How does one value an endangered species? Visiting Assistant Professor Pierce Donovan and coauthor Michael Springborn from UC Davis take a shot at answering the question by measuring the values implied by species viability goals set under the Endangered Species Act. Their valuation approach can be found in the Journal of Environmental Economics and Management, with a paper titled “Balancing conservation and commerce: A shadow value viability approach for governing bycatch.”
Their paper develops a theory of the implicit existence value of an endangered species population. A social planner calculates the minimal (virtual) level of loss from extinction that would trigger sufficient regulation to avoid extinction with a desired confidence. A cost-effective policy then arises from acting as if the resulting shadow value is real. This value is used to produce market-based instruments that aid in the integrated management of leatherback turtle conservation and commercial swordfish harvest in California.