The shortage of natural resources directly affects half of the world economy, analysts of the World Economic Forum and PwC have calculated, and indirectly – all sectors of the economy. How to fix it and who should be equal in this?
The total weight of all people on Earth is 0,01% (one ten-thousandth) of the weight of all living things, but it is man and his activities that are responsible for the disappearance of flora and fauna, analysts from the World Economic Forum (WEF) note in the report on natural risks for 2020 year, which they prepared jointly with PwC experts. They grouped 90% of the negative changes in nature over the past half century into five categories – all of them are somehow related to the economy, politics, consumption and other human activities:
- changes in soil and water use;
- changing of the climate;
- depletion of natural resources;
- pollution;
- the spread of invasive species, that is, “alien” for a certain territory or ecosystem of organisms that appeared there thanks to humans and are potentially harmful (a vivid example is hogweed).
The risks of species extinction for the economy seem to be obvious, but often we see only a part of the whole scale, since environmental problems can be hidden deep in the logistics and production chain, the authors of the report emphasize. Earlier, experts from the Organization for Economic Cooperation and Development (OECD, which unites 36 most developed countries) estimated that soil degradation alone brings the global economy from $6 trillion to $11 trillion in annual losses.
In total, WEF and PwC analysts name three hidden threats that the world economy is facing the destruction of ecosystems and the extinction of species.
1. The dependence of business processes on nature is much higher than is commonly believed.
According to WEF and PwC analysts, almost half of the global economy — $44 trillion annually — depends on the state of the environment in one way or another. Some to a greater extent (agriculture and forestry, food industry, construction), some to a lesser extent (trade, transport, real estate).
The area of forests cut down and burned since the beginning of the current year around the world (in ha).
Other industries formally do not depend on the environment in any way – these are finance, IT, digital services and healthcare. But if you look closely at their supply chain, the state of the environment affects them too. For example, the electronics industry cannot exist without the extraction of rare earth metals, and unexpected cataclysms threaten insurance companies with billions in losses.
2. Image risks
A certain company can pollute the air or the oceans for years, but given the modern fashion for consciousness, responsibility and environmental friendliness, it thus risks incurring the wrath of investors, social activists and even government regulators. Following will be a decline in stock quotes, a reduction in sales turnover, a drop in profits, massive layoffs, and further down the list.
The number of deaths related to air pollution since the beginning of the current year.
Understanding this, representatives of many industries are acting forward, changing the rules of the game themselves, until they are forced to do it “from below” or “from above”. For example, players in the textile industry in general and the fashion industry in particular, being one of the main polluters of nature, are rushing to sign environmental pacts and commit themselves to reducing their carbon footprint along the entire production chain.
3. Risks to society
The extinction of species, the depletion of natural resources – all this affects us through the economy, the world in which we live. Problems may arise in the following areas of public life:
- health – the spread of viruses, exacerbation of respiratory diseases due to polluted air;
- diplomacy – the struggle for resources as the reason for the flare-up of more and more new military conflicts;
- trade – here WEF and PwC analysts give an example of 2019, when due to unprecedented fires in Brazil and the inability of the government to cope with them, the trade agreement between the EU and Latin America was threatened (the Europeans did not want to sign it until Brazil sorts out its problems );
- rural development – residents of developing countries living outside megacities are critically dependent on the state of the environment, which affects the position of these countries as a whole;
- Equity – Women play a key role in natural resource sectors, so the crisis in these sectors will have a negative impact on gender equality and social development.
How is it possible to slow down or stop these destructive processes? The authors of the report call for attention to the efforts of the authorities, business and society to combat climate change – and to shift this experience to the sphere of resource depletion and species reduction.
How many Earth-like planets do we need with our current level of consumption.
This includes the improvement of risk management and public control, the increase in “green” funding specifically for the fight against species reduction. Ultimately, a responsible approach to the use of land and water alone is an additional $4,5 trillion in global economic growth over the next ten years (reforestation, artificial meat, reducing food waste, and so on).