In this paper we argue that the loss of bio-diversity hould be of concern for farmers, though it seems to be of little or no concern to them at the moment. As diversity is a component of nature that controls the growth of pests, a loss of bio-diversity means increased exposure to pests, danger of crop failures and, in the long run, lower average yields and profits. So far farmers buy costly pesticides for compensating the reduction of bio-diversity. We argue that institutional problems are the reason why farmers are not concerned with bio-diversity, and show that under pure private property rights farmers have interest in pesticides and not in bio-diversity as a measure of crop protect because they have perhaps to devote land to the natural eco-system. In contrast, public policy which is assumed to make bio-diversity improvements, and this policy may pay off. Note, the prerequisite for improved in biodiversity through the establishment of an ecological main structure (EMS), may reveres this trend. We show that joint efforts in a community of farmers can result in building up an adequate size of nature elements in landscapes (an EMS) for maintaining the bio-diversity. These nature elements shall allow, in parts, a more sustainable performance of pest control than chemical control. The public control instrument is the EMS size. For this, in the paper, we extend the institution economics model of Rausser and Zusman (1992) on productive governments to bio-diversity.


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