The Value of Biodiversity in Economic Decision Making: Applying the IEEM+ESM Approach to Conservation Strategies in Colombia

Onil Banerjee*, Martin Cicowiez, Ziga Malek, Peter H. Verburg, Renato Vargas, Sean Goodwin

*Corresponding author for this work

Research output: Working paper / PreprintWorking paperProfessional


In this paper we evaluate the economic, natural capital and ecosystem services impact s of strategies for conserving Colombia’s rich natural capital endowment. Specifically, we consider Government program proposals for establishing Payment for Ecosystem Services (PES), implementing more sustainable silvopastoral systems and expanding habitat banking. We develop and apply the Integrated Economic - Environmental Modeling (IEEM) Platform linked with spatial Land Use Land Cover (LULC) and Ecosystem Services Modeling ( IEEM+ ESM) to shed light on the multi-dimensional impacts of these programs from the perspective of sustainable economic development and intergenerational wealth. Advancing the state-of-the-art in integrated economic-environmental modeling, our framework for the first time integrates dynamic endogenous feedbacks between natural capital, ecosystem services and the economic system to fully capture how changes in natural capital and ecosystem service flows affect the economy and vice versa. Our approach quantitatively models the economy, natural capital and ecosystem services as one integrated and complex system at a high level of spatial resolution across Colombia’s 32 Departments. We demonstrate how valuing biodiversity in public policy and investment analysis can make the difference between an investment that is economically viable and one that is not. Without accounting for the value of biodiversity, the proposed PES and habitat banking programs are not economically viable. Including the value of biodiversity, both PES and habitat banking become strong investment propositions with a net present value of US$4.4 billion and US$4.9 billion, respectively. The economic and environmental benefits of enhancing Colombia’s natural capital base and future ecosystem service supply are demonstrated and regionally differentiated, which provides a strong empirical evidence base to inform the spatial targeting of policies to maximize economic, environmental and social outcomes .
Original languageEnglish
Place of PublicationWashington D.C.
PublisherIADB (Inter-American Development Bank)
Number of pages93
Publication statusPublished - Dec 2020


  • Ecosystem services modeling
  • land use change modeling
  • Natural capital
  • payment for ecosystem services
  • habitat banking
  • Colombia
  • Integrated economic-environmental modeling
  • dynamic computable general equilibrium (CGE) model
  • IEEM

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