Biological diversity provides important benefits – in some sense it is the basis of all economic value – yet the conservation of biodiversity also involves significant costs. Economics offers insight into the tradeoffs and complementarities involved, between the benefits of biodiversity conservation and the many other goods and services that people desire. Economics can also help us find ways to reduce the costs and maximize the benefits of biodiversity conservation by making use of market incentives that influence how people use natural resources.

The production and consumption of goods and services generally has a negative impact on the environment, either through depletion of natural resources or pollution. Markets often fail to account for the environmental costs of production and consumption, due to the fact that many resources and environmental inputs are provided free of charge by nature. However, both governments and business have made great strides in recent years in the difficult task of measuring and reducing the environmental impact of economic activity. Some of the most innovative policies and programs take advantage of market forces to minimize the costs of environmental protection.

Efforts to sustain or restore biodiversity should be assessed in terms of their social, economic and environmental impacts. Programs and policies intended to regenerate, conserve or manage biodiversity have costs, large or small. Some actions will affect the prices of other goods and services, or result in unintended market shifts that lead to loss of livelihoods or environmental damage to other regions or resources. Tradeoffs arise where values conflict.