Economic growth

ECONOMIC GROWTH, BIODIVERSITY LOSS AND CONSERVATION EFFORT by Simon Dietz and W. Neil Adger

CSERGE Working Paper ECM 01-03

ECONOMIC GROWTH, BIODIVERSITY LOSS AND CONSERVATION EFFORT by Simon Dietz1 and W. Neil Adger2 Department of Geography and Environment London School of Economics and Political Science Houghton Street London, WC2A 2AE and
2 1

Centre for Social and Economic Researchon the Global Environment University of East Anglia Norwich, NR4 7TJ, UK Email: n.adger@uea.ac.uk

Acknowledgements The support of the Economic and Social Research Council (ESRC) is gratefully acknowledged. This work was part of the interdisciplinary research programme of the ESRC Research Centre for Social and Economic Research on the Global Environment (CSERGE). We thank Renate Schubert andMatthias Gysler (Swiss Federal Institute of Technology (ETH), Zurich) and Ross Cullen (Lincoln University, New Zealand) for comments and guidance on an earlier draft. This version remains our own responsibility. ISSN 0967-8875

Abstract This paper investigates the relationship between economic growth, biodiversity loss and efforts to conserve biodiversity using a panel of cross-country time seriesdata. If economic growth is a cause of biodiversity loss through habitat transformation and other means then we would expect a strong relationship in the data. But if higher levels of income are associated with increasing real demand for biodiversity conservation then the rate of biodiversity loss should slow with growth, since increasing diversity is not a realistic prospect, and investment toprotect remaining diversity should grow. Initially, economic growth and biodiversity loss are examined within the framework of the environmental Kuznets hypothesis. Biodiversity is represented by species diversity, generated for tropical terrestrial biodiversity using a species-area relationship. The environmental Kuznets hypothesis is investigated with reference to comparison of fixed and randomeffects models to allow the relationship to vary for each country. It is concluded an environmental Kuznets curve between income and rates of biodiversity loss does not exist in this case using the full dataset of tropical countries. Hence economic growth continues to cause biodiversity loss even at high levels of income per capita. The role of conservation effort in addressing environmentalproblems is examined through state protection of land and the regulation of trade in endangered species, two important means of biodiversity conservation, showing that the extent and effectiveness of government environmental policy increases with economic development. We argue that, although the data are problematic, the implications of these models is that conservation effort can only ever result in apartial deceleration of biodiversity decline, as protected areas serve multiple functions and are not necessarily designated to protect biodiversity. Nevertheless the institutional components of the income biodiversity relationship are central and not well captured through cross-country regression analysis.

JEL Classification: Q2, Q23 Keywords: Environmental Kuznets Conservation effort.curve;

Biodiversity;

Species-area

relationship;

1.

Introduction

The relationship between economic growth and various indicators of environmental quality has come under increasing scrutiny because of abundant manifestations of the consequences of unsustainable resource use at local and global scales. For certain indicators and certain statistical designs, the reducedform relationshipbetween income per capita and environmental quality is an inverted-U. Environmental degradation first increases with rising income, reaches a turning point, and then decreases. This has been termed the environmental Kuznets curve, though, as with Kuznets’ (1955) own hypothesis on the relationship between income and inequality, the evidence that an environmental Kuznets curve applies generically...