Portfolio Effect

This is an interesting article I came across while browsing JSTOR that discusses the "portfolio effect" of biodiversity in a more economic context, for anyone interested in the Worm '06 article. You might need to go through the UC Libraries off-campus log in to view the full text.

Biodiversity, Ecosystem Function, and Investment Risk

THOMAS KOELLNER‌, and OSWALD J. SCHMITZ‌
BioScience, December 2006, Vol. 56, No. 12, Pages 977–985

http://caliber.ucpress.net/doi/abs/10.1641/0006-3568%282006%2956%5B977%3ABEFAIR%5D2.0.CO%3B2?select23=Choose&journalCode=bisi

Abstract

Biodiversity has the potential to influence ecological services. Management of ecological services thus includes investments in biodiversity, which can be viewed as a portfolio of genes, species, and ecosystems. As with all investments, it becomes critical to understand how risk varies with the diversity of the portfolio. The goal of this article is to develop a conceptual framework, based on portfolio theory, that links levels of biodiversity and ecosystem services in the context of risk-adjusted performance. We illustrate our concept with data from temperate grassland experiments conducted to examine the link between plant species diversity and biomass production or yield. These data suggest that increased plant species diversity has considerable insurance potential by providing higher levels of risk-adjusted yield of biomass. We close by discussing how to develop conservation strategies that actively manage biodiversity portfolios in ways that address performance risk, and suggest a new empirical research program to enhance progress in this field.