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1996 - Simpson et al - Valuing Biodiversity for Use in Pharmaceutical Research

Title
Valuing Biodiversity for Use in Pharmaceutical Research

Authors
David R. Simpson, Roger A. Sedjo, John W. Reid

Date
1996

Abstract
’Biodiversity prospecting’ has been touted as a mechanism for both discovering new pharmaceutical products and saving endangered ecosystems. It is unclear what values may arise from such activities, however. Evidence from transactions is incomplete and existing theoretical models are flawed. The authors calculate an upper bound on the value of the ’marginal species.’ Even under favorable assumptions this bound is modest. Slightly modified assumptions lead to drastically lower estimates. The authors extend their findings to the value of the marginal hectare of habitat and find that the incentives for habitat conservation generated by private pharmaceutical research are also, at best, very modest.

Citation
Simpson, R., Sedjo, R., Reid, J. (1996). Valuing Biodiversity for Use in Pharmaceutical Research. The Journal of Political Economy 104 (1), 163-185.