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1797720808

Biodiversity: indispensable yet often underexposed

Cora Vandamme
1797720808

Our planet is in bad shape when it comes to biodiversity. Since the beginning of human civilization, we have lost some 83% of the biomass of wild mammals and half of all plants due to human activity (2018 report) and the rate of animal and plant extinction is increasing. Our current production and consumption patterns are not sustainable, and this while the world's population is expected to grow for several more years.  

Impact not to be underestimated

The decline in biodiversity is often underemphasized in the climate debate even though it is a crucial puzzle piece in achieving our climate goals. Ecosystems such as forests, wetlands, coastal areas and oceans absorb more than 50 percent of man-made CO2 emissions. Biodiversity also helps mitigate the effects of global warming. Coral reefs and mangrove forests, for example, help protect coastal communities from storms, floods and erosion.

Biodiversity is not only important for the climate story but also for economic growth (see also economic opinion 22 May 2019). According to a 2020 World Economic Forum report, more than half of global GDP depends, moderately or heavily, on nature. Construction, agriculture and food are particularly sensitive to changes in ecosystems because they obtain raw materials directly from nature and/or because they depend on a number of so-called ecosystem services such as healthy soils, natural pollination, clean water and stable weather conditions. There are also several sectors where the direct added value of nature services is limited but which depend indirectly on nature conservation. These include tourism (diving activities, beautiful beaches and local fishing), real estate (decline in property values due to increased natural disasters) and consumer goods (availability of raw materials to make goods). A 2021 World Bank report estimates that the collapse of certain ecosystem services provided by nature - such as pollination, food supply from marine fisheries and timber from native forests - could lead to a $2.7 trillion annual decline in global GDP by 2030.

A Paris moment for biodiversity

In recent years, efforts to protect and restore biodiversity did increase. There was even talk of a Paris moment for biodiversity after the Biodiversity COP-15 conference in Montreal late last year. This is a reference to the 2015 Paris Agreement, in which 195 countries committed to keeping global warming well below 2°C compared to the pre-industrial period (and to aim for a warming of only 1.5°C). During the Biodiversity COP-15, the post-2020 biodiversity framework was adopted (the Kunming-Montreal Global Biodiversity Framework) which includes a number of concrete measures for nature conservation and restoration. It also set 23 targets to be achieved by 2030, including the effective protection of at least 30% of terrestrial, coastal and aquatic areas. An ambitious goal because currently only 17% of land and 8% of wetlands are protected. Other goals include restoring 30% of terrestrial and marine ecosystems and halving food waste. To finance this, the goal is to mobilize $200 billion a year from private and public sources, with a special focus on financing projects in developing countries.

The proof of the pudding is in the eating

The success of the new biodiversity framework will have to be proven in the future. As with the Paris Agreement, there is a chance that goals will not be met or that there will be a lot of foot-dragging before action is taken. One step in the right direction is the creation of the nature fund at the end of August 2023 under the umbrella of the United Nations Global Environment Facility. For now, only the United Kingdom and Canada have officially pledged to contribute but other countries are expected to follow soon.

A first moment to evaluate the efforts made will be the 2024 Biodiversity COP meeting. For a true state of affairs, however, we will have to wait until the publication of the fifth Global Biodiversity Outlook report in 2025, a publication of the Convention on Biological Diversity. This five-year report registers changes in biodiversity and evaluates whether biodiversity targets will be met.

Disclaimer:

Any opinion expressed in this publication represents the personal opinion by the author(s). Neither the degree to which the hypotheses, risks and forecasts contained in this report reflect market expectations, nor their effective chances of realisation can be guaranteed. Any forecasts are indicative. The information contained in this publication is general in nature and for information purposes only. It may not be considered as investment advice. Sustainability is part of the overall business strategy of KBC Group NV (see https://www.kbc.com/en/corporate-sustainability.html). We take this strategy into account when choosing topics for our publications, but a thorough analysis of economic and financial developments requires discussing a wider variety of topics. This publication cannot be considered as ‘investment research’ as described in the law and regulations concerning the markets for financial instruments. Any transfer, distribution or reproduction in any form or means of information is prohibited without the express prior written consent of KBC Group NV. KBC cannot be held responsible for the accuracy or completeness of this information.

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