The economic necessity to invest in nature

The loss of biodiversity and ecosystem services could not only jeopardise the achievement of SDGs but also undo decades of development gains and keep poor countries from securing future growth. 

The World Bank has recently published an approach paper titled, 'Unlocking Nature-Smart Development' which projects a 70% decline in Bangladesh's GDP growth rate (the highest in South Asia) from 2021 to 2030 even if a select few of its ecosystem services collapse. 

Bangladesh, as a biodiversity-rich country, hosting coastal, marine, inland freshwater, terrestrial forest, hilly and man-made homestead ecosystems stands to lose a lot in terms of future growth capacity due to the degradation of nature. 

However, by framing the degradation of biodiversity and ecosystem services (referred to as nature) as a development issue, the WB paper offers hope highlighting the various opportunities associated with integrating nature into development policies that could reduce or even reverse the negative impacts. 

Moreover, the paper cites sources that show policies and investment in nature can result in job creation, poverty alleviation, equitable prosperity and faster post-pandemic recovery.

With the UN Biodiversity Conference (COP-15) of the Convention on Biological Diversity scheduled to take place this October in Kunming, China, the paper hopes to offer insights that could be used to design and implement the new Global Biodiversity framework. It also outlines six 'specific response' areas that governments can focus on to effectively incorporate nature into their development planning. 

Framing the Problem

Before we explore potential solutions or development opportunities offered by the paper regarding the biodiversity and ecosystem services crisis, let us define the key terms, 'biodiversity' and 'ecosystem services' and put them in perspective.

The Food and Agriculture Organisation of the United Nations (FAO) defines biodiversity as the variety and variability of animals, plants and micro-organisms at the genetic, species and ecosystem levels, which is necessary to sustain key functions of the ecosystem. 

Why are properly functioning ecosystems so important?

That is because the world's ecosystems provide 'biodiversity or ecosystem services' that directly benefit the activities and well-being of mankind. For example, pollination, nutrient cycling and soil formation provided by the ecosystems directly benefit farm yields and the global food supply. 

In an assessment report by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) in 2019, one out of an estimated eight million animal and plant species is threatened with extinction while 14 of the 18 assessed categories of ecosystem services declining since 1970. 

These figures cast an ominous shadow on the future of the world's biodiversity and ecosystem services foreboding a future filled with severe water crisis, extreme weather, pathogen spillovers and dwindling fish catches. 

With poorer countries disproportionately relying on their biodiversity and ecosystems to generate wealth, the WB's model estimates that a "collapse of even a limited range of ecosystem services – a 90% reduction in pollination of crops by wild pollinators, provision of timber from tropical forests, and food from marine fisheries – could jeopardise the prospects of some of the poorest economies to grow out of poverty".

Nature-smart Development 

Notably, the WB's analysis shows that the economic sectors that put the most strain on nature — food, land use, and ocean usage; infrastructure and urban development; and energy and mining – will ultimately provide solutions to the global biodiversity crisis.

How can policymakers harness the benefits and opportunities of ecosystem services to both save the environment and achieve sustainable development? The six global response areas for nature-smart development delineated by the WB in the paper include: 

• Policy dialogue and reform- Economic policies addressing and tracking the drivers of nature degradation and incorporating biodiversity into financial decisions and national development policies, etc.

• Nature-positive investments- Promoting agroforestry, identifying and protecting ecologically sensitive zones, utilising green infrastructure like mangroves and wetlands for flood protection, etc. depending on the type of economic sector, etc.

• Locally relevant conservation- Facilitating community-based eco-tourism, addressing illegal logging and poaching, establishing effective benefit-sharing mechanisms for conservation with locals, etc.

• Finance mobilisation- Facilitating a supply of bankable green or blue projects, creating and promoting financial instruments that attract investment in environmentally sustainable projects, incorporating sustainability into business and financing decisions, etc.

• Decision support tools- Employing open-access tools to measure the impact on biodiversity through various relevant metrics and spatial data and integrating these metrics into development or planning decisions.

• Leveraging partnerships- Cooperation among development partners, international donors, development banks, regulators and financial institutions to jointly address the biodiversity crisis is essential for an effective global response. The design and implementation of a post-2020 global biodiversity framework after the COP-15 is crucial in this regard.

In broad strokes, the WB proposes that policymakers systemically consider the implications of various national policies on biodiversity and the ecosystem using modelling tools and frameworks before deciding. 

Case in point, when wind-energy farms constructed in Jordan threatened the survival of the country's unique bird species due to a lack of framework, the IFC approached and helped the stakeholders develop a monitoring and managing framework to reduce the impact on the bird population.

Moreover, a data-driven approach (i.e., satellite imaging and AI) may be utilised to monitor and map out the various ecosystems and wildlife habitats in the country to ensure policy decisions do not unwittingly jeopardise biodiversity services. 

Similarly, cracking down on illegal wildlife trade and poaching while promoting ecotourism might be a good way to mobilise the local communities to preserve the biodiversity of their environment. 

Furthermore, the introduction and promotion of financial instruments like green bonds, blue bonds (for marine conservation projects for example), green 'sukuk' bonds, sustainable development bonds, etc. can help investors provide the much-needed funding for projects that protect biodiversity and the environment. 

In fact, there is a forecasted $711 billion gap in biodiversity financing by 2030 unless changes to policies are made. In that regard, Bangladesh has launched its first green bond and green sukuk bonds this year. 

Similarly, mandating listed companies to disclose ESG metrics might be an effective way of directing capital (especially FDI) towards enterprises that are also sustainable.