Table 1.

Definition of the main concepts used in ecology and economics, parallels between them, and applications in ecosystem management

Ecology (Point of view: observer of ecosystem property a )	Economics (Point of view: economic agent)	Applications in ecosystem management (Point of view: manager optimising ecosystem output)
Variability: variations of an ecological property (e.g. plant biomass or production) through either time or space. Classic measures of variability include the variance, standard deviation or coefficient of variation b of the ecological property. Stability: a broad concept, which we use here to denote a reduced variability of an aggregate ecosystem property, usually through time.	Risk: chance that an outcome or return will differ from an expected outcome or return. Risk is typically associated with a high temporal variance; more variable economic assets have higher risk.	From a manager's point of view, increased variability in ecosystem output (e.g. crop yield) is often detrimental as it comes with episodes of extreme lows.
Biological insurance c : general concept used to denote the fact that aggregate ecosystem properties vary less in more diverse communities because of compensatory changes between species or phenotypes across time, space, or both. Buffering/portfolio effect: the increased temporal stability or reduced variability of aggregate ecosystem properties that results from increasing biodiversity. Selection effect: occurs when species that have the best individual features (mean or variability) in monoculture become dominant in multispecies communities. A larger biodiversity in the initial or regional species pool enables selection effects to operate across time, space, or both. Performance‐enhancing effect: a type of selection effect that applies specifically to the mean, when environmental conditions vary and the best‐performing species are favoured under each environmental condition. Mean‐stability trade‐off: occurs when increased stability or reduced variability is associated with reduced mean.	Portfolio: set of assets with uncertain returns. Basic portfolio theory focuses on avoiding unnecessary mean–variance trade‐offs, identifying portfolios that maximise expected returns for a given level of risk (e.g. though the efficiency frontier) d . Mean–variance trade‐off: occurs when reduced variance or risk comes at the cost of lower expected return.	Species diversity enhances the stability of food production across multiple spatial scales in both agro‐ecosystems and fisheries. Fish diversity maintains high aggregate levels of fisheries catch and revenue against fluctuating and shifting conditions in both environment and market though a performance‐enhancing effect. Application of the efficiency frontier approach helps reveal the best management strategy that maximises average forest stand productivity for a given level of risk.
Spatial insurance: concept used to denote the fact that aggregate ecosystem properties vary less in more diverse metacommunities because of compensatory changes between species or communities across space, or across both time and space.	No economic equivalent of spatial insurance. The closest analogy is spatial equilibrium, whereby people can move across space to choose locations that best match their skills and preferences, thereby reducing variation in individual welfare across space.	Crop pollination in large‐scale natural systems requires a much higher number of bee species than in small‐scale experiments because of spatial complementarity between species.
Delayed selection effect: ecological equivalent of economic option, in which biodiversity maintenance comes at the expense of reduced ecosystem functioning in the short run but allows enhanced functioning in the long run through selection of the best‐performing species under future conditions.	Option: grants an individual the right to wait (up to an expiration date) before making a decision about whether or not to buy or sell an asset at a given price. Option value reflects the ability to exploit fluctuations in asset value.	A potential application would be growing seedlings of two crop types (which is costly), but planting only one type later in the season once weather forecasts are refined.
Catastrophe avoidance: ecological equivalent of economic insurance, in which biodiversity maintenance comes at the expense of reduced ecosystem functioning in the short run but prevents catastrophic declines in ecosystem functioning in the long run through the maintenance of species that resist major disturbances (e.g. fires or biological invasions). Bet hedging: evolutionary equivalent of economic insurance, in which organisms have lower fitness under typical conditions but lower fitness reduction under stressful conditions through strategies such as dormancy.	Insurance: paying an insurance premium lowers mean wealth, but the coverage that premium buys lowers potential variance in wealth. Insurance has strong similarities with portfolios of asynchronous assets, but it generally applies to risk incurred by the purchaser, who often has some control over their own risk factors.	Private land managers may use biological insurance as a partial substitute for economic crop insurance to avoid the deleterious effects of climate extremes, such as droughts. Another potential application would be selecting a crop whose yield is lower on average but less variable across different environmental conditions.
Complementarity effect: occurs when a mixture of species performs better than would be expected based on their performance in isolation because of niche differentiation among species.	Economic diversification: complementarity may occur when more diversified assets span more market niches and lead to larger overall economic productivity (e.g. at the regional scale).	Intercropping and crop rotations often enhance crop yields and help suppress weeds because of complementarity in resource use among species.

^a The ecosystem property is determined by the observer. By selecting species and shaping their fluctuations, ecological dynamics may result in the same effects as those of strategic economic agents, but the parallels between ecological and economic concepts do not imply any intentionality from either the ecosystem or its observer.

^b The coefficient of variation is traditionally used to remove or reduce the effect of the mean on variability in comparisons of systems with different means, but it generally does not remove this effect completely.

^c Follows the common‐language usage of ‘insuring’ as ‘guaranteeing safety’.

^d In ecological terms, economic portfolio theory thus encompasses both buffering and selection effects.