The Value of Habitat Conservation for Bioprospecting

1
The Value of Habitat Conservation for
Bioprospecting

• Sean B. Cash
• Assistant Professor, Dept. of Rural Economy
• University of Alberta
• Fourth BioEcon Workshop on the Economics of
  Biodiversity Conservation
• Venice, August 28 29, 2003

2
Why Higher Plants are Valuable to Pharmaceutical
Companies

• Up to 1/4 of all drugs derived from plants
• Taxol was derived from the Pacific yew
• Cortisone and the first oral contraceptives
  derived from Central American yams
• Aspirin derived from a substance found in willow
  trees
• Merck/InBio agreement in Costa Rica

3
Rents to Pharmaceutical Development
4
Previous Work

• Farnsworth and Soejarto (1985) - 1.5 million per
  year for each extinct species
• Principe (1989) - 300,000 per species
• Simpson, Sedjo and Reid (1996) - 9,400 as an
  upper bound for the marginal species almost no
  incentive to conserve land
• Rausser and Small (2000) - Value of a research
  lead

5
SSR Model

• Value of the marginal, not average, species
  drives conservation incentives
• Value is negligible for low or high probability
  of discovery
• Expected value of an additional species is

6
SSR Model

• If testing for a particular use ends with the
  first success, the value of a collection of n
  species is
• The expected value of an additional species for
  any given use is therefore

7
Expected Value of the Marginal Species as a
Function of p (SSR)
8
(No Transcript)
9
Incorporating Spatial Correlation

• Let Ij1 if species j is beneficial otherwise
  Ij0, i.e., p prob(Ij1)
• Assume Corr(Ij, Ik) f(djk)
• Simple case Corr(Ij, Ik) r if Ij, Ik are in
  same region, Corr(Ij, Ik) 0 otherwise
• prob(Ij1Ik1) is then r (1 - p) p
• Replace p with this conditional probability when
  a hit is observed

10
Value of the Marginal Hectare

• Area-species curve predicts ni(A) ai AZ, where
  ai is species richness in i and Z .25
• Can predict the loss of endemic species from a
  one-hectare loss of habitat
• Combined with v(n) and conditional probability
  pi, value of marginal hectare if a hit is
  previously observed is

11
(No Transcript)
12
(No Transcript)
13
Results (1)
14
Incorporating Expected Loss of Habitat

• If genetic resources are secure, commercial value
  of conservation is zero
• Value of preservation higher in an area where
  habitat loss is progressing quickly
• The number of useful species we expect to have
  tomorrow is number today minus habitat loss,
  other extinction, and species ruled out by
  research

15
Incorporating Expected Loss of Habitat

• Assuming that dit is realization of habitat loss
  in hotspot i in period t, per-hectare value of
  preventing deforestation is
• where the expected number of useful species
  surviving the current period is

16
Results (2)
17
Results (2)
18
Conclusions

• Calculations reported here are not definitive
  estimates, just possible scenarios
• Potential role of spatial correlation and
  expectation of future habitat loss significant
• Results of Simpson et al. sensitive to these
  considerations
• Can mean difference between success and failure
  of market-based conservation

19
Other Considerations

• Perfect substitution of plant compounds for a
  given use assumed here (and elsewhere)
• Competition between firms has not been considered
• Interesting interplay between the two better
  products can replace established ones
• Role of ex situ conservation techniques