Why biodiversity and global prosperity go hand in hand
We can no longer afford to neglect nature. The health of our planet and our future wellbeing depend on it.
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Last year, renowned naturalist David Attenborough broke a world record. He became the fastest person ever to reach a million followers on Instagram, doing so in just over four hours.
But why did the legendary presenter show a sudden interest in social media? He wanted to use the platform to spread the word that our natural world is in trouble. The United Nations has named 2021-2030 the decade for ecosystem restoration.
And the scale of the problem is terrifying. A million plant and animal species are now facing extinction. More than 40% of amphibian species, almost a third of reef-forming corals and more than a third of all marine mammals are threatened.
In fact, research from Swiss Re Institute shows the extent to which ecosystems are in peril. Nearly a quarter of all countries on the planet have fragile and damaged ecosystems in a significant proportion of their land. And it’s having a direct impact on their bottom line: many of these countries depend on the systems, processes and fruits of their lands to sustain their economies.
More diversified economies, which are less dependent on fishing, farming and forestry, for example, still face threats from water shortages and interruptions to food supply. One estimate places the value of biodiversity at USD 33 trillion a year – close to the combined GDP of the US and China.
The health of the natural world is not just about having nice places to walk and fresh air to breathe – it’s rooted in our financial system and is at the heart of societal wellbeing.
The cost of a damaged environment
As our urban areas expand, we’re carving huge swathes out of natural ecosystems. By 2050, it’s estimated over two thirds of the world’s population will live in cities and towns.
Alongside this, greenhouse gases, plastic waste and other sources of pollution continue to mount up.
The Swiss Re Institute Biodiversity and Ecosystem Services (BES) Index reviews the state of land on a square kilometre basis and finds only 34 countries (or 14% of all countries) have ecosystems with a high capacity to provide services on at least a third of their territories.
These ecosystem “services” represent the benefits that we obtain from nature. Our research shows that Malta, Israel, Cyprus, Bahrain and Kazakhstan have some of the lowest capacity to provide ecosystem services.
But Kenya, Vietnam, Pakistan, Indonesia and Nigeria are most dependent on the health of their ecosystems. With their economies largely powered by industries such as farming, fishing and forestry, these countries are financially vulnerable to ecosystem shocks.
Data is part of the solution
Given the inextricable links between ecosystem services and global financial and societal health, tackling each factor in isolation will not help us find a solution. This is where data and technology come in. By collecting and analysing information about our environment and the impact of our infrastructure, we can make financial decisions grounded in nature. We can use this information to ensure our industry and urban expansion is not just sympathetic to the environment, but actively supports its recovery. And ultimately this will guide us to a more resilient future.
Our updated CatNet® tool turns geographical risk data into actionable information for the insurance industry. It assesses risk by combining hazard, loss and exposure with selected background maps and satellite imagery. It means that data about issues such as climate change, natural catastrophe and population density can be used in pricing and to create new solutions.
Using this data to inform underwriting and asset management will help redirect attention to more sustainable and financially viable projects, creating more resilience. And nature-based insurance solutions open up a new line of business for insurers.
We hope that the BES Index helps foster a dialogue around biodiversity and ecosystem services and their connection with the economy.
We want to see biodiversity and ecosystem services incorporated into businesses’ decision-making. As an industry, we have the power to influence a resilient future for affected regions and communities and our global economy.
As we look to a post-pandemic recovery, the long-term health of our societies and financial systems ultimately depends on Mother Nature’s wellbeing.