Economics and the monarch butterfly

By Frank Convery, Chief Economist

This regular column honors the memory of Robert W. Wilson, a longtime EDF supporter and champion of harnessing market forces to drive environmental progress.

In “Reality Demands,” the poet Wislawa Szymborska captures the essence of human resilience:
Life goes on.
It continues at Cannae and Borodino,
At Kosovo, Polje and Guernica.
Where Hiroshima had been
Hiroshima is again,
Producing many products
For everyday use.

Humans can and do recover from the stupidities and horrors we inflict on ourselves and one another. But some things, like the extinction of species, are irreversible. The threatened survival of the monarch butterfly is a case in point.

How can economics help? By taking the need to avoid extinction as a given, and finding the most efficient, least costly way of doing so. Take EDF’s pioneering use of Habitat Exchange, which brings the magic of the marketplace to preserving species.

It creates a market that brings together two sets of interests: businesses that need to offset the effects of their operations and landowners who can preserve habitat. The market is created by inviting landowners to take part in an auction, where they specify the minimum amount they’d accept from businesses to create each unit of habitat.

The result combines interests of both parties to create a common good: more people participating in species preservation, more funds to protect wildlife and an increased amount of habitat.