Deriving Biodiversity Option Value Within a Model of Biotechnology Research and Development

EPA Grant Number: R824707
Title: Deriving Biodiversity Option Value Within a Model of Biotechnology Research and Development
Investigators: Rausser, Gordon C.
Institution: University of California - Berkeley
EPA Project Officer: Chung, Serena
Project Period: October 1, 1995 through September 30, 1997
Project Amount: $80,000
RFA: Valuation and Environmental Policy (1995) RFA Text |  Recipients Lists
Research Category: Environmental Justice


The purpose of this project is to derive formulas for computing biodiversity option values within a dynamic model of biotechnological innovation. The approach employs formal economic models and rigorous methods of analysis to clarify the economic effects of introducing new goods, the role of genetic materials as an input to the research and development process, and the imputed option value of the existing stock of genetic resources. The analysis is based on the view that biodiversity conservation - the preservation of genetic materials - and biotechnology research and development - the incorporation of genetic materials into goods providing economic utility - are components of a single problem, that of determining the optimal use of genetic resources for economic benefit. The claim is that, given a general theory for valuing innovations, the value of options on potential innovations can be analyzed using tools well-established in the literature on finance. The product of the research will be an analytic framework, including explicit formulas, that relate biodiversity option value to other economic fundamentals (e.g., interest rates). This framework could then be applied in empirical studies to estimate the option values associated with genetic resources, and could be expanded to analyze the effect of economic incentives facing agents involved with biodiversity conservation and biotechnology innovation.

Publications and Presentations:

Publications have been submitted on this project: View all 11 publications for this project

Supplemental Keywords:

RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, Ecosystem Protection/Environmental Exposure & Risk, Monitoring/Modeling, decision-making, Biology, Social Science, Economics & Decision Making, ecosystem valuation, policy analysis, social psychology, compensation, biodiversity, biodiversity option values, valuation, decision analysis, economic benefits, valuing environmental quality, property values, environmental assets, conservation, economic incentives, environmental values, preference formation, standards of value, cost benefit, environmental policy, community-based, models, psychological attitudes, public values, social resistance, public policy, genetic materials

Progress and Final Reports:

  • 1996
  • Final Report