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27th September 2020
A fifth of countries worldwide at risk from ecosystem collapse as biodiversity declines, reveals pioneering Swiss Re index
39 countries have ecosystems in a fragile state on more than a third of their land–Malta, Israel, Cyprus, Bahrain and Kazakhstan have the lowest Biodiversity and Ecosystems Services(BES) ranking.
55% of global GDP depends on high-functioning BES.
Major economies in Southeast Asia, Europe and the US exposed to BES decline.
Swiss Re Institute BES Index enables businesses and governments to factor in biodiversity and ecosystem issues into economic decision-making.
Countries across the world are reliant on a range of services that are based around their natural ecosystems. Biodiversity and Ecosystem Services(BES) include such necessities as food provision, water security and regulation of air quality that are vital to maintaining the health and stability of communities and economies.
Over half 55%) of global GDP, equal to $41.7tr trillion, is dependent on high-functioning biodiversity and ecosystem services. However, a staggering fifth of countries globally (20%) are at risk of their ecosystems collapsing due to a decline in biodiversity and related beneficial services, reveals this new study by Swiss Re Institute.
The study, which is based on Swiss Re Institute's new Biodiversity and Ecosystem Services Index, shows that both developing and advanced economies are at risk. The report finds developing countries that have a heavy dependence on agricultural sectors, such as Kenya or Nigeria, are susceptible to BES shocks from a range of biodiversity and ecosystem issues.
Among G20 economies, South Africa and Australia top the rankings of fragile BES. The well-known impact of water scarcity is a driver for these countries, alongside factors such as costal protection and pollination. Brazil and Indonesia enjoy the highest percentage of intact ecosystems within the G20, however, the countries' strong economic dependency on natural resources highlights the importance of sustainable development and conservation to the long-term sustainability of their economies.
An upcoming United Nations Summit on biodiversity on 30th September 2020 is set to call for "urgent action on biodiversity for sustainable development" as global efforts to improve in this vital area have fallen well below UN targets to halt biodiversity loss.
To build understanding around this global issue, Swiss Re Institute developed the BES Index, enabling governments and business leaders worldwide to cross-compare and benchmark the state of local ecosystems that underpin their economies. Insurers can also use this data to develop relevant insurance solutions that protect communities at risk from poor-functioning BES.
Christian Mumenthaler, Swiss Re's Group ceo, comments "There is a clear need to assess the state of ecosystems so that the global community can minimise further negative impact on economies across the world. This important piece of work provides a data-driven foundation for understanding the economic risks of deteriorating biodiversity and ecosystems. In turn, we can inform governmental decision-making to help improve ecosystem restoration and preservation. We can also support corporations and investors as they fortify themselves against environmental shocks. Armed with this information, we can also ensure the provision of stronger insurance services."
What can be done?
The insights from the index serve to highlight the importance of nature conservation for a functioning economy. Among the top ten countries with fragile ecosystems and high GDP dependency on natural services, it is the resource-rich developing countries with large agricultural sectors that stand out, such as Kenya, Vietnam, Pakistan, Indonesia and Nigeria. The study highlights the dangers of these economies potentially reaching critical tipping points when essential natural resources are disrupted. The report highlights the value of ongoing economic diversification combined with conservation and preservation efforts in such countries.
Major economies in Southeast Asia, Europe and America that already have diversified economies are nevertheless also exposed to risk from BES decline. This is because important individual economic sectors can be impacted by single BES factors such as water scarcity, which can have a disruptive effect on a country's manufacturing sectors, properties and supply chains.
The report discusses how addressing BES challenges through simple preservation actions can have significant impacts. For example, ecosystem restoration along the coast of Louisiana could reduce expected flood costs by $5.3bn annually. Steps to ensure functioning coral reefs globally could lower estimated flood damages for 100-year storm events that would otherwise increase by 91% across the globe.
The Swiss Re Institute report that accompanies the launch of the index, "Biodiversity and Ecosystem Services: A business case for re/insurance", highlights several real-life cases of how BES impact economies. For example, the destruction of the Aral Sea, which led to economic collapse and mass migration from the surrounding coastal area, provides an extreme illustration of how the collapse of an ecosystem can affect a local economy. Other examples include the economic impacts of invasive species, nutrient run-off and algal blooms or the effects of the loss of pollinators on the agricultural sector. Global medical research is also very much at threat from the decimation of rainforests, as almost 50% of all medicines are sourced from natural resources within this habitat.
Swiss Re Trends (751 articles)