Biodiversity Loss and Economic Growth: A Cross‐Country Analysis

Abstract

This article empirically examines the relationship between biodiversity loss and economic growth in light of the current debate on the effects of economic growth on environmental quality. The basic premise is that biodiversity belongs to a special class of environmental degradation because it involves complex ecosystems, the loss of which cannot be recovered by technological advances. The main finding is that although economic growth has an expected adverse effect on biodiversity, the composition of economic output can also be significant, particularly in low‐income countries. The study highlights the need to develop appropriate institutions and macroeconomic policies that allow biodiversity values to be internalized in decisionmaking processes.