Biodiversity and its price

Who does not know them – the extraordinary animal species, previously only known to insiders, which, like the sand lizard at Tesla in Grünheide, delay or sometimes even prevent the establishment of new production facilities? The debates – how can the right balance be found between the preservation of biodiversity and the necessary economic growth? – but must go far beyond the question of how to protect the respective favorite animal species from extinction.

Because such discussions distract from the core of the topic. Rather, it is of central importance that species diversity or biodiversity as part of nature is the decisive prerequisite for the global economic system. The degradation of nature is not simply a classic external effect of economic activity, but it undermines its long-term basis.
Two examples should illustrate this: First, pictures went around the world in 2020 when the Chinese had to pollinate the blossoms of apple trees. The main reason was that bees failed as pollinators due to the overuse of pesticides – nature’s free provision of goods had to be taken over by paid labour. This had an immediate negative impact on the balance sheets of the affected companies.

A zoonoses boom is looming

The second example goes much further: the connection between the loss of nature and the spread of pandemics. The cause of many pandemics is the fact that people are converting previously untouched natural landscapes into agricultural or urban habitats – and thus increasingly come into contact with animal viruses. These in turn can cause zoonoses such as corona. A boom in zoonoses is to be feared if mankind does not change the way it treats nature.

If you look at the estimated global costs in the tens of trillions caused by the corona pandemic alone, it quickly becomes clear that this is a global problem of the utmost importance. Because protecting biodiversity also serves to protect against further pandemics. Against this background, the question arises: Why, with a few exceptions, does the topic of biodiversity, unlike the climate crisis, not make it into the center of public debate?

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After all, biodiversity is as important to human survival and economic well-being as is the fight against rising temperatures. In addition, climate and biodiversity are closely linked – not least because of global warming, according to UN estimates, no fewer than 55,000 species become extinct every year, and the trend is rising. One reason for narrowing the spectrum to the climate crisis is that the rise in temperature is easier to measure than the loss of biodiversity.

The loss of biodiversity is a marginal issue

When it comes to the climate, there is enough knowledge about two essential parameters, the emission of CO2 and other greenhouse gases and the global change in temperatures. Therefore, government interventions such as pricing CO2 emissions can at least fundamentally steer economic activity in a different direction. The loss of biodiversity, on the other hand, is much more difficult to quantify.

No one can put a precise figure on how much the disappearance of the sand lizard or a square kilometer of rainforest will affect the ecological and economic scale. The result: In contrast to the climate crisis, there is no mechanism comparable to the price of CO2 in the fight to preserve biodiversity. In general, one gets the impression that while the climate crisis is becoming the center of attention in the face of droughts, storms and floods, the loss of biodiversity remains a marginal issue – although the reduction in biodiversity is just as dramatic as the rise in temperature.
But there is a glimmer of hope: the UN World Conference on Nature in Montreal is on the agenda for December. The meeting, chaired by China, is expected to bring about significant advances in nature conservation. There are even hopes that a similar breakthrough for biodiversity can be achieved in Montreal as was achieved for the climate in 2015 with the Paris Agreement.

Interdisciplinary cooperation is required

What are the requirements for this? First of all, there needs to be close cooperation between the natural sciences and other disciplines. This is the only way to gain insights into which economic activities actually reduce biodiversity and how this economic activity can be held more accountable for its harmful consequences. Measures such as giving greater consideration to the use of land, water and sea routes could provide important impetus.

Due to the close interlinking of the climate crisis and dwindling biodiversity, a pricing of the loss of nature that is similar to the CO2 mechanism is a good idea, at least initially. In the longer term, however, a separate mechanism for biodiversity could have more impact as it would make this challenge more visible. It is also clear that a lot of capital has to be mobilized in order to meet the challenges.

State funds are required here, and when they are approved, the focus should be on the possibility of preventing further pandemics. The state money could be understood as a premium for an insurance that protects humanity from further pandemics – and the finance ministries from massive slumps in tax revenues and expensive aid measures. In addition, by pricing economic activity that affects biodiversity, substantial private capital could be mobilized.

Private capital is indispensable

There would also be additional private capital, for example through foundations with a global focus. This capital would have to be used in a targeted manner to protect larger parts of nature from further human intervention. Existing initiatives such as the World Heritage Fund (Legacy Landscapes Fund) should be given significantly better financial resources. In addition, a global social balance seems indispensable. Biodiversity is not evenly distributed across the world, it is concentrated in certain regions – the 25 most species-rich areas of the world, mostly located in emerging and developing countries, make up just 1.4 percent of the earth’s surface.

So far, the economic pressure in emerging and developing countries has led to people encroaching further and further into previously untouched natural landscapes.
Sustainability, as becomes clear at this point, is primarily a social challenge. The expectation of Montreal is therefore clear: the global North must also provide massive financial support to the global South in overcoming the central challenge facing humanity. The time to act is now. It is not primarily about sand lizards, but about the future of mankind.

The author: Jörg Rocholl is President of the European School of Management and Technology Berlin and Deputy Chairman of the Scientific Advisory Board at the Federal Ministry of Finance.

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