The World Economic Forum’s New Nature Economy (NNE) Report:

The World Economic Forum’s New Nature Economy (NNE) report:

As the world prepares for the 2020 “Super Year for Nature”The World Economic Forum’s New Nature Economy (NNE) report helps bring newperspectives and stakeholder engagement to bear in tackling the urgent nature crisis.

Snap short :

• Although the world’s 7.6 billion people represent only 0.01% of all living things by weight, humanity has already caused the loss of 83% of all wild mammals and half of all plants.

Environmental costs of economic growth:

• Human activities have already severely altered 75% of land and 66% of marine environments.
•  Around 25% of assessed plant and animal species are threatened by human actions, with a million species facing extinction, many within decades.
• Ecosystems have declined in size and condition by 47% globally compared to estimated baselines. 
• The destruction of mangroves, peatlands and tropical forests for agriculture and other uses contributes to 13% of total human CO2 emissions and will continue to exacerbate the effects of climate change. 
• as global temperatures increase by 2°C compared to the pre-industrial growth era, one in 20 species will be threatened with extinction from this warming alone. 

• more than 99% of coral reefs, which host more than a quarter of all marine fish species, will be lost. 

The  World Economic Forum’s annual Global Risks Report (GRR) has, for the past five years, identified biodiversity loss and ecosystem collapse as a mid- to high-level global risk in terms of impact and likelihood. In 2020, the GRR’s comprehensive Global Risks Perception Survey, conducted across a global community of businesses, governments and civil society, displays a striking result. For the first time, the top five global risks come from a single category: the environment. This includes biodiversity loss as one of the top risks in the coming 10 years.

Who are benefitting with nature :

• high-growth economies such as India and Indonesia, around a third of the GDP is generated in sectors that are highly dependent on nature.In terms of global exposure, larger economies have the highest absolute amounts of GDP in nature-dependent sectors: $2.7 trillion in China, $2.4 trillion in the EU, and $2.1 trillion in the United States.

• industry sector has some degree of direct and indirect dependency on nature. Example :primary industries such as food and beverages; agriculture and fisheries; and construction exhibit the highest nature dependency.

• the three largest sectors that are highly dependent on nature generate close to $8 trillion of gross value added (GVA): construction ($4 trillion); agriculture ($2.5 trillion); and food and beverages ($1.4 trillion). 

Drivers of nature loss:

five direct drivers of change in nature have accounted for more than 90% of nature loss in the past 50 years. Ultimately, these five drivers stem from a combination of current production and consumption patterns, population dynamics, trade, technological innovations and governance models.

Hidden Risks loss of nature :

Economy value : $44 trillion of economic value generation – more than half of the world’s total GDP – is moderately or highly dependent on nature and its services and is therefore exposed to nature loss. 

Dependency sectors :While the risk to primary industries is straightforward to grasp, the consequences for secondary and tertiary industries can also be significant. For example, six industries – chemicals and materials; aviation, travel and tourism; real estate; mining and metals; supply chain and transport; retail, consumer goods and lifestyle – with less than 15% of their direct GVA highly dependent on nature, still have “hidden dependencies” through their supply chains. More than 50% of the GVA of their supply chains is highly or moderately dependent on nature. 

Business :Nature risks become material for businesses in the following three ways:

1. When businesses depend directly on nature for operations, supply chain performance, real estate asset values, physical security and business continuity. 

2. When the direct and indirect impacts of business activities on nature loss can trigger negative consequences, such as losing customers or entire markets, legal action and regulatory changes that affect financial performance. 

3. When nature loss causes disruption to society and the markets within which businesses operate, which can manifest as both physical and market risks. 

societal :if the current rates of nature destruction continue unabated, some biomes (e.g. tundra, grasslands, forests, deserts) may cross irreversible tipping points, with far-reaching economic and societal impacts. For example, large-scale forest loss in the Amazon not only affects the destroyed area, but can also alter regional weather patterns, affecting regional water availability and agricultural productivity.

Volatility in prices :If the rate of forest loss continues, and 20–25% of the forest is lost, scientists warn that the region will reach a tipping point and parts will change to non-forest ecosystems. This would lead to increased duration of droughts in the region and annual agricultural production losses of $422 million in Brazil alone.Example Brazil is a significant global exporter of food, and a sharp decline in its agricultural output could increase the volatility of food prices around the world.

Health :The degradation and loss of natural systems can affect health outcomes. For example, the onset of infectious diseases has been connected to ecosystem disturbance such as the strong links between deforestation and outbreaks of animal-transmitted diseases like Ebola and the Zika virus. Nature loss can also exacerbate the effects of air pollution, a major threat to health that causes between 3.4 and 8.9 million deaths every year. 

Production loss :outbreaks of invasive pests and diseases are a common cause of nature loss that threatens the survival of commercially important crop species with low genetic diversity. More than half of the world’s food comes from just three staples – rice, wheat and maize – which already suffer annual losses of up to 16% of total production (valued at $96 billion) due to invasive species. 

Risks to global peace:The degradation of nature can – with climate change – contribute to water shortages, which in turn have long been a precursor to disputes and conflicts. Droughts have been linked to climate change and are exacerbated by nature-loss trends such as deforestation. 

Risks to global trade:Large-scale loss of nature has the potential to affect trade relations between countries. The dramatic increase in forest fires in the Brazilian Amazon in 2019 is threatening to derail the EU-Mercosur trade agreement after 20 years of negotiations. The trade between the two blocs is worth €122 billion. 

Risks to economic developmentNature loss is particularly dire for the rural poor and their prospects of economic development. Rural communities are often directly and heavily dependent on nature for their food, shelter, income, fuel, health and way of life. They are more vulnerable to its loss since substitutes are often unavailable or too costly.97 In India, for example, while forest ecosystems contribute only 7% to India’s GDP, they contribute 57% of rural Indian communities’ livelihoods.98Given that three-quarters of moderately and extremely poor people live in rural areas,99 the loss of natural assets and ecosystem services has a profound effect on global poverty and development.

Risks to gender equality:

Nature loss and climate change have a disproportionate impact on women and children, as women play a vital role in managing biological resources such as fuel, food and water.100,101 As increased gender equality is a driver of economic growth,102 the adverse impacts of nature loss on women have wider implications for economic development and can reduce market development opportunities for businesses.

Genetic material loss puts future growth in the pharmaceutical industry at risk:

The industry is particularly dependent on biodiverse tropical rainforests for new discoveries, with 25% of drugs used in modern medicine derived from rainforest plants.109 As tropical forests face threats from felling and wildfires, pharmaceutical companies face losing a vast repository of undiscovered genetic materials that could lead to the next medical – and commercial – breakthrough. Only 15% of an estimated 300,000 plant species in the world have been evaluated to determine their pharmacological potential. 

Manging nature related risk :

managing and mitigating such risks requires a fundamental shift in thinking about the value of nature, including accounting for natural capital and the costs of ecosystem degradation within economic development. As the globalcommunity works towards transitioning to a nature-positive economy, an urgent reframing of the financial materiality of nature risks to businesses, financial institutions, asset owners, regulators and governments is required. It is important that these risks are regularly identified, assessed and disclosed by business – as is now routinely the case for climate risks. This will help prevent risk mispricing and inaccurate capital buffers to both short-term risk events and more chronic impacts.