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Biodiversity conservation, loss of natural capital and interest rates

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  • Tisdell, Clem

Abstract

It is argued that there is neither regular relationship between changes in the level of the market rate of interest and variations in the rate of biodiversity loss nor does such a regular relationship occur between alterations in the market rate of interest and changes in the rate of natural resource extraction. However, some texts suggest otherwise. Microeconomic examples are given in which a rise in the market rate of interest results in increased biodiversity loss and others in which it does not. It is also posited that the rate of biodiversity loss (as well as the rate of natural resource extraction) tends to rise with the level of aggregate investment and aggregate economic activity. It is demonstrated, using macroeconomic models, that the market rate of interest can increase or decrease with a rise in aggregate investment and also with an increase in the level of aggregate economic activity. Therefore, changes in biodiversity loss (and in the rate of natural resource extraction) are independent of variations in the market rate of interest in macroeconomic models.

Suggested Citation

  • Tisdell, Clem, 2011. "Biodiversity conservation, loss of natural capital and interest rates," Ecological Economics, Elsevier, vol. 70(12), pages 2511-2515.
    • Handle: RePEc:eee:ecolec:v:70:y:2011:i:12:p:2511-2515
    DOI: 10.1016/j.ecolecon.2011.08.015
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    References listed on IDEAS

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    1. N. G. Mankiw, 2009. "The Macroeconomist as Scientist and Engineer," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 5.
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    5. Tisdell, Clem, 2001. "Globalisation and sustainability: environmental Kuznets curve and the WTO," Ecological Economics, Elsevier, vol. 39(2), pages 185-196, November.
    6. Clem Tisdell, 1999. "Biodiversity, Conservation and Sustainable Development," Books, Edward Elgar Publishing, number 1408.
    7. Timothy M. Swanson, 1994. "The International Regulation of Extinction," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-12985-0, October.
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    Cited by:

    1. Tisdell, Clement A., 2012. "Biodiversity Change and Sustainable Development: New Perspectives," Economics, Ecology and Environment Working Papers 125211, University of Queensland, School of Economics.
    2. Lee, Kang-Soek & Werner, Richard A., 2018. "Reconsidering Monetary Policy: An Empirical Examination of the Relationship Between Interest Rates and Nominal GDP Growth in the U.S., U.K., Germany and Japan," Ecological Economics, Elsevier, vol. 146(C), pages 26-34.

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    More about this item

    Keywords

    Biodiversity loss; Natural capital; Natural resource depletion; Sustainable development;
    All these keywords.

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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