Economics of biodiversity



Biodiversity plays an essential role in the global economy. This includes its role in providing ecosystem services - the benefits that humans get from ecosystems. Biodiversity plays a major role in the productivity and functioning of ecosystems, affects their ability to provide ecosystem services. For example, biodiversity is a source of food, medication, and materials used in industry. Recreation and tourism are also examples of human economic activities that rely on these benefits. In 2018, the WWF Living Planet Report estimated that ecosystem services contributed US$125 trillion a year to the global economy.

The benefits of biodiversity are often evaluated in an anthropocentric way and the inherent value of biodiversity, outside of its benefits to humanity, has been debated by economists. Despite these benefits, economic activities often result in harm to biodiversity, such as through deforestation.

The majority of species have yet to be evaluated for their current or future economic importance. Raw materials, pharmaceuticals and drug production all directly and indirectly depend upon biodiversity.

Food
Biodiversity provides high variety of food: crops, livestock, forestry, and fish are important food source of human species. However, the number of species have been domesticated and cultivated are small if comparing with the number of species existing. Wild species and varieties can supply genes for improving domesticated species by improving their yield, disease resistance, tolerance and vigor; this can increase the profit of farming.

Biological pest control


An important ecosystem function associated with biodiversity is pest control. Control species can suppress pest populations and reduce loss of crop yields without the negative impacts of chemical pesticides. This has economic benefits and maintaining natural pest control is important to humanity's ability to grow crops. It can also be applied within horticulture.

Biological pest control can reduce economic losses incurred as a result of pests, disease vectors, and invasive species. However, its use can have unintended effects where control species are introduced without adequate research. For example, the cane toad was introduced to Queensland, Australia in 1935 to control cane beetles that attack sugarcane roots but are now regarded as an invasive species through their damaging impacts on native species.

Medication
A wide variety of plants, animals and fungi are used as medicine. Wild plant species have been used for medicinal purposes since before the beginning of recorded history. Over 60% of world population depends on the plant medicines for their primary health care. For example, quinine comes from the cinchona tree has been used to treat malaria, digitalis from the foxglove plant treats chronic heart trouble, and morphine from the poppy plant gives pain relief.

According to the National Cancer Institute, over 70% of the promising anti-cancer drugs come from plants in the tropical rainforests. It is estimated that of the 250,000 known plant species, only 5,000 have been researched for possible medical applications. Ethnopharmacy is the branch of science that investigates traditional medicines.

Animals may also play a role, in particular in research. In traditional remedies, animals are extensively used as drugs. Many animals also medicate themselves. Zoopharmacognosy is the study of how animals use plants, insects and other inorganic materials in self-medicatation. In an interview with the late Neil Campbell, Eloy Rodriguez describes the importance of biodiversity:

"Some of the compounds we've identified by zoopharmacognosy kill parasitic worms, and some of these chemicals may be useful against tumors. There is no question that the templates for most drugs are in the natural world."

Industry
For example, fibers for clothing, wood for shelter and warmth. Biodiversity may be a source of energy (such as biomass). Other industrial products are oils, lubricants, perfumes, fragrances, dyes, paper, waxes, rubber, latexes, resins, poisons, and cork, which can all be derived from various plant species. Supplies from animal origin include wool, silk, fur, leather, lubricants, and waxes.

Animals may also be used as a mode of transport.

Biological material can provide models for many industrial materials and structures. For example, the inspiration for the infrared sensor came from the thermosensitive pit organ of rattlesnake. The modelling is considered as Biomimicry.

Horticulture
Horticulture refers to the small-scale cultivation of plants, such as for use in gardening or landscaping. These plants may be used for food, medicine, or aesthetic and ornamental purposes. Horticultural plant biodiversity is important to the economy. For example, in the UK, growth of ornamental plants was worth £1.7 billion in 2023.

Tourism and recreation
Through cultural ecosystem services, biodiversity provides economic benefits in the form of recreation and tourism, while also benefitting human wellbeing. Biodiversity influences the potential of ecosystems to provide recreational services. This includes outdoor recreation, such as hiking, hunting, fishing, and wildlife watching. Another form of recreation supported by biodiversity is tourism. Biodiversity is "at the heart of what drives the tourism industry", according to the United Nations Environment Programme. The beauty of tourist destinations or the species they support can attract tourists to visit certain areas. For example, destinations like rainforests, beaches, national parks, and nature reserves are attractive to tourists. The revenue generated through tourism is vital to many economies worldwide.

Nature-based tourism, such as to visit protected areas, also has an important economic impact. For example, ecotourism, where the motivation of tourists is to observe and appreciate nature and the cultures in natural areas, while supporting their maintenance. In 2023, the global ecotourism market was estimated to be worth US$216.49 billion.

Despite the economic benefits from biodiversity through tourism, the tourism industry has negative impacts on biodiversity. For example, through habitat destruction and pollution. As a result, sustainable tourism emerged with the aim of reducing the negative impacts of tourism on the environment.