Leading Article: The economic case for preserving the fly

'GOD in his wisdom made the fly/and then forgot to tell us why,' wrote Ogden Nash. An interchange last week at a conference well expressed the difficulty that environmentalists face in defending the case for biodiversity. The director of the World Wide Fund for Nature UK explained that each year the world lost some 20,000 species, one every 20 minutes. He was asked to name one species which had become extinct this year. He was unable to do so. Since we do not know how many species there are (estimates vary from five million to 50 million) it is impossible to do more than guess at the numbers we are losing.

But it is worth trying to answer Nash's implied question: what is the point of so many species? It is easy to explain our natural desire to preserve threatened large mammals like the giant panda (WWF's symbol), the blue whale, or the Siberian tiger. But it is much harder to argue that forests should not be converted to cropland simply to preserve habitat for insects which we do not even know exist.

Yet there is a powerful economic case for doing just this, quite aside from the ethical or moral case. It is made in a book - The Economic Value of Biodiversity, by David Pearce and Dominic Moran - to be published later this month. The single most important reason for the loss of species is changing land use - taking land in its 'natural' form, be it bog, forest or coast, and converting it into land which is either grazed or cropped. But the value of this land may actually be greater in its original state than after it has been transformed. Its value as farmland may be less than the medicinal value of its plants and its use as a tourist venue. Add to this that chopping down a forest will cause floods elsewhere and will tend to exacerbate global warming and the change in land use frequently makes no economic sense.

Yet it is still happening. Why? The explanation lies in two distortions. Countries frequently subsidise changes in land use for domestic political reasons. Even when they do not, it is difficult for them to extract the full value of the land in its existing form. There is no easy way of ironing out the second distortion, but simply eliminating distorting subsidies would help. We do not need to know what the fly is for; all we need to know is that it is economic nonsense to subsidise insecticides to kill it.