Elettra Agliardi (Dept. Economics, University of Bologna)
Title : Optimal Management of Biodiversity Preservation
Abstract : One major question faced by society is the decline and extinction of natural species as a consequence of human choices and activities and the resulting irreversible depletion of biodiversity. In this paper we study the decision to preserve diverse species when the value of biodiversity is uncertain, or even affected by ambiguity. Optimal decisions are derived in an optimal stopping framework. We find that while calculated risk creates a scope for biodiversity preservation, the presence of ambiguity reduces it, thus accelerating the extinction of species with lower value. We extend our analysis when an ecosystem planner determines a conservation programme based on harvesting rules including the species “non-use” values of social importance. Our results suggests that effective conservation strategies would involve a reduction of ambiguity by creating a stable and transparent policy environment. Furthermore, they may involve a two-tier strategy, with one tier addressing output targets and the other conservation targets.