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World Wild Economy

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Did you know? The value of biodiversity and ecosystem services is about twice as high as the global gross national product per year. More than 60% of global economic output is directly or indirectly dependent on nature's services. These are figures that the financial sector should also urgently consider.

Article by Dr Frauke Fischer, biodiversity expert

For a long time, the protection of nature was considered a task for government bodies and nature conservation organisations. Real business people had other things to worry about. Wherever they had to make an omelette, they had to break eggs. Wherever they had to boost the economy and make big money, they had to make way for Mother Nature. We had to earn money, stimulate the economy, create growth and generate jobs.

The more we understand the natural laws of the world, the clearer it becomes that these - still important - goals can only be achieved with nature, not against it.

What does biodiversity mean for us?

A little less romantically, but scientifically correct, we can call nature "biodiversity" and its connection to us "ecosystem services". Biodiversity is the diversity of life on our planet: at the level of genes (Mr. Schmidt is not Mrs. Meyer), of species (a dog is not a cat) and ecosystems (a coral reef is not a rainforest). Biodiversity is the basis of ecosystem services, which in turn are defined as services that nature explicitly provides for humans. These services can be divided into four broad categories. Provisioning services describe everything that we can take directly from nature and use. Drinking water, wood, forest mushrooms or wild fish fall into this category. The second category is regulating services. They include, for example, the regulation of diseases, the stabilisation of the global climate, the pollination of (useful) plants, and the purification of air and water. The third category is supporting services. This category is clear because it only includes three services: the generation of fertile soils, photosynthesis, and the maintenance of global nutrient cycles. The last category includes cultural services, such as the recreational function of nature or the inspiration we draw from it.

Current studies show that more than 60% of global economic output is directly or indirectly dependent on services provided by nature.
Dr Frauke Fischer

How much is biodiversity worth?

So far so good and no reason to look away from the quarterly figures and balance sheets, or is there? The value of biodiversity and ecosystem services can be measured in monetary terms. If you calculate it, you come to the surprising conclusion that it is about twice as high as the global gross national product - year after year. This alone should give us all pause for thought; after all, these services are not only impossible to pay for, but also difficult or impossible to replace. For example, humans cannot produce fertile soils, pollinate flowers much more slowly and poorly, or pay a lot of money to filter water and air. Nature provides all these services permanently, in the best quality, reliably and free of charge. But even greater than the surprise when looking at the gigantic monetary value is probably that when recognising the dependence of the global economy, and thus of each individual company, on these services. Current studies show that more than 60% of global economic output is directly or indirectly dependent on services provided by nature. Knowing this, nature is suddenly no longer just "nice to have", but a central component of the core business of every company.

But this is where the crux really begins. While it is easy to understand why companies in the food sector are dependent on biodiversity and ecosystem services, the connections and dependencies of other sectors - including the financial sector - are not so obvious. Anyone who works with computers and numbers every day but does not cut down trees cannot be dependent on biodiversity or be partly responsible for its decline.

What does biodiversity have to do with the financial sector?

The Covid-19 pandemic has taught us painfully that there is a connection between every sector and every company and the impact of interventions in nature. Covid-19 is a zoonosis, i.e., a disease that has jumped from wild animals to domestic animals and or humans. About 1.7 million unknown viruses exist. Of these, an estimated 640,000 - 850,000 can be dangerous to humans as "new diseases". Five such new zoonoses occur in humans every year. Each one has the potential to trigger a pandemic. About 30% of these virus jumps can be traced back to human interference with nature. Because people want to make room for cattle pastures and soy plantations, dig for mineral resources or market valuable timber, the rainforests in Southeast Asia, the Congo and the Amazon basin are disappearing. No one should be indifferent to all this because rainforest destruction not only paves the way for dangerous diseases to reach the City of London, Wall Street, or the banking district in Frankfurt, but also brings our Earth system ever closer to dangerous tipping points. Such a tipping point will be reached in the Amazon basin, for example, when 22% - 24% of the forest area has disappeared. Are we far away from that? Unfortunately, no. 18% of the Amazon forest has already disappeared, more 38% of the remaining forest is degraded. But what does it mean when we reach the Amazon's "tipping point"? In that case, the forest will gradually die, whether we cut down one more tree or not. Because this will happen quickly and across the board, we cannot reforest against it. This would not help at all, because rainforests are not located where it rains, but generate the precipitation locally. So, no forest, no rain, and not only in situ, but in the case of the Amazon also no longer in Central and North America, where not only agriculture is urgently dependent on this water.

We probably lose 1-2 species per hour on Earth.

So, is everything hopeless?

Not at all if we act quickly and effectively. We probably lose 1-2 species per hour on Earth. This means that we do not have time to set time horizons of decades for our goals. In order for action to finally be taken, many actors (also in the financial sector) need to understand two things. 1. The sentence "We have to make money." can only be thought and said in the context of respecting planetary boundaries and preserving biodiversity and ecosystem services. 2. Measurability in the sense of the ultimate statement of a key figure, such as "We are at four for biodiversity, but five would be better.", will not happen any time soon. Those who wait for this are paving the way (even if not willingly) for the further destruction of our livelihood.

The good news is that completely new financial and investment products are emerging that are based on the conservation and promotion of biodiversity. In the future, investments in nature conservation will hopefully replace those in nature destruction on a large scale. The second piece of good news is for the world around us. It doesn't really care whether we behave wisely and sensibly or carry on as before. The idea that humans will first destroy all nature around us before they themselves become extinct can safely be regarded as nonsense. We already die out in the midfield and then make room for the hardy animal and plant species that are less demanding.

Book cover Wal macht Wetter

You can read more about biodiversity and the connection with climate change in the recently published book "Wal macht Wetter - Warum biologische Vielfalt unser Klima rettet".

Biologist Frauke Fischer and economist Hilke Oberhansberg tell us with a lot of charm why the climate crisis gives koalas a stomach ache, how whales make weather, corals stop floods and why we actually just need to give nature enough space again so that life on this planet remains worth living.

Click here for the book.

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