The State-contingent Approach to the Noah's Ark Problem

Abstract

Biodiversity outcomes arising from conservation programs depend on the future state of nature, yet standard economic models of biodiversity conservation are not state contingent. We develop a state-contingent approach to the Noah's Ark problem – the problem of efficiently allocating limited funds to conserve biodiversity – and model conservation actions under uncertainty. Under the state-contingent approach, Noah will prepare for unfavorable and unexpected states of nature ex ante rather than relieving suffering ex post. Different species will be chosen for the Ark and particularly species that underpin the foundations of ecosystems. More generally, the state-contingent ranking equation justifies conservation policy that treats the cause rather than the symptom of biodiversity loss, and recommends strategies that focus on ecosystem resilience and integrity. In comparison to the standard model, the state-contingent approach leads to a more detailed and explicit allocation of resources. (JEL: Q54, Q57, Q58).