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Biodiversity Loss: The Hidden Threat to Our Economy

Updated: Apr 3




forest fire
Photo by Matthis Volquardsen: Pexels

An often-cited World Economic Forum study showed that $44 trillion of economic value, or about half of the world's GDP, was dependent on nature and its services and as a result at risk from biodiversity and nature loss.  


An equally well-known study titled The Economics of Biodiversity showed that humanity is using Earth’s resources at the rate of about 1.6 Earth’s per year. This is, of course, unsustainable. 


In our white paper, Biodiversity Loss: The Hidden Threat to Our Economy, ED4S takes the reader on a journey to better understand the issues of biodiversity loss and natural capital. We aim to help the reader understand the increasing risks involved in not properly valuing biodiversity. The other side of that coin is, of course, the opportunities available to investors and companies who work to repair the damage done to our biosphere. 


Economic impact and business implications 

The natural world provides services to our world worth more than 150 trillion annually. This includes food and water resources, clean air, carbon storage, and many other services that we take for granted and therefore do a poor job of valuing. 


Regulators, investors, and companies need to better assess how we depend on biodiversity and to what extent our activities damage the natural world. This knowledge can help us protect nature and in some cases reverse the cycle of biodiversity loss that in the long run only hurts the viability of our companies our investments and our societies. 

 

Biodiversity loss and everyday life 

Many of the products we use and the services that we enjoy depend on natural systems for their inputs. By not properly valuing the cost to the nature of these goods and services, we overuse them and don't replenish them at our peril. Your morning coffee or morning tea is under threat due to climate change and other natural system breakdowns. Under a business-as-usual scenario, the regions that provide these resources to the world face a future of steadily decreasing yields due to climate change and other environmental factors.  

Think of all the systems and the products that you use on your average day. Whether it's from that cup of coffee in the morning, your commute, the meals you eat, the heat and air conditioning you enjoy, the products and services from suppliers, the clean air and water your children enjoy at school, and others, most of these systems have nature somewhere in the supply chain. As environmental damage increases unabated, the reliability of these products and services and the quality of these products and services will diminish, and over time will diminish at an increasing rate.  

 

The role of investors 

Investors have an important role to play and ensure that we correct the environmental damage and biodiversity loss we see today. We need to reverse these trends where possible. Investors need the material information from companies to make informed investment decisions. 


We hope this paper can serve as a resource to investors regulators and companies all looking to improve measuring and managing of our biodiversity bounty. 








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