Economic Production and Biodiversity in the United States

Species extinctions and ecological degradation are accelerating to a degree unprecedented in human history. Despite such trends, causal evidence for economic drivers of biodiversity loss and effective policy responses remains sparse. Here we study the relationship between economic production and biodiversity using a novel panel dataset that contains detailed and consistently reported information on the types and quantities of wildlife at thousands of locations across the United States between 1960 and 2015. Exploiting quasi-experimental variation in local economic output due to national military buildups, we find that economic production substantially reduces the total abundance of wildlife, reduces the diversity of species, and changes the composition of species in a local ecosystem even holding the number of species constant. We provide new causal evidence that air pollution, an externality caused by economic production, is an important driver of biodiversity declines. We show that air quality regulations preserve biodiversity and provide policymakers with another lever for conservation efforts.