Economic consequences of declining biodiversity

Estuarine environments contain an enormous diversity of flora and fauna. The stockpile of genetic diversity found in these systems is extremely important to the continuing functioning of the environment. It is not surprising that the State of the Environment Advisory Council noted that the loss of biodiversity is one of the most serious environmental problems affecting Australia1. If biodiversity declines, ecosystem integrity will be increasingly threatened. Given that industries including commercial and recreational fishing are reliant on estuarine environments supporting biodiverse ecosystems to provide habitat areas for fisheries, declining biodiversity will have considerable economic repercussions.

While no studies have been undertaken to estimate what the collective value of Australia’s biodiversity is, we do know that its value can be broadly captured in five different areas that roughly correlate to the various functions performed by it. These values are consumptive use value, productive use value, non-consumptive use value, option value and existence value2. The definitions of these values are as follows:

  • Consumptive and productive use values relate to the value of goods produced by the ecosystem that can be consumed and used by people2. In estuaries these include, for example, fish and shellfish.
  • Consumptive use value refers also to the value of goods produced by the ecosystem that are not captured by the market2. For example, seaweed and firewood is often harvested from beaches in estuarine areas by individuals. Consumptive and productive use values are closely related to biodiversity because without biodiversity the productivity of the ecosystem responsible for the production of these goods would be significantly impaired.
  • Non-consumptive use value relates to the self-maintenance value of the ecosystem, for instance recycling of nutrients  2.
  • Existence or bequest value is the value derived from the knowledge that a certain component of the ecosystem exists2. In this instance, biodiversity is not used, either directly or indirectly, but it still has a value to society.
  • Option value is the value of knowing that the resources are there for use in the future2. Biodiversity has a value to society in terms of the option to visit areas where a variety of flora and fauna, or more specifically, endangered species exist as well as a value in simply knowing that different species of plant and animal life exist.

On the basis of these definitions, it is apparent that the value of biodiversity in estuarine ecosystems has the potential to be enormous. It follows from this that a decline in biodiversity will result in economic losses that have the potential to be large and to affect broad sections of the community. While it is outside the scope of this information to identify the economic costs already incurred due to declining estuarine biodiversity, brief examples can be given to illustrate some basic economic costs to arise from this situation. Estimates are provided of the value of visitor expenditure to several locations within Australia where visitors are attracted by rare species or biologically diverse surrounds.This will allow some observations to be made about the potential value of biological diversity to the economy.

In the first example, it is estimated that in 1999 approximately 75,000 people visited Hervey Bay on Queensland’s central coast to watch the Humpback Whales. Using statistics on visitor expenditure and length of stay in the area from the Bureau of Tourism Research (BTR), it is estimated that expenditure by visitors on whale watching in 1999 could have been in the vicinity of $12m3. In addition to this direct expenditure, there would be significant flow-on impacts on the regional economy to help service the accommodation, travel and services required by these visitors. In another example, it is estimated that approximately 436,000 people visited the biologically diverse Daintree region of north Queensland in 2000. In the previous year, visitors alone were estimated to contribute approximately $1.856 billion to the regional economy4. World heritage listed Fraser Island attracted approximately 332,000 people to its shores in the 2000-2001 period. Visitor expenditure in 1999 contributed $366 million to the regional economy4. Tourism to the Great Barrier Reef is estimated to be worth over $2 billion to the Australian economy each year5.

The Derwent River in southern Tasmania hosts two species of animal, the Spotted Handfish and the Southern Right Whale, that are likely to be of interest to visitors. The Spotted Handfish (Brachionichthys hirsutus) is found only in the lower Derwent Estuary (southern Tasmania) and adjoining bays and channels. Although considered “common” until the early 1980s, recent CSIRO surveys have located only three small and restricted colonies6. The cause of the decline may include the loss of critical habitat due to increased sediments and degradation of water quality. All species of Handfish are protected under the Environmental Protection and Biodiversity Conservation Act 19996.

Also in the Derwent Estuary is the Southern Right Whale (Eubalaena australis). This species once used the sheltered bays and estuaries around south east Tasmania for calving grounds. This species of whale was present in large numbers in the estuary until the 1980s when it had been hunted to the edge of extinction. This species is also protected under the Environmental Protection and Bio diversity Conservation Act 19996.

Another marine mammal that is of particular interest for eco tourism is the Dugong. Dugongs ( Dugong dugong) are found along the Red Sea, around the Solomon Islands and along the Pacific Coast of Australia. Worldwide, the species is listed as being vulnerable to extinction (1996 ICUCN)7. Dugongs feed only on sea grass meadows and are therefore vulnerable to loss of this critical habitat that is threatened from increased sediment loads from land-use activities. In addition, fishing nets, particularly those belonging to commercial fishers, have been cited as being responsible for Dugong deaths7. It is interesting to note that although Dugongs are not listed as endangered by the Department of Environment, Water, Heritage and the Arts, the Great Barrier Reef Marine Park Authority (GBRMPA) have recognised a threat to the species and taken action to protect it within the marine park8. Again, as for the Southern Right Whale and the Spotted Hand Fish, these species are worth preserving for the potential or option value they represent to society.

These examples illustrate the links between the presence of biological diversity and substantial economic gains for regional and national economies.

Biology browser

Some important links with biodiversity content can be found on the BiologyBrowser web site. BiologyBrowser is a user-driven enterprise, with a forum where you can post questions for, or respond to, other scientists worldwide. There are up-to-date listings of taxonomic information tools, biology conferences and other resources for scientists. You can also submit your site for review. If it provides sound life sciences information, it will be stored in the BiologyBrowser database with thousands of other web sites.


Robinson, J. , Cully, T. , Coastal CRC


  1. State of the Environment Advisory Council. 1996. Australia State of the Environment 1996. CSIRO Publishing, Collingwood.  
  2. World Resources Institute. Conserving the world’s biological diversity.            
  3. Tourism Research Australia.  
  4. Kleinhardt – FGI. 2002. Tourism and recreation values of the Daintree and Fraser Island.    
  5. Australian Institute of Marine Science. Science for management of the Great Barrier Reef.  
  6. Tasmanian Government, 2001.      
  7. Great Barrier Reef Marine Park Authority.    
  8. the Department of Environment, Water, Heritage and the Arts. Threatened species and ecological communities.