Preserving biodiversity, a major economic challenge

There is a lot of talk about environmental, social, and governance (ESG) issues in a company’s activities. But while preserving the environment and climate is fundamental for our planet and the proper functioning of our economy, we tend to forget the importance of biodiversity. How can it impact human activities and why is it essential to preserve it? myLIFE provides some explanations.*

What is biodiversity?

Biological diversity or biodiversity refers to all living organisms (animals, plants, bacteria, etc.), the natural environments in which they evolve (oceans, forests, grasslands, etc.), as well as the interactions between species and with their living environment. It encompasses genetic diversity within a single species, the variety of living beings, and all ecosystems.

What does it enable?

Biodiversity is the foundation of our existence. It provides the essential elements for all life on Earth, such as oxygen, food, and water. It supplies the raw materials that allow us to feed ourselves (fruits, vegetables, meats, fish, etc.), clothe ourselves (plant fibres, wools, leathers, etc.), and house ourselves (wood, corks, straws, sands, etc.).

It regulates the climate, the quality of water, and air: forests and oceans produce oxygen and absorb CO₂, wetlands act as a natural filter that contributes to water purification, plants help cool temperatures, etc.

It also helps protect us against environmental risks: wooded areas, hedges, and grasslands help moderate the effects of floods by promoting water infiltration or creating obstacles to flows, vegetation reduces soil erosion and prevents landslides, etc.

According to the World Economic Forum (WEF), no less than half of the global GDP depends on the exploitation of natural resources.

What is the impact of biodiversity on the economy?

If biological diversity is essential for the health of the planet and its inhabitants, it is also crucial for economic stability. According to the World Economic Forum (WEF), no less than half of the global GDP depends on the exploitation of natural resources, and nearly 400 million jobs could be created through positive actions towards nature. Agriculture, forestry, aquaculture, construction, the textile industry, and tourism, to name but a few, directly depend on the health of ecosystems.

Thus, the development of agriculture is made possible through the pollination by insects (bees, bumblebees, butterflies, etc.) and organisms that contribute to soil renewal and fertility (earthworms, fungi, bacteria, etc.).

Oceans, forests, and grasslands provide animal, plant, and mineral species essential for food production, our energy needs, clothing design, and the construction of our homes.

The creation of medicines is possible thanks to natural molecules derived from plants and animals: white willow is used to produce aspirin, poppy for morphine, certain venoms are used against hypertension or as analgesics, etc. The medical field continually draws inspiration from nature and the functioning of living beings for its research, notably through biomimicry (observation and imitation of the forms and functioning of living organisms and nature).

Beyond the production of natural goods, biodiversity also allows the exploitation of tourism and travel activities, sports and outdoor leisure, not to mention the numerous jobs related to the use of ecosystems for educational, mental and physical health purposes, etc.

The collapse of certain ecosystem services provided by nature could reduce the global gross domestic product (GDP) by $2.7 trillion per year by 2030.

This biological diversity has a real economic value. As the European Central Bank (ECB) noted in 2024: “Businesses, the financial sector, and policymakers have long underestimated, or even ignored, the economic importance of ecosystem services, many of which are neither traded on markets nor directly assigned a monetary value.”

It thus reminds us that wetlands, which act as natural water filtration systems and storm barriers, save billions of dollars in water treatment and disaster mitigation costs. That forests, by absorbing carbon dioxide, reduce the economic impacts of climate change. Or that without pollinators, agricultural yields would decrease, leading to higher production costs and consumer prices.

In 2021, the World Bank already indicated that “(…) the collapse of certain ecosystem services provided by nature (wild pollination, food from marine fishing, and wood from natural forests, in particular) could reduce the global gross domestic product (GDP) by $2.7 trillion per year by 2030.”

Preserving biological diversity and protecting natural capital thus prove essential for the development of numerous activities, job creation, and the financial balance of society. Without this, the economic stability we know today could not exist.

Human activities threaten biodiversity

Although fundamental for the survival of living beings and the good health of the economy, this natural wealth is not eternal. It is even strongly compromised by human activities that alter the diversity of natural habitats and cause the disappearance of many animal and plant species.

