Economic Benefits of Rare
and Endangered Species
Loomis, J.B., White, D.S. "Economic Benefits
of Rare and Endangered Species: Summary
and Meta-Analysis." Ecological Economics
18(1996): 197-206.
Lauren Goschke
Questions
#1- What kinds of economic costs and benefits
are provided by Threatened and Endangered
(T&E) species?
#2- Can we calculate the importance of a
species through Willingness to Pay (WTP)?
#3- What is the most effective way of including
a cost-benefit analysis into the Endangered
Species Act (ESA)?
Measuring Costs and Benefits
of T&E Species
• Used Willingness to Pay (WTP) to determine
costs and benefits (value) of T&E species.
• Use Value
• Option Value
• Existence Value
• Bequest Value
Total Economic Value
(Randall and Stoll, 1983)
Sources of Data
• 20 mail survey studies of WTP for T&E
species
• Used the mean WTP rather than the median
WTP
• Dollars evaluated at a 1993 level
• Used a meta-analysis
Method of Analysis
• Contingent Valuation Method (CVM)
– The creation of a hypothetical market
• Included description of species and necessary
habitat
• Form and frequency of payment to maintain
populations
• What is a respondent’s WTP?
• This method has been upheld as valid by the
US District Court of Appeals
Examples of WTP
Value Per Species Per Household
Species
Low Value High Value
Average Value
Northern
Spotted
Owl
$44
$95
$70
Salmon/
Steelhead
$31
$88
$63
Grey
Whale
$17
$33
$26
Bighorn
Sheep
$12
$30
$21
Some Results
• WTP is sensitive to the size of the population
change of the T&E species
• WTP increases with increases in population,
but does so at a decreasing rate.
• WTP for marine mammals and birds is higher
than that for fish, land mammals, or birds
ESA Implications
• CVM can provide Total Economic Value
for T&E species
• Current costs and benefits based on
anthropocentric values, so CVM may
not account for all costs and benefits
• Safe Minimum Standard Approach
• Opportunity cost is low-problem is
distribution of costs
CBA in the ESA
• The CBA can be important but
shouldn’t be a sole determining factor
• A CBA does not include
– Equity
– Fairness
• Should value entire ecosystem, not
individual species (habitat valuation)
Questions?