Abstract: | The preservation of biological diversity is discussed from a global perspective, with a focus on tropical deforestation. Economic issues in tropical deforestation, market failure, and the costs and benefits of preserving biological diversity are surveyed. It is found using a straightforward economic model based on the cost-benefit criterion that industrialized countries can realize “gains-from-trade” by financing preservation of biological diversity in tropical developing countries. This provides a strictly economic rationale for the introduction of an international system to transfer funds for the protection of biological diversity in developing countries. |