Tropical Forest Biodiversity Protection: Who Pays and Why

People value biodiversity found in tropical rain forests for a variety of utilitarian, aesthetic, moral, ecological, and socioeconomic reasons (Botkin and Talbot, 1992). For instance, traditional medicines derived from plant and animal species found in the tropics provide health services to rural and urban populations; about 25 percent of the pharmaceutical products produced in the United States are associated with plants (WRI et al., 1992). Genetic materials extracted from plant and animal species have contributed to the development of commercial agricultural products (e.g., new varieties of wheat, maize, and rice) that are more resistant to pests and diseases. And nature tourism, often associated with protected wildlife habitats, has become an important source of income, generating about $ 12 billion annually in worldwide earnings (Lindberg, 1991). There are important socioeconomic and political considerations in the valuation of biological resources and the protection of biodiversity. First, the benefits that result from biodiversity have spatial and temporal dimensions. The ecological services linked with biodiversity, such as clean air and water, and the use of genetic material and ingredients extracted from plants, animals, and microorganisms, occur at different places and at different times, often beyond the “economic time scale” of individuals. Second, biodiversity has characteristics of a public good locally arid nationally and may be considered a “global environmental good” in an international context. The benefits of public goods flow to all people regardless of whether they have paid for the good, which means that public goods suffer from the problem of “free riders.” In a national context, economists have long focused attention on the difficulty of financing public goods and have generally concluded that such goods will be underprovided by markets. In the international context, the provision and financing of public goods is even more problematic. These characteristics make management of biodiversity institutionally complex and create problems in defining property rights. Third, conservation of biodiversity can create significant nonuse values. By its very existence, biodiversity can generate economic value without requiring actual use and can provide value by leaving open the option of future use.