What is your main field of expertise and current research?
My main field of expertise is the economics of ecosystems and biodiversity, but currently I am examining the corporation and trying to understand how today’s business needs to change to provide a green economy. This involves looking at corporate values as well as the costs of losing biodiversity and ecosystems.
Given your research, what would you say is the most under-appreciated risk that would have global, regional or industry implications?
Well, I think perhaps dividing risks into different, neatly compartmentalized silos is really an error which in itself is the biggest risk. For instance, take the case of coral reefs. If they were to disappear, that would mean the loss of an ecosystem, a loss of biodiversity and a risk to future potential solutions to medical problems. But even more importantly, that scenario poses a risk to the 500 odd million people who live along coastlines and depend, for both their livelihood and their food, on the fish that breed and thrive among coral reefs.
And so, if you lose these reefs, and climate change of course is the main driver of this loss, you will potentially create political risk and geopolitical risk. So something as straightforward as a climate change-induced bleaching and loss of coral reefs, which is actually a biodiversity risk, is connected with geopolitical risk because we are talking about people in Indonesia, Malaysia, the Philippines, the Caribbean region and so on. These are potentially explosive situations if they are allowed to grow beyond control. We do not understand the connectivity between risks enough.
How would you frame this risk as a hypothetical scenario: “what if” this was to actually happen?
What if coral reefs disappear? Well, as the problems of the Palestinian Authority today show, the loss of property and the loss of the ability to earn a living has caused geopolitical risk.
Here we are talking about something in the order of 500 million people displaced from their livelihoods. So, if you can multiply the Palestinian problems by about 20 or 30, this probably gives you a sense of the scale of the geopolitical risk. Poverty levels in these areas are high and people in Indonesia, Malaysia and the Philippines do not really have anywhere to go because these are fairly densely populated places. On the coasts of Indonesia, 130 million people cannot just migrate to somewhere else, as the rest of Indonesia is populous as well.
Biodiversity loss is not about losing warm furry animals. It is about losing our ability as a human species to live on earth among ourselves. That is the most fundamental connector – I call it the connector because it is about recognizing the impacts of climate, recognizing the impacts of land use change, understanding what is happening in biodiversity, what the impacts of that are on ecosystems, on ecological security, on human security, on geopolitical disturbances and so on. The whole lot is connected and that is the point that we have to recognize: it is not just the silos that matter, it is the connections between them.
What is your assessment of the extent of biodiversity loss and how hopeful are you that this risk can be mitigated?
Biodiversity loss is already happening, and its impact is severe. If you just total up the 500 million who depend on coastal fisheries and coral reefs, the 800 odd million people who depend on the bounty of forests, then we are talking about more than 1.3 billion people – they basically represent the bottom 20% income bracket of humanity. It cannot be a viable social and political solution to ignore this problem. There are no quick and easy solutions. You need to focus on what they get free from nature and ensure that it continues while you build up other livelihoods and poverty reduction strategies and so on. It is not an either or: you have to do both. Ensure that their asset base is maintained. Ensure that these free flows to them continue and at the same time also work on building alternatives.
How well do you think relevant organisations are prepared for this scenario?
I think right now they are just hiding. They are taking an ostrich attitude; they are not seeing the connection between biodiversity loss and its various impacts. The biggest risk is the risk of misunderstanding: our failure to see the importance of nature to the economy and to society.
What is your top mitigation approach for this risk?
Well, I would try to create more momentum, almost a movement: that is what my TEEB (The Economics of Ecosystems and Biodiversity) project is trying to do. I think there is a much greater need for business to rally around this problem and recognize that it is important and then to create awareness. And, second, governments – and not just the governments of Brazil and India – should be ready to recognize this issue. There has to be consistent, constant attention to the problem and solutions should be built into strategy and policy at every level. I think there is a huge role to be played by the World Economic Forum, and I think there is an even greater role to be played by the leading G20 governments.
On the flip side of risk, what opportunities do you see associated with this “what if” scenario?
First, I think it is important to recognize and evaluate the risk and build it into balance sheets. This means opportunity for everybody from ecological and forestry experts all the way to accountancy firms. Indeed, the accountancy regulators have an opportunity to create a much better set of metrics for measuring impacts on nature.
Then there is a second layer of opportunity for biodiversity dependent businesses. What are the new ways in which we can create ecologically friendly farming solutions? Ecologically friendly farming can increase yields by 70 to 180%, according to a 2007 study, and the yields increase in countries especially which are poor.
Then there is a third layer of opportunity in using the study of nature to inspire new products – which can only be done if we preserve our ecosystems. There is a whole area called biomimicry, covering everything from new forms of aerodynamic and hydrodynamic materials all the way to something as simple as Velcro.
Sadly, though, there is a huge incentive to continue with “business as usual”. We are paying subsidies in the order of US$ 650 billion per annum for fossil fuels. US$ 275 billion per annum goes on subsidising conventional agriculture. US$ 30 billion per annum subsidises large, unsustainable fisheries.
To say new, more sustainable ideas need increased financing is not true. All you need to do is to stop financing the opposite and there will be enough money to finance new ideas. I think this is what really needs to be emphasized.
Pictured: Coral in Australia’s Great Barrier Reef (Reuters)