Valuation of Biodiversity

OnPoint’s experts have decades of experience in valuation techniques widely used in environmental and resource economics; techniques that are more recently being applied to biodiversity. Biodiversity provides a wide range of indirect benefits to humans, benefits that are challenging to quantify. It is now widely recognized that human activities can contribute both to the loss of biodiversity and, if properly managed, to the promotion of biodiversity thus creating economic gains. In order to assess the total economic value (TEV) of biodiversity, OnPoint investigates four components, among others:

  • Ecosystem life support functions – e.g., the benefits of groundwater recharge, nutrient removal, toxic retention and flood control
  • Supply of ecosystem space and natural habitat protection – e.g., the loss of wilderness areas and natural areas related to tourism and outdoor recreational demand
  • Overall provision of species diversity – e.g., the impact on revenues of pharmaceutical and agricultural industries that use plant and animal material to develop new medicines and products
  • Passive/nonuse component of biodiversity – e.g., the knowledge that biodiversity exists and human philanthropic considerations irrespective of actual use.

In the valuation of these components OnPoint applies its expertise in empirical analysis of market data and in survey design to quantify both revealed and stated preferences. The methodologies OnPoint employs include:

  • Travel cost
  • Random utility
  • Alternative behavior
  • Hedonic pricing
  • Contingent valuation
  • Choice modeling
  • Determination of option value of genetic resources
  • Determination of pricing for exclusive vs. non-exclusive rights to biodiversity sites.