1. ECO 345 - Environmental and Resource Economics
Research Paper
March 15, 2016
Nicholas C. Niesen
Our group will focus on the environmental and economic impacts of Natural Resource
Depletion. To better focus our research, we will define Natural Resource Depletion as the
consumption of a resource faster than it can be replenished. Sub-topics will focus on the
depletion of forests, wildlife/extinction, water, oil, and agriculture. The group member
researching each subtopic and corresponding articles are listed below.
Agriculture - Loss of Biodiversity
At its core, biodiversity simply refers to a variety of life. There are roughly 10 million
species of plants, animals, and microbes on earth, and every one of these species has a unique
role in ensuring that the world keeps progressing in an efficient manner (Pimm et al., 1995). The
increased loss of these species leads to an increased loss of ecosystem services that they may
provide to agriculture, forests, or ecosystems. These services range from earthworms that churn
and aerate the soil to microbes used to eliminate pollutants. The costs of these services are
discussed in the scholarly article that I reviewed while an interesting possible solution to loss of
biodiversity is discussed in the popular article.
A recent article in The Economist titled Hang On addresses biodiversity and possible
solutions to the increased loss of biodiversity throughout the world. The article discusses how
economic growth has led to a decline in biodiversity, and, conversely, how economic
development may be a way to increase biodiversity. Evidence shows that more developed areas

2. have recently shown a preference toward conservation which has helped slow the rate of
extinctions in these areas. On the other hand, relatively poorer and less developed countries have
increased their impact on the environment. Multiple sources of data are referenced including how
the Living Planet Index, which measures trends in species populations, has generally fallen in
poor countries and risen in rich countries over the past 40 years. Also, the case of the bald eagle
was mentioned as an example of how a once nearly extinct species has rebounded quite well in
the United States which is relatively rich. To illustrate the progress of developed countries in
promoting biodiversity, South Korea, a fast developing country where forest loss has stabilized,
was compared to North Korea, a relatively less developed country, where approximately one
third of forests have been lost since 20 years ago. However, the issue of biodiversity loss is in no
way solved. As the population continues to increase, additional strain is put on the planet.
Specifically, the increase in land needed to grow food has caused a large amount of habitat loss
which has greatly contributed to loss of biodiversity. Because of population growth, the land area
needed to grow food is expected to double by 2050 (Economist, 2013).
The specific issue that the author addressed was the ability of economic development to
aid in increasing or preserving biodiversity. To do so, the examples mentioned in the previous
paragraph are used as evidence. The method of revealed preference because of the use of indirect
data gathering. Recent trends such as agricultural yields, birth rates, and Living Planet Index are
used to illustrate humans impact on biodiversity is decreasing in developed countries.
While reading this article, willingness to pay (WTP) seemed to be a main economic
theory that could be applied to this situation. The findings of this article point to citizens of rich
countries having a higher WTP to preserve biodiversity that citizens of relatively poorer

3. countries. However, the findings could also mean that poor counties are willing to accept (WTA)
relatively less to no longer have biodiversity. This topic can also be related to a classic case of
supply and demand. The demand for biodiversity is poor countries is relatively low compared to
rich ones, so the supply of biodiversity in poor countries will be relatively less that it will be in
rich areas.
Almost anytime loss of biodiversity or a rise in extinction rates are discussed, one of the
main causes is often economic development. This article take a different approach and discusses
how economic growth may be a large reason we are where we are (environment wise) but this
same development may also be a large reason why we begin to turn the corner and actually gain
biodiversity while improving the environment. Because of this different take on the relationship
between economic development and biodiversity, this article is a unique pice of literature in the
economics community.
The article brings up interesting points but is generally near sighted about the issue of
biodiversity. The relatively rich counties of the present have been the ones that have historically
produced the most pollution over the industrial revolution. As a result of operations that were
extremely harmful to local ecosystems, these countries prospered while others took a relatively
small tole on their local ecosystems by not participating in the Industrial Revolution. A market
for pollution like the one in class was not mentioned in the article. There is the real possibility
that rich countries may be outsourcing their pollution to poorer one thus increasing the
biodiversity discrepancy between rich and poor countries. The article does not mention how
citizens of poor countries do not have a high WTP for biodiversity because their basic needs fail
to be met. People are referred to as being either members of poor or rich countries which

4. removes the reader from the fact that biodiversity loss is a worldwide issue that can only be
addresses with a unified effort between everyone on earth. Overall, the article provides an
interesting perspective on the subject of biodiversity loss, but fails to address the possibility that
mankind may have already done irreparable damage to biodiversity and the environment as a
whole.
The second article that was reviewed, Economic and Environmental Benefits of
Biodiversity, dealt with the value of biodiversity services. Data is compiled from previous
research to assist the authors in arriving at the value that biodiversity brings to the United States
and the world. This paper breaks down the monetary value of biodiversity into categories found
in Table 2 and uses the known cost of similar activities to assign a dollar value to the biodiversity
services. The main conclusion is that the conservative total value of services provided to
humanity by the wide range on species on earth is $2.928 trillion and $319 billion in the United
States alone (Pimental et al., 1997).
One of the main points of biodiversity preservation is that the supply of biodiversity
services is dependent on human activity. The more negative impact we have on biodiversity, the
less services we receive. It is to our advantage to preserve and encourage biodiversity because it
not only benefits the environment, but it also translates to more biodiversity services that we
essentially get for free. The issue of biodiversity is a classic example of the basis of economics
which involves how society disperses scarce resources while dealing with unlimited demand.
The optimal level of biodiversity is not achieved because it is a public good which is typical
because people are willing to pay less for public goods due to a tendency to think on an
individual basis. Mankind has historically given more consideration to present needs than needs

5. of future generations. As a result, we have natural resource depletion and specifically
biodiversity loss.
The article contributes to research literature by taking a systematic and conservative
approach to estimate total value of biodiversity services to humans and to the natural
environment as a whole. The paper states that this research is vital because it can be used as a
basis for implementing policies that encourage enhanced biodiversity based on its large
economic contribution to mankind.
Source: BioScience, Vol. 47, No. 11
Economic and Environmental Benefits of Biodiversity is effective in illustrating the
overall contribution of biodiversity. When dealing with costs that can sometimes be difficult to

6. estimate, it is important to be conservative in estimates. The authors of this paper take a
conservative approach which improves the accuracy of any policies that come about as a result
of this research. A wide range of biodiversity services are taken into account which give an
accurate representation of the net social benefits received from them. Based on this, I feel that
the authors wrote a very accurate and interesting paper that was a valuable addition to the
research community.

7. References
Pimm S.L., Russell G.J., Gittleman J.L., & Brooks, T.M. (1995). The future of biodiversity.
Science 269, pp. 347-350.
Economist, The (2013). Hang On: More growth, not less, is the best hope for averting a sixth
great extinction. The Economist, Hang On, September 14, 2013. Retrieved from http://
www.economist.com/news/leaders/21586346-more-growth-not-less-best-hope-averting-
sixth-great-extinction-hang
Pimentel, D., Wilson, C., McCullum, C., Huang, R., Dwen, P., Flack, J., Tran, Q., Saltman, T., &
Cliff, B. (1997). Economic and Environmental Benefits of Biodiversity. BioScience, Vol.
47, No. 11, pp. 747-757.