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Do we know the true value of biodiversity – and the cost of losing it?

As a risk manager I must have a certain degree of paranoia. What are we overlooking? Do others have better insights then we do? What is the slow-burning, underlying risk that seems to escape everyone? The loss of biodiversity and damage to ecosystems could be such a global risk.

Many of us have seen the documentaries on bee extinction and watched Chinese farmers dusting the fruit plantations by hand. The problem of a degrading biodiversity is indeed not new. But so far, our focus has been more on single phenomena, such as the extinction of bees, than on the loss of entire ecosystems and the services or benefits they provide for society such as for example freshwater production or climate regulation. According to the International Union of the Conservation of Nature (IUCN), a third of all assessed species are threatened with extinction.

What does this mean for the world's ecosystems and the services they provide? As re/insurers we need to understand the risks, since it could have broad and long-lasting implications. Let's look at coastal and river-bordering forests. Trees in these locations – mangroves or others – deliver important erosion protection. In areas where forests disappear, floods and landslides are more frequent, causing higher property losses. At the same time respiratory diseases are spatially strongly connected to the absence of forests, thereby increasing claims on the Life & Health side.

Unlike other goods, ecosystems services are not valued or traded in markets at a readily observable price. We tend to take them for granted and don't monitor them in a comprehensive way. Scientists estimate that global ecosystem services provide annual benefits in the range of USD 124-140 trillion annually. For example, by investing in biodiversity and ecosystems – through measures such as reforestation of coastal mangroves – we can reduce the risk of damage from natural catastrophes. This would be much cheaper than having to cope with losses from storms or flooding.

So, being paranoid when it comes to biodiversity means recognising the importance of natural habitats, understanding their value and including biodiversity and ecosystem services in our risk assessments and decision making – very much in the same way we already do for natural disasters. The Swiss Re Biodiversity and Ecosystem Services Index (BES) gives us the means to do this. The index provides a holistic, comparative view of the state of BES globally. It works by aggregating data from ten different BES categories addressing water security, timber provision, food provision, habitat intactness, pollination, soil fertility, water quality, regulation of air quality & local climate, erosion control and coastal protection. Let's start now with also assessing biodiversity and ecosystems risks.



​Habitat, water security and air quality

New index reveals which sectors and countries are at risk from biodiversity loss