The Economic Insurance Value Of Ecosystem Resilience
Source: Leuphana Universität Lüneburg
Ecosystem resilience, i.e. an ecosystem's ability to maintain its basic functions and controls under disturbances, is often interpreted as insurance: by decreasing the probability of future drops in the provision of ecosystem services, resilience insures risk-averse ecosystem users against potential welfare losses. Using a general and stringent definition of "Insurance" and a simple ecological-economic model, the authors derive the economic insurance value of ecosystem resilience and study how it depends on ecosystem properties, economic context, and the ecosystem user's risk preferences.