Economic Production and Biodiversity in the United States

Species extinctions and ecological degradation are accelerating to a degree unprecedented in human history. Despite such trends, causal evidence for economic drivers of biodiversity loss and effective policy responses remains sparse. Here we study the relationship between economic production and biodiversity using a novel panel dataset that contains detailed and consistently reported information on the types and quantities of wildlife at thousands of locations across the United States between 1960 and 2015. Our research design exploits well- understood sources of change to local economic output – including those induced by fiscal shocks and environmental regulations – to identify how local economic production affects biodiversity outcomes. We find that economic production re- duces the total abundance of wildlife, reduces the count of distinct species, and changes the composition of species in a local ecosystem even holding the number of species constant. Our findings point toward environmental degradation as a potential culprit in the decline of biodiversity. We show that the adverse effect of economic production is mitigated by conservation, and by advances in emission abatement technologies that were spurred by stricter pollution regulations.