Endangered species, genetic capital and cost-reducing R&D

Excessive transactions costs, poor property rights and other institutional and technical impediments make it difficult, on the one hand, to capture the value provided to those who view endangered species and, on the other hand, to prevent species from being destroyed by harvesters, including poachers. In contrast, the value of the alternative domestic use of the habitat often can be readily captured by those who harvest the forests, plant the land with crops or graze domestic animals. Krutilla, Myers and others have capably explained how the substitution of activities with capturable payoffs for those with real but elusive benefits, leads to a too rapid rate of species extinction from a social point of view. An alternative and perhaps more fundamental explanation for the too frequent demise of species is discussed in this paper. We take up the theme, earlier argued by Ciriacy-Wantrup (1952) that species are an inherent source of scientific information as a stock of potential discoveries.