Land sharing or land sparing for biodiversity: how agricultural markets make a difference

We show that the form of agriculture most beneficial to biodiversity depends on the equilibrium of agricultural markets. All other things being equal, as long as demand is price-elastic and extensive farming has higher production costs, the former is often more beneficial for biodiversity than intensive farming, provided that the relationship between biodiversity and yield is not highly convex. This extensive form of agriculture is disadvantageous to consumers when their surplus is assessed in a restrictive manner, i.e. as increasing with the quantities consumed and decreasing with prices. Its effect on agricultural producers is unclear. It does not have a straightforward effect on food security, and is likely to reduce the pressure on protected areas.