Over the last few years, there have been plenty of examples of natural eco-systems under threat or being damaged, ranging from the destruction of natural habitats to water scarcity.
When people talk about the threat to eco-systems, it is often from an environmental perspective, but now there are growing calls to also consider the economic risks they pose as well.
The executive director of the global advocacy initiative Campaign for Nature, Brian O’Donnell said the growing loss of biodiversity and risks to natural eco-systems is fast becoming a defining economic issue, in an in an interview.
O’Donnell added people often take for granted how the economy is dependent on nature, by providing us with food, water and clean air.
He told me the risks to natural eco-systems can include soil degradation, the loss of water and the warming of the oceans.
“Our economy relies on nature to filter our water, to make sure our soils are productive and to provide defences from storms,” said O’Donnell. “Nature is also a huge part of regulating our climate.”
“We have seen central banks recognize the risks of long-term climate change, but most of their models assume a stable natural environment, which unfortunately is not the trend.
“We continue to clear tropical forests, degrade oceans, and that only enhances the climate risk, which is already on the minds of a number of banks and businesses.”
O’Donnell said water scarcity, driven by extreme heat and data center consumption, could lead to the large-scale migration of people out of cities like Phoenix, Las Vegas and even Southern California.
“If we don’t start seeing nature as fundamental to both our economies and our livelihoods, and stop treating it as a peripheral issue, then we will see much larger costs in the long run, and a less desirable planet to live on,” he said.
“It’s actually not that expensive to invest in safeguarding nature compared to the long-term costs, and yet we are seeing governments treating this as an area to cut.
“This is incredibly short-sighted because nature risk is every bit as important as the other geopolitical risks, and it will only get harder. The restoration of nature always costs more than maintaining an intact system.”
Dr. Samuel Sinclair, co-founder and director of the conservation consultancy Biodiversify said more than 55% of global GDP is moderately or highly dependent on natural systems, in a statement.
Dr. Sinclair added the U.K crop harvest is a prime example, and this year’s looks set to be the worst, with the Energy and Climate Intelligence Unit estimating up to £390 million in lost revenue for farmers.
“Restoring soils, water and habitat is the most affordable protection available, and it is not something government or growers can deliver alone,” said Dr. Sinclair.
“Businesses buying produce depend on the same ground and hold the commercial stake and the capital to invest at the scale nature works,” he added.
“The companies that come through years like this one best are those that have invested upstream, in the growers and the ground, rather than buying on price alone. That gap is the business case, and it widens every year.”
And Dr. Jesse Abrams, senior impact fellow at Green Futures Solutions, University of Exeter, said our society and economy are fundamentally dependent on nature, in a statement.
Dr. Abrams added when natural systems are damaged, the costs ripple through economies via lower productivity, greater food and water insecurity, higher inflationary pressures and rising financial risks.
“Central banks, regulators and other institutions therefore need to treat nature-related risks with the same seriousness increasingly afforded to climate risks,” he said.
“This means incorporating nature degradation into economic and financial risk assessments, stress testing for ecological shocks, improving disclosure of nature-related exposures and supporting policies that keep economic activity within planetary boundaries.”