We are losing nature's assets

The economic challenge of biodiversity loss

Biodiversity is declining sharply. We are losing species at a rate that is by some accounts up to 1000 times the natural rate of extinction. As a consequence, the ability of ecosystems to provide valuable services to us and our economy is weakened with each and every disappearance. 

Even though the global Gross Domestic Product (GDP) has more than doubled between 1981 and 2005, today on average about 60% of the world’s ecosystems are degraded or exploited unsustainably. In Europe 38% of all bird species are threatened, 45% of all butterflies and 37% of all habitats are in a critical status. With a business as usual scenario the cost of policy inaction in the field of biodiversity is estimated at a loss of 7% of the annual global GDP by 2050 (2.5 trillion EUR). This is about as much as the gross product of the three major sectors of the world economy (automotives - 1.5 trillion, IT - 0.7 trillion and steel - 0.3 trillion) together and equals the economic costs of climate change as calculated in the Stern Review. 

It is therefore no more surprising that the loss of biodiversity and ecosystem degradation is moving towards front stage of the global business agenda, both in terms of business opportunities and risks.

Why is the state of biodiversity so critical?

The higher the biodiversity in an environment is, the more organisms live there. An ecosystem consists of groups of organisms that interact with their physical environment in a certain area. Ecosystems are often clearly recognisable (dunes, forests, meadows, backyards). Even artificial and urban environments are called ecosystems.

All ecosystems provide goods and services which are called ecosystem services. Examples include timber, water purification and erosion control. Businesses depend directly or indirectly on ecosystems, for instance through their operations or procurement chain. 

We are just one of 13 million species living on this planet. Biological diversity is not only the basis for human existence but also in many ways a critical prerequisite and asset for most aspects of our economic activities. 

Ecosystems and businesses are interlinked. Entrepreneurial activities not only affect our species and ecosystems, they often also depend on these resources provided to us for free like fresh air and water, food, wood, minerals an so on. At the same time, enterprises profit from biodiversity indirectly, for example in the fields of flood protection and erosion control.

Key messages

  • Groups of organisms interacting with their physical environment are called ecosystems.
  • Urban environments form ecosystems as well.
  • Ecosystems provide important services called ecosystem services.
  • Ecosystems with a high biodiversity generally provide more reliable ecosystem services.
  • All businesses either directly or indirectly make use of biodiversity and ecosystem services.

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What are the causes of biodiversity loss?

There are direct and indirect causes of habitat loss. Direct causes are habitat change, climate change, invasive alien species, overexploitation of species and pollution. Indirect causes are demographic, economic, socio-political, cultural and religious as well as scientific and technological factors. 

All businesses have either a direct or an indirect impact on biodiversity. In sectors such as the mining industry or forestry, most companies directly impact on biodiversity. In other sectors such as the consumer goods industry, companies are indirectly responsible for biodiversity; for instance through their supply chain. 


Key messages

  • There are direct and indirect causes for the decline in biological diversity
  • Businesses can be either directly or indirectly responsible for these causes

Links and Resources

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A Simple Explanation of Business & Biodiversity!

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