<p>This study examines the emergence of biological externalities when agents target specific species and only partially consider the dynamics of the ecosystem as a whole. We contrast this regime with the socially optimal outcomes, which yields new insights into the exploitation of a predator-prey ecosystem. Specifically, private agents overestimate the conservation value of the targeted species and limit their fishing effort. This induces predator overpopulation and depletion of the prey stock. Overall under-fishing effort persists even when there is intra-industry competition between fishers targeting the same fish. Finally, we propose a species-specific instrument to align private and social optimal outcomes.</p>