Economic assessment of an insect pollinator decline: a general equilibrium analysis

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14 January 2014

Insect pollination service is widely used in agriculture. This pollination service contributes significantly to the total economic value of crop production. A better economic valuation is to assess the welfare loss resulting from insect pollinator decline, this welfare loss being the sum of producer and consumer surplus variation. In this study, we assess the impact of insect pollinators on the social welfare within a general equilibrium analysis. What would be the consequences of a production loss due to an insect pollinator decline considering the adaptation of the overall economy and more particularly considering the possible spillovers on others markets? How are changes in profits distributed between producers of pollinated goods and other producers? These two questions will be studied within two alternative scenarios for the distribution of property rights over the firms: the case where agents possess and equal share of the productive sector (the egalitarian ownership structure) and the case where each agent possess one firm (the polarized ownership structure). For each scenario, we considered two states of the economy. In the first state, agent and firms are homogeneous. In the second state, firms are heterogeneous. The social welfare is a function of the profile of consumers’ utilities. We will analyze and measure the variation of the social welfare after the insect pollinator decline. Under the egalitarian ownership structure, we found that an insect pollinator decline will cause a social welfare loss. However this loss is reduced by the possibility of agents to consume the good, whose production does not depends on insect pollination. This result no longer holds when the distribution of the property right is heterogeneous between agents. In this case the owner of the firm that does not produce the pollination-dependent good, would experience a gain in utility. As a result, the social welfare could increase after a pollinator decline. This social welfare gain would rise if the production function of the firm of the non agricultural sector would be more efficient than the agricultural one.