What drives long-run biodiversity change? New insights from combining economics, palaeoecology and environmental history

This paper presents a new approach for understanding the effects of economic factors on biodiversity change over the long run. We illustrate this approach by studying the determinants of biodiversity change in upland Scotland from 1600 to 2000. The measure of biodiversity used is a proxy for plant species diversity, constructed using statistical analysis of palaeoecological (pollen) data. We assemble a new data set of historical land use and prices over 11 sites during this 400-year period; this data set also includes information on changes in agricultural technology, climate and land ownership. A panel model is then estimated that controls for both supply and demand shifts over time. A main result is that prices that act in our model as a proxy for livestock numbers do indeed impact on biodiversity, with higher prices leading to lower biodiversity.