains of Central Asia Western Ghats in Western Ghats and Western Ghats and India Sri Lanka Sri Lanka Southwestern Sri Mountains of South- Mountains of South- Lanka Central China Central China Eastern Himalayas Eastern Himalayas Indo-Burmae Indo-Burma, Himalaya Continued 18 Conservation Table 1.1 Continued (Myers 1988) (Myers 1990) (Myers 2000) (Mittermeier et al. 2004) Peninsular Malaysia Peninsular Malaysia Northern Borneo Northern Borneo Sundaland, Wallacea Sundaland, Wallacea Philippines Philippines Philippines Philippines Japan Southwest Australia Southwest Australia Southwest Australia East Melanesian Islands New Zealand New Zealand New Caledonia New Caledonia New Caledonia New Caledonia Polynesia‚ Polynesia‚ Micronesia Micronesia Source: (Marchese 2015). Figure 1.2 Terrestrial and marine hotspots. This often-seen image, originally due to Conservation International, describes the first 34 of the 36 biodiversity hotspots designated to date. For current hotspots see Critical Ecosystem Partnership Fund (2020). A shapefile of hotspots is available from Hoffman et al. (2016). progressively greater numbers of threatened species (IUCN 2004, IUCN 2014), which reflects both change in the level of effort given to the classifica- tion and change in real conditions. As in the case of hotspots, too, the science lies in the identification of species satisfying particular criteria. The focus on anthropogenic threats to species richness, and particularly the richness of endemic species, is at least partially reflected in two strands of Environmental Conservation and Environmental Change 19 research in the economics of conservation that will be explored later. One is in the analysis of the demand for naturalness (Eichner and Tschirhart 2007), and the other is in the specification of the optimization problem where diversity is measured in terms of the phylogenetic distance between species (Weitzman 1992). Both take the normative goals of conservation biology as given, and ask what economic problem they give rise to. 1.4 Plan of the book We call the approach adopted in this book the Hotelling approach. This recognizes the fact that the principles were first spelled out in Hotelling’s 1931 analysis of the optimal extraction of mineral resources. We are not the first to recognize Hotelling’s contribution in this area. In 1981, 50 years after his paper appeared, an article by Deverajan and Fisher had this to say: “There are only a few fields in economics whose antecedents can be traced to a single, seminal article. One such field is natural resource economics... its origin is widely recognized as Harold Hotelling’s 1931 paper... it... not only presented the canonical model for modern theorists to build on, but also anticipated the relevant issues—such as the effects of uncertainty and the presence of externalities—by almost a generation” (Deverajan and Fisher 1981). The same principles now appear in almost every paper on the optimal management of dynamical resource systems. They are frequently thought of as principles governing optimal extraction or harvest, but conservation and extraction or harvest are but two sides of the same coin. A solution to the optimal extraction problem is also a solution to the optimal conservation problem. When resource managers decide how much to extract or harvest in some period, they also decide how much to leave or conserve in the same pe- riod. When they decide how much of an ecosystem to convert to human use, they also decide how much to conserve. All we do is draw attention to the fact that all conservation problems have a similar structure, and can benefit from application of the same principles. The challenge is to understand the value of resources—to recognize that the same resource may have value to different people for different reasons, and that values may change at different rates. The book is divided into four parts. Part I offers an economic theory of conservation that generalizes Hotelling’s (1931) results. We show that the Hotelling principle is embodied in all subsequent work on the optimal ex- ploitation of both nonrenewable and renewable natural resources. In fact, we show that every time we find the first order necessary conditions for the optimal management of natural resources, we include a restatement of the 20 Conservation Hotelling principle that resources should be exploited only up to the point where the growth in their value to society is equal to the rate of return on al- ternative assets. The arguments offered in this part are somewhat mathemat- ical, but for those who are willing to take the formal arguments as read, we include discursive summaries at the end of each chapter. Part II focuses on the valuation of goods and services, and of the assets un- derlying the production of goods and services. Given that conservation in the Hotelling approach depends on valuation, this step is critical. Since many natural resources are not bought and sold in the marketplace, however, we cannot rely on market prices. We often need to estimate resource values using a range of nonmarket methods. The chapters in this part explore the options open to us to estimate nonmarket values. Part III considers the issues involved in aligning the private and social value of environmental assets. Even where resources are exchanged in the market, their price may be a poor approximation of their value. We may need to add in external effects or externalities, particularly where resources are public goods. We show how interventions that confront resources users with the true social opportunity cost of their behavior can be thought of as conservation instruments. Once again, where we make formal arguments, we also include a discursive summary of those arguments. Part IV then applies the Hotelling approach to a discussion of the main issues in environmental conservation. This includes the classic approach to conservation—protected areas, but also includes conservation in production systems beyond protected areas. We consider the problem of scale, and dis- cuss the impact of changes in both temporal and spatial scale. While we focus on two spatial scales—national and international—we acknowledge that con- servation policy and practice play out at multiple spatial scales, and we spell out the principles that apply to conservation that affects people at different scales. 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