Biodiversity's Contribution to Production

Résumé

We estimate the economic value of biodiversity’s ecosystem services in agriculture and forestry, focusing on pest control provided by migratory birds across North America. These sectors are both major contributors to biodiversity loss and highly dependent on the services biodiversity provides, complicating efforts to measure its productive value. We address this challenge by exploiting plausibly exogenous variation in the return of migratory bird species to North America, driven by ecological shocks to their winter habitats in South America. This variation allows us to identify the causal impact of biodiversity on production. A 10 percent decline in bird-provided pest control services reduces agricultural revenues by 1 percent and increases the prevalence of forest pests by up to 1 percent. We also show that the economic value of biodiversity declines with the adoption of technological substitutes such as genetically modified pest-resistant crops. Our findings highlight biodiversity as an economically meaningful input in production and reveal how environmental degradation in one region can generate negative production externalities in another—underscoring the need for coordinated international conservation policy.