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The phantom menace: the non-obvious consequences of the depletion of nature for the economy
Material posted : Administrator Publication date: 21-02-2020

Scarcity of natural resources directly affects half of the world economy, analysts estimated the world economic forum and PwC, and indirectly — all sectors of the economy. How to fix it and who to be?

The cumulative weight of all people on Earth is 0.01% (one ten-thousandth) of the weight of all living creatures, but man and his activities responsible for the disappearance of flora and fauna, analysts of the world economic forum (WEF) in the report on natural risks for 2020, which they prepared together with experts from PwC. 90% of negative changes in nature over the past half century they were grouped into five categories — all of them are somehow connected with economy, policy, consumption and other human activity:

  • changes in use of soil and water resources;
    climate change;
  • the depletion of natural resources;
  • pollution;
  • the spread of invasive species, that is "alien" for a particular area or ecosystem of organisms that appeared there because of man and potentially harmful (a vivid example — Hogweed).

Risks of species extinction for the economy seems to be obvious, but we often see only a portion of the entire scale, as environmental problems can be hidden deep in the logistic and production chain, the authors of the report. Previously, experts of the Organization for economic cooperation and development (OECD brings together 36 of the most developed countries) has estimated that only soil degradation brings the world economy from $6 trillion to $11 trillion annual loss.

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All analysis of the WEF and PwC called three hidden threats that the world economy are the destruction of ecosystems and extinction of species.

1. The dependence of business processes from nature is much higher than is commonly believed.

According to analysts, the WEF and PwC, the state of the environment one way or another affects almost half the world economy — the $44 trillion annually. Some to a greater extent (agriculture and forestry, food industry, construction), some to a lesser extent (trade, transport, real estate).

Other branches formally does not depend on the environment — is Finance, it, digital services and healthcare. But if we look to their supply chain, the environment affects them too. For example, the electronics industry cannot exist without the extraction of rare earth metals, and unexpected disasