A chance to save our life support systems

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In a world of relentless rolling crises, which demand immediate attention and action, it can be difficult to recognise an opportunity to address one of the systemic environmental challenges we face. But, with negotiations on a global biodiversity agreement coming to a head, we have a once-in-a-generation chance to tackle our accelerating nature crisis and start to move towards a nature-positive world.

Make no mistake. There is no shortage of pressing near-term crises that require resolution. War in Ukraine. The resulting global energy crisis. A climate emergency that is becoming ever more severe in its impacts. But a failure to address unprecedented biodiversity loss risks destroying the global life support systems on which we all rely.

The Intergovernmental Science-Policy Panel on Biodiversity and Ecosystem Services (IPBES) has warned that around 1 million of the world’s estimated 8 million plant and animal species are at risk of extinction. The rate of species loss is perhaps hundreds of times greater than the average over the last 10 million years. Vertebrate populations have declined in size by an average of 68% between 1970 and 2016, according to WWF.

This is not only a tragedy for the natural world — it also has profound implications for our well-being and, ultimately, for our survival. In purely economic terms, we cannot do without nature. PwC and the World Economic Forum have estimated that more than half of global GDP is generated by industries that are moderately or highly reliant on nature. The natural world provides the global economy with services — food, fibre, energy, water management, etc. — worth an estimated $125 trillion, or 1.5 times global GDP at the time of the study.

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Embedded in nature

But, more profoundly, human society is ultimately reliant upon healthy ecosystems. As Professor Partha Dasgupta noted, in a landmark study for the UK government on the economics of biodiversity, humanity is “embedded in Nature”. Our advanced civilisation cannot survive if we degrade or destroy the natural systems that provide humanity’s life support system.

Fortunately, this realisation is beginning to get the attention it needs among policymakers. In December, the UN will hold its much-delayed COP15 summit, in Montreal, Canada, to agree a Global Biodiversity Framework (GBF) under the auspices of the Convention on Biological Diversity (CBD). This is intended to ensure that humankind can, by 2050, “live in harmony with nature”. Among other things, it aims to ensure that at least 30% of land and ocean is protected, cut pollution and the spread of invasive species, and fundamentally transform the global economy and financial flows to ensure that they protect, rather than harm, nature.

Finance will be key to a successful agreement — both in ensuring that the funding is available to protect nature as well as, crucially, ensuring that existing financing no longer harms it.

There is currently an estimated $700 billion biodiversity finance gap, according to research from the Paulson Institute. In 2019, between $124 billion and $143 billion was spent on protecting nature; the researchers say that adequately protecting biodiversity would require between $722 billion and $967 billion of spending each year.

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Closing the gap

Governments are starting to step up to close this gap. At the Glasgow climate talks last November, the Canadian government pledged that it will allocate 20% of its $5.3 billion climate finance commitment to nature-based solutions that support biodiversity. At an earlier round of GBF negotiations, China’s President Xi pledged RMB1.5 billion to a Kunming Biodiversity Fund to support biodiversity protection in developing countries.

Multilateral institutions are also responding. In June, sponsor governments agreed the eighth replenishment of the Global Environment Fund (GEF), which acts as the financing mechanism for the CBD, as well as for other international environmental agreements. Biodiversity protection will make up the largest part of GEF funding over its next four-year cycle. The IMF’s recently launched Resilience and Sustainability Trust has been set up to provide lower-income countries with financing to address longer-term threats to their resilience, including environmental challenges; we are hoping for a commitment from the IMF for a conservation component to that trust, essential for preventing pandemics and addressing climate change.

Encouragingly, this week’s UN General Assembly (UNGA) in New York has seen world leaders declare COP15 a priority and announce new biodiversity finance initiatives. The announcement, at a high-level event on the sidelines of UNGA, that Germany is increasing its international biodiversity finance to 1.5 billion euros — the highest total international yearly financial commitment of all OECD countries to biodiversity conservation, so far — sends an important signal that developed countries are prepared to step up. So, too, did the 2021 announcement that the EU is doubling its international biodiversity finance funding, as well as France’s committing 30% of its climate funding to nature, amounting to one billion euros by 2025.

Richer countries have both a responsibility and an interest in helping protect biodiversity in developing countries. These commitments are therefore critical to continuing momentum on nature and helping countries find common ground in the upcoming talks in Montreal.

Here, we can again point to progress achieved this week in New York, with the launch of a 10-point plan for financing biodiversity, endorsed by 16 initial countries from both sides of the negotiations table. And the announcement by the government of Colombia of an accelerator to fast-track action on biodiversity in developing countries as well as an announcement from Costa Rica to support the protection of at least 30% of land and ocean globally.

However, much more needs to be done. But perhaps the greater challenge for governments as they finalise the GBF lies in ensuring that it addresses the impacts that existing public and private financial flows currently have on nature. The main problem they face is that nature is not considered material in the investment decisions made within most of the economy, and that it is rarely considered in government subsidies or when laws and regulations are drafted.

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Spending to protect nature

Governments need to redesign their budgets and their subsidy programmes to ensure that their spending protects rather than harms nature. At the same time, they need to ensure that the positive impacts of that spending — such as on poverty alleviation or food security — are maintained.

The private sector, meanwhile, needs to better understand the impact that its financing has on biodiversity, and the extent to which the assets that it finances depend upon natural systems. They can learn from the multilateral development banks, which pledged at COP26 last year “to better understand the financial and systemic risk of nature loss to our public and private portfolios and the current impacts of our portfolios on nature”. The proper pricing of those impacts and dependencies — encouraged, if need be, by financial regulators — would shift capital towards a more nature-positive global economy.

Governments must seize the opportunity presented by the Montreal talks to ensure that the GBF catalyses the financing needed to support conservation efforts and biodiversity protection. But they must also ensure the GBF calls for the alignment, promised in its first draft, of financial flows with a nature-positive global economy. And, of course, governments must ensure that their finance ministries deliver that alignment; they would do well to consult the recent report on the subject from the Coalition of Finance Ministers for Climate Action.

We do not underestimate the challenge we face in shifting to a nature-positive global economy, especially in the face of manifold existing crises. But what is clear is that if governments fail to craft an ambitious Global Biodiversity Framework, and to implement the policies and measures needed to deliver its goals, the costs will be incalculable.

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