Environmental and Resource Economics

, Volume 48, Issue 4, pp 609–628 | Cite as

The Biodiversity Bargaining Problem

  • Rupert Gatti
  • Timo Goeschl
  • Ben Groom
  • Timothy Swanson
Article

Abstract

We employ cooperative bargaining theory and Nash’s ‘rational threats’ idea to cast light on the biodiversity bargaining problem. The problem of global environmental negotiations is argued to be of the nature of a bargaining problem, in which bargainers must agree on the distribution of cooperative surplus in order to move to the bargaining frontier. We discuss the importance of both efficiency (bargaining frontier) and fairness (recognition of characteristics of bargainers) in the choice of the appropriate contract. We show that the incremental cost contract, used to resolve the biodiversity bargaining problem, is of the form of an extreme point contract that fails to recognise the contributions of the South to the production of cooperative surplus. A rational response to such a contract is the use of threats of biodiversity destruction. Contracts must evince both efficiency and fairness in order to represent lasting solutions.

Keywords

Biodiversity Incremental costs International environmental agreements Nash cooperative bargaining North–south bargaining Rational threats 

JEL Classification

Q15 Q16 Q21 O13 O34 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Barrett S (1994) The biodiversity supergame. Environ Resour Econ 4(1): 111–122CrossRefGoogle Scholar
  2. Barrett S (2002) Environment and statecraft. Oxford University Press Inc, New YorkGoogle Scholar
  3. Busch L-A, Shi S, Wen Q (1998) Bargaining with surplus destruction. Can J Econ 31(4): 915–932CrossRefGoogle Scholar
  4. Copeland BR (1990) Strategic enhancement and destruction of fisheries and the environment in the presence of international externalities. J Environ Econ Manag 19(3): 213–226CrossRefGoogle Scholar
  5. Droege S, Soete B (2001) Trade-related intellectual property rights, North–South trade and biological diversity. Environ Resour Econ 19: 149–163CrossRefGoogle Scholar
  6. Goeschl T, Swanson T (2002) The social value of biodiversity for R&D. Environ Resour Econ 00: 1–28Google Scholar
  7. Goeschl T, Swanson T (2003) Pests, plagues, and patents. J Eur Econ Assoc 1(2): 561–575CrossRefGoogle Scholar
  8. Karp L (1996) Monopoly power can be disadvantageous in the extraction of a durable nonrenewable resource. Int Econ Rev 37(4): 825–849CrossRefGoogle Scholar
  9. Kassar I, Lasserre P (2004) Species preservation and biodiversity value: a real options approach. J Environ Econ Manag 48: 857–879CrossRefGoogle Scholar
  10. King K (1994) The incremental costs of global environmental benefits. GEF, WashingtonGoogle Scholar
  11. Krugman P (1979) A model of innovation, technology transfer, and the world distribution of income. J Polit Econ 87(2): 253–266CrossRefGoogle Scholar
  12. Lai E, Qiu L (2003) The North’s property rights standard for the South. J Int Econ 59: 183–209CrossRefGoogle Scholar
  13. Leakey R, Lewin R (1995) The sixth extinction. Weidenfeld and Nicolson, LondonGoogle Scholar
  14. Martinez-Alier J (2007) Keep oil in the ground: Yasuni in Ecuador. Econ Polit Wkly (Oct 20):4227–4228Google Scholar
  15. Miller K, Munro G, McKelvey R, Tyedmers P (2000) Climate, uncertainty and the Pacific Salmon treaty: insights on the harvest management game. In: Proceedings of the international institute for fisheries economics and trade (IIFET) annual conferenceGoogle Scholar
  16. Nash J (1953) Two-person cooperative games. Econometrica 21(1): 128–140CrossRefGoogle Scholar
  17. Polasky S, Costello C, McAusland C (2004) On trade, land-use and biodiversity. J Environ Econ Manag 48(2): 911–925CrossRefGoogle Scholar
  18. Sarr M, Swanson T (2009) IPR and North–South hold-up problem in sequential R&D, mimeo. http://www.homepages.ucl.ac.uk/~uctptms
  19. Swanson T (1996) The reliance of northern economies on southern biodiversity: biodiversity as information. Ecol Econ 17(1): 1–8CrossRefGoogle Scholar
  20. van Soest DP, Lensink R (2000) Foreign transfers and tropical deforestation: what terms of conditionality?. Am J Agric Econ 82(May): 389–399CrossRefGoogle Scholar
  21. World Bank (2003) Contracting for biodiversity conservation in agricultural landscapes. Environment Department Paper No.96. Environmental Economics Series, World BankGoogle Scholar

Copyright information

© Springer Science+Business Media B.V. 2010

Authors and Affiliations

  • Rupert Gatti
    • 1
  • Timo Goeschl
    • 2
  • Ben Groom
    • 3
  • Timothy Swanson
    • 4
  1. 1.Faculty of EconomicsUniversity of CambridgeCambridgeUK
  2. 2.Chair of Environmental Economics, Alfred Weber InstituteUniversity of HeidelbergHeidelbergGermany
  3. 3.Department of EconomicsSchool of Oriental and African StudiesLondonUK
  4. 4.Hoffman Chair of Economics, Graduate Institute of International and Development StudiesInstitut de hautes études internationales et du développementGeneva 21Switzerland

Personalised recommendations