Simple-but-sound methods for estimating the value of changes in biodiversity for biological pest control in agriculture

Recent meta-analyses indicate that an increase in the number of natural enemy species raises the overall effectiveness of biological control of insect pests in agricultural settings. Although economic valuations of biological pest control in agriculture show an impressive cost savings from this ecosystem service, no direct estimate of the value of biodiversity for biological control has been attempted. We apply a basic microeconomic model for estimating the value of changes in the richness of arthropod natural enemies or in functional diversity for biological pest control for two sample crops using experimental results reported in the ecological literature. Market-based outcomes were driven by changes in crop yields associated with experimental reductions in natural enemy species richness, and modified by supply shifts and price elasticities. We show how our simple model differs from common approaches used in the ecological literature, and explain why this alternative model more accurately estimates societal well-being for consumers and producers participating in these crop markets. We conclude by discussing the additional research and data needed to make economic valuation of ecosystem services in agricultural settings more feasible, rigorous, and realistic in the future.