In 2019, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) warned about the speed of biodiversity collapse driven by human activity: 75% of the Earth’s surface is significantly altered, 66% of the oceans undergo major changes, and 85% of wetlands have disappeared.

If no action is taken, nearly one million species of animals and plants will be threatened with extinction in the coming decades.

In the last fifty years alone (1970-2020), the average size of studied wild animal populations has decreased by 73% (according to the WWF Living Planet Report 2024). According to experts, if no action is taken, nearly one million species of animals and plants will be threatened with extinction in the coming decades.

The IPBES has identified five factors (called “pressures”) directly responsible for the degradation of nature and ecosystems worldwide:

• • The conversion of natural environments into artificial environments (urbanization, deforestation, cultivation of grasslands, etc.) fragments ecosystems and destroys species habitats.
  • Overexploitation and excessive use of resources (overfishing, poaching, deforestation, mining, etc.) compromise the functioning and renewal of ecosystems.
  • Climate change affects the life cycle of all living beings and disrupts their geographical distribution.
  • Pollution of air, soil, and water (chemical, plastic, noise, light, etc.) degrades and alters natural environments and the beings that live there.
  • The introduction of invasive exotic species (intentional or not) by humans disrupts ecosystems and replaces local plants and animals.

In Luxembourg, the observation is the same. The Ministry of Environment, Climate and Biodiversity noted in 2023 a “(…) loss and degradation of natural habitats and ecosystems, as well as landscape fragmentation, due to the expansion of urban areas, the extension of transport networks, changes in agricultural practices, as well as the drainage and transformation of wetlands and waterways. The number of species at risk of extinction is higher than ever, and the combined effect of climate change is likely to exacerbate this negative trend with unpredictable repercussions for the functioning of terrestrial and aquatic ecosystems, and consequently for public health, the economy, agriculture, and forestry.”

Economic activities, as well as production and consumption models, population growth, global trade exchanges, and urbanization, have a significant negative impact on nature and biodiversity.

Just like the climate crisis, it is becoming necessary to adopt strategies to promote the conservation of ecosystems and the preservation of biodiversity.

Preserve diversity to protect human beings and the economy

The erosion of natural resources necessitates collective awareness. Although natural capital is generally not considered in the wealth figures of countries, it nonetheless represents real economic value, and its destruction leads to considerable expenses: up to 200 billion dollars are spent each year on improving the state of biodiversity (IPBES NEXUS assessment report).

Just like the climate crisis, it is becoming necessary to adopt strategies to promote the conservation of ecosystems and the preservation of biodiversity. This will ensure the sustainability of natural resources, which are essential to business activities and the proper functioning of the economy.

Many European and international initiatives have already been launched. At the United Nations Conference on Biodiversity (COP16) held in Colombia in 2024, 61% of member states submitted their national biodiversity goals. Luxembourg thus presented its “National Plan concerning Nature Protection” (PNPN3) which aims to work towards restoring biodiversity by 2030. Based on the EU biodiversity strategy, the country is committed to ensuring the protection of 30% of the national territory’s area (protected zones), stopping any deterioration, and restoring or improving the state of at least 30% of habitats and species, etc.

Also noteworthy is the European directive CSRD (Corporate Sustainability Reporting Directive) which encourages companies to better integrate biodiversity-related risks into their value chain by assessing their impact on natural ecosystems, as well as the TNFD framework (Taskforce on Nature-related Financial Disclosures) which helps companies and financial institutions evaluate the risks and opportunities related to biodiversity.

The rate of biodiversity loss and climate change over the last 50 years is unprecedented in human history. Just as the integration of environmental, social, and governance (ESG) issues into political, financial, or business decisions is imperative, it is crucial to consider the impact of nature degradation and biodiversity loss.

We all have a role to play in restoring and conserving the planet’s natural capital and the health of ecosystems. This is essential for the well-being of the global economy, as well as for the welfare of current and future generations.

* Content translated from French by the BIL GPT AI tool