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Report, 2005

Estimating the production costs of biological diversity on Swedish pastures

Nilsson, Fredrik


This paper estimates the production costs of biological diversity on Swedish permanent grasslands. A simple model is introduced where biodiversity on pastures is produced using grazing animals. On the pastures, the grazing animals create a sufficient grazing pressure leading to an environment that suits many rare and red-listed species. Two types of pastures are investigated: semi-natural and cultivated. Biological diversity produced on a pasture is estimated by combining a biodiversity indicator, which measures the quality of the land, with the size of the pasture. Two areas in different parts of Sweden are investigated. Box-Cox transformations are used in the empirical analysis and the results indicate that the biodiversity production costs differ between the regions. The major contribution of this paper is that it develops and tests a method of estimating biodiversity productions costs on permanent pastures when biodiversity quality differs between pastures. If the method were to be used with cost estimates that are both more thoroughly retrieved and cover additional production areas, cost functions that could be used in applied policy work should be retrievable


biodiversity; production cost; pasture; public good

Published in

Working Paper Series / Swedish University of Agricultural Sciences, Department of Economics
2005, number: 2005:03
Publisher: Institutionen för Ekonomi

    SLU Authors

    UKÄ Subject classification

    Economics and Business
    Social Sciences

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