Imre FertőCorvinus University Budapest and ELTE Centre for Economic and Regional Studies
02/11/2025 – AES blog
The issue of biological invasions is traditionally discussed as a conservation problem. This perspective is partly true but misleading: the overwhelming majority of costs from introduced and established species materialize in the economy. Crop losses, control and restoration expenses, infrastructure damage, healthcare burdens, foregone tourism revenues—all are fiscal and welfare impacts that flow through both public budgets and households. The crux of the debate is therefore not whether to spend, but when and on what to spend. Our claim is simple: the logic of soft budget constraints must be replaced by the fiscal rationality of prevention and early intervention. Every other option is the costly illusion of procrastination.
The Mechanism of Soft Budget Constraints
The economic intuition is clear. If decision-makers—municipalities, sectoral actors, and sometimes even authorities—expect that a later, centralized „bailout package” will cover the bulk of the bill on their behalf, they easily postpone the certain costs of prevention that would arise today. The well-known consequence is so-called „firefighting”: the problem only reaches the top of the agenda when managing it has become exponentially more expensive. Biological invasions follow precisely this dynamic. For a while, everyone hopes „it won’t become a big problem.” The spread, however, is mostly non-linear, and by the time the damage becomes clearly visible, the cost of intervention is already many times that of prevention. If we harden the budget constraint—that is, bring responsibility and consequences closer to decision points—the system’s incentives shift toward early action.
Examples: When the Price of Procrastination Becomes Visible
Japanese knotweed, introduced as an ornamental plant, is an iconic case: for years it seemed „just” a nuisance, then became an invasion damaging the built environment, with removal and restoration bills in the billions. A similar pattern emerges with giant hogweed, tree of heaven, or nutria: if we don’t screen the entry of risky species and don’t fund early and targeted eradication, we later have to intervene across wide areas at great social cost. The lesson is not anecdotal but structural: procrastination is systemically expensive.
The Structure of the Bill: Visible and Invisible Line Items
Direct costs—crop losses, pesticide and eradication expenditures, infrastructure restoration, healthcare—are those that are more easily quantifiable and thus overrepresented in policy debates. The harder part is the realm of „invisible” costs: degradation of ecosystem services, decline in the landscape’s recreational and aesthetic value, rand isks from biodiversity loss. These rarely appear on explicit budget lines, yet they are real; indeed, their long-term welfare impact is often greater. If we don’t estimate these, the cost-benefit balance falsely tilts toward „doing nothing.” Global figures—the rapidly growing damage trajectories documented in the international literature—indicate that the „invisible” is actually becoming increasingly visible.
Measurement and Assessment: What Actually Costs How Much?
Good policy rests on data and methodology. Direct cost calculation is necessary but insufficient: it doesn’t capture secondary effects rippling through the economy, and it also underestimates the side effects of control measures. Partial equilibrium models can conduct sensitivity analyses at the sectoral level (prices, quantities, substitution), but don’t show what happens in connected sectors. Computable general equilibrium (CGE) models fill precisely this gap: they trace the shock’s impact through input-output relationships to labour markets, manufacturing, and foreign trade—providing a more realistic approximation of social cost. Yes, they are data-hungry and require expertise, but the returns from better decisions far exceed the cost of modeling. Non-market valuation (contingent valuation, hedonic pricing, travel cost method) expresses in monetary terms what remains invisible in the budget Excel: how much is a cleaner water body worth, an invasion-free forest, or recreational experience? And finally, bioeconomic models link the spatial-temporal dynamics of spread with economic decisions: what happens if we act now, versus three years from now? This question can only be meaningfully answered within a dynamic framework.
Regional Picture: Why Do Costs Vary So Much?
International comparisons show enormous differences between continents and countries. Part of this is ecological and economic endowment, but the institutional and data collection infrastructure is equally important. Where management costs and damages are consistently documented, the numbers are higher—not because there’s more damage, but because measurement is better. Within the European Union, this is why wide variation emerges, and why it’s critical how we handle outlier, extremely expensive events in statistics. If we exclude these, we get „nice” averages but underestimate the tail of the cost distribution—yet it’s tail events that burden budgets. Good policy therefore looks at multiple indicators simultaneously and favors robust decision rules over convenient averages.
Climate Change and Globalization: Increasing Exposure
The combination of climate change and globalization increases the probability of introduction and establishment. Warmer winters and longer growing seasons make new areas suitable for invasive species, while extreme weather events—floods, storms—”transport” propagules. Meanwhile, deep integration of supply chains, movement of packaging materials, tourism, and urban heat island effects all „open the gate” to establishment. In other words, the exposure trend is rising. If the response system’s scope (law, money, capacity) and reaction time don’t improve, soft budget constraint logic necessarily produces delayed and expensive responses.
Counter arguments and Responses: „Prevention is Expensive,” „Damage is Uncertain”
A common counter argument is that prevention is costly while damage is uncertain. True: prevention is a certain expenditure, while damage is probabilistic. But this is precisely the classic case for insurance. Society accepts certain costs against probable risks every day (think flood protection or epidemic preparedness). The relevant question is not whether it’s „expensive,” but whether it pays off relative to expected damage. International experience shows that the cost-benefit ratio of early, targeted measures is typically favourable by multiples. The other counter argument is uncertainty. Indeed, invasion spread is stochastic. But this is not an argument for inaction; rather, it’s an argument for probabilistic and scenario-based decision-making. Uncertainty can be managed with sensitivity analyses and is no excuse for procrastination.
The Practical Toolkit for „Hardening”: a Checklist
• Early Detection and Rapid Response (EDRR). National risk species lists, effective border controls, public and professional reporting systems, and above all: a dedicated, rapidly mobilizable fund. The price of delay is exponential; decision-making must reflect this.
• Chain of Responsibility and Sanctions. Risky imports and intentional spreading must be accompanied by liability rules that approximate the expected social damage. Official negligence must also have consequences: if responsibility blurs, the budget constraint automatically „softens.”
• Data Management and Transparency. Unified reporting protocols for management costs and damages; inclusion of non-market items in impact assessments; regular data submissions to international databases. Measurement is not an administrative burden but an investment in better decisions.
• Modeling Capacity. CGE and bioeconomic frameworks, probabilistic scenarios, cost-benefit analyses. The central budget should specifically fund this knowledge infrastructure; the return is avoiding bad decisions.
• Horizontal Coordination. Conservation, agricultural policy, public health, infrastructure management, and municipalities: invasion costs appear across multiple sectors, just as solutions involve multiple ministries. Without institutional „bridges,” measures fragment and the system bleeds out on transaction costs.
• Public Communication. Invisible costs must be made visible. If the public understands that a current, seemingly small expenditure prevents a future loss an order of magnitude larger, prevention becomes politically more viable.
Government Decision Rules: Automatic Activation and Portfolio Logic
In practice, two principles are worth establishing. First, have predetermined, measurable thresholds whose breach automatically activates early intervention and financing. Don’t let ad hoc political bargaining decide each individual case. Second, apply portfolio logic: early defense is a small, certain expenditure that prevents large, uncertain but probable and rapidly growing future losses. This is not austerity but insurance—a protective tool against systemic damage. „Hardening” the budget constraint in this sense is not ideology but prudence!
Conclusion: Fiscal Prudence, Not Rhetoric
The spread of invasive species, climate change, and globalization together shift the risks. If we know that delay is the most expensive decision, then prevention and rapid response are not rhetorical elements but financial prudence. The bill will arrive in any case. The only question is: do we pay less in now, or later and many times over? The answer—if we take hardening the budget constraint seriously—is not only ecological but rock-solid economic rationality.
