The Economics of Invasives

Invasive species are defined by the Convention of Biological Diversity as “.. those alien species which threaten ecosystems, habitats or species”.  If we take the expenditure to counter pests in agriculture, forestry and fisheries along with the output lost through invasive pests and pathogens in all sectors, and add to that the costs of both emergent and recurrent human diseases of international origin, the problem of invasive species makes all other environmental problems pale into insignificance.

The ecological and economic dimensions of the problem of invasive species are connected at different levels. The ecological changes that lead ecosystems to be more vulnerable to the impacts of invasions, the fragmentation, and disturbance of habitats, loss of biodiversity and increasing pollution burdens, are a direct consequence of economic behaviour. The ecological mechanism connecting invasive species, functional diversity and ecosystem resilience, the rate at which species are dispersed, is highly correlated with the growth of trade, transport, and travel. The main consequence of a loss of resilience is a reduction in the capacity of ecosystems to maintain functionality and the production of ecosystem services over a range of environmental conditions. This has direct implications for the value of both output and the underlying ecological assets—the natural capital—of the system. At every level, the ecological impacts of the economic activities involved are incidental to and are ignored by the actors concerned.

They are said to be externalities of the market transactions involved, meaning that they are not taken into account by the people engaged in those transactions. The economic problem of biological invasions is first to understand the nature of invasive species externalities and why they occur, second to evaluate the consequences they have for human well-being, and third to develop policies and instruments for their internalisation.

The economic forces that drive the problem of biological invasions include trends in land use that affect the vulnerability or susceptibility of ecosystems, trends in trade, transport and travel that affect the likelihood of species introductions, and trends in technology that affect species’ impacts. While globalisation has implications for all three, it is especially important for the second, influencing both the species involved in exchanges and the likelihood of their becoming invasive. The development of new trade routes has led to the introduction of new species either deliberately or accidentally, while the growth in the volume of trade along those routes has increased the frequency with which introductions are repeated. Species introductions are an externality of trade whose cost depends heavily on the way that ecosystems are exploited, both because that influences the vulnerability of those systems to invasion, and because it determines the value at risk from invasions.

A plant pathogen specific to a particular cultivated crop, for example, may have no implications outside of agricultural areas but may be devastating within those areas. Indeed, agro-ecosystems are typically the most vulnerable to invasive species, though also the most likely to be protected through controls. For the agricultural sector, for example, invasive species cause damage costs equal to around 50% of agricultural GDP in the USA and Australia, 30% in the UK, but between 80% and 110% of agricultural GDP in South Africa, India, and Brazil. To date, however, there are almost no studies of the implicit cost of habitat fragmentation, disturbance, or other landscape changes that affect the ease with which introduced species can establish and spread.

Where there is uncertainty about the likelihood of both introductions and the potential consequences of establishment and spread, the economic problem resolves into an evaluation of the relative net benefits of mitigation versus adaptation strategies: of preventive action versus control after the fact. What makes the problem particularly difficult is precisely the uncertainty attaching to several aspects of the invasion process. The historic likelihood that any given introduced species will establish, spread and inflict appreciable harm on the host system are low. However, the few species that do turn out to be damaging can be very harmful indeed—as was the case with the plague in Europe, smallpox, measles, and typhus in the Americas, or the Spanish Flu worldwide.

Three related issues turn out to be important in the theory of invasive species control. The first is the relative costs and benefits of alternative strategies and, in particular, the relative costs and benefits of mitigation versus adaptation strategies. The second is the degree of uncertainty involved, and the third is the rapidity and spatial extent of the potential spread of the invasive species. In the absence of reliable estimates of the net benefits of investment in the defensive capabilities of ecosystems themselves, the relative costs and benefits of alternative strategies generally involve a comparison of net benefits of inspection and interception or detection and eradication versus the control of established invaders. Of the three strategies-inspection (to prevent introduction), detection (to identify and eradicate species that have got past the border but have not yet spread) and control (management of species that have established and spread – inspection and detection are generally substitutes. Reducing the cost of one of these two strategies will increase the optimal effort devoted to it and reduce the optimal effort devoted to the other. However, both are substitutes for the control of established populations. The optimal inspection strategy depends on the level of uncertainty attaching to commodity groups and trade routes. Where the risks associated with particular commodity groups or trade routes are known, then a targeted inspection strategy makes sense.

But where the risks are not known, it is optimal to adopt a random audit approach. In an evolutionary system where the capacity to predict the consequences of novel events is limited by the lack of historical precedents, building that capacity through both monitoring and experimentation is an essential part of the policy toolkit. Biological invasions are an externality of international trade, and the solution to the problem requires policies to address that fact directly. These imply international cooperation, which means collaborative action both in terms of the multilateral agreements governing trade (the General Agreement on Tariffs and Trade) and the effects of trade (the Sanitary and Phytosanitary Agreement, and the International Plant Protection Convention), and of the intergovernmental organisations established to address different dimensions of the invasive species problem. For virulent human or animal pathogens that are likely to spread globally the scale at which the problem needs to be addressed is clearly global. At the same time, however, many introduced species spread locally at fast enough rates to make them problematic at that scale, but have no implications beyond that. Application of the subsidiarity principle implies that problems of that sort be dealt with at a local scale. Between such polar cases, however, lie problems that occur over a wide range of scales. The challenge in this for the economic, epidemiological and ecological sciences is to determine the spatial and temporal scale of the problem-including its causes and effects-and to analyze both the problem and the policy and management options accordingly.

Global protection against many invasive species risks is a public good of a very special kind-a ‘weakest link public good’. Because global protection is a weakest link public good, the lower the capacity of poor countries to deal with damaging and rapidly-spreading invasive species, the greater the exposure of all their trading partners. It follows that the more closely integrated in the global system, the greater the incentive to high-income countries to build capacity in the weakest links in the chain. In the case of human, animal and plant pathogens, the risk of infection or re-infection can be reduced by direct support of the sanitary and phytosanitary capabilities of low-income trading partners.
Charles Perrings is at the School of Life Sciences, Arizona State University, Tempe, USA. Mail at
Harold Mooney is at the Department of Biological Sciences, Stanford University, Stanford, USA.
Mark Williamson is at the Department of Biology, University of York, UK.

This article is from issue


2010 Mar