ABSTRACT
Economists have developed a lucid and consistent framework to analyse biodiversity and loss of species. Conservation of species is considered an investment. Some conservationists are sceptical about entering the economic arena to improve the prospects of nature conservation. Provision of nature is inadequate from a social perspective, because private agents cannot capture all of its benefits—this constitutes a market failure. Forest conservation is an investment in natural capital that yields a return in the form of biodiversity, carbon sink and tourism benefits, as well as benefits from the sustainable harvests of wood and non-timber forest products. Economic decisions are made at the margin, and it is only at the margin that society is indifferent between conserving and depleting natural capital. As most of the globe’s biodiversity is located in developing countries where capital is scarce, the prospects for conserving biodiversity and endangered species look bleak.
