Biodiversity metrics and biodiversity values for the public appraisal of biodiversity: synthesising and extending the evidence.

The world is facing a biodiversity crisis. Despite biodiversity's value, it is systematically ignored in economic decision making. This proposal will address this shortcoming by synthesising the lessons to date in valuing biodiversity, and establishing how these values can be mainstreamed in decision-making to positively affect biodiversity policy and outcomes. As numerous publications highlight, biodiversity contributes to people's wellbeing through multiple ecosystem services (e.g. pollination, climate regulation, flood prevention). Decades of research allows us to accurately estimate the relationship between land-use decisions and both biodiversity outcomes and ecosystem service values. Yet, people also derive well-being from simply knowing that biodiversity is there ("existence value"). This study will explore the two methods for incorporating these values within economic decision making: 1) via measuring people's Willingness-To-Pay (WTP) for biodiversity; 2) via the cost of meeting an agreed policy target (e.g. net-gain) for biodiversity: a cost-based approach.
The proposal will first critically review and synthesise the WTP approach. If consistent estimates of WTP exist, it is the economist's preferred approach - as it allows for the optimal allocation of resources across biodiversity outcomes and other goods (e.g. health, education) by weighing benefits against costs. However, there are well known inconsistencies in WTP estimates (e.g. WTP is unresponsive to increases in biodiversity provision, and is sensitive to framing), which arise because people struggle to interpret biodiversity-money trade-offs. We will therefore review how an alternative valuation procedure - the cost-based approach - could be operationalised.
In the UK the target in the 25-year Environment Plan is "nature-positive" or biodiversity net-gain. This can be used as the target for a cost-based approach. While the aim is clearly articulated, the net-gain ambition does not state which metric of biodiversity should be used to measure whether net-gain is achieved. This is problematic given biodiversity is multifaceted, and people's well-being is differently affected by different aspects. Orienting the cost-based approach around a biodiversity metric that reflects public preferences (what the public want in relation to biodiversity) requires establishing how well-being is affected by different aspects of biodiversity and how these tally with different metrics of biodiversity.
To achieve this aim, we shall synthesise the different metrics of biodiversity. We will couple this with an economic experiment specifically designed to tease apart the relationships between biodiversity metrics and people's preferences, and conduct this experiment with a representative sample to provide empirical evidence of which aspects of biodiversity people value, while avoiding asking them to perform difficult and controversial biodiversity-money trade-offs. Once an appropriate metric is established to assess achieving net-gain, the proposal will determine the cost meeting the target though the NEV modelling suite. This implied monetary value of biodiversity would then be used in policy appraisal and guide decisions away from harmful biodiversity impacts. Finally, the research will use the NEV modelling to demonstrate the land-use, welfare and biodiversity, implications of different policy approaches.
The research agenda is extremely timely given the recommendations of HMT's Dasgupta Review on the Economics of Biodiversity. It will have obvious ramifications for other metric-driven approaches (e.g. disclosure in the financial sector and the net-gain requirement for housing developments). Moreover, the research will act as a proof-of-principle for how biodiversity's value can be estimated and applied in policy appraisal, which will be of use globally given the reputation of the UK government guidelines on public investment appraisal that this research hopes to influence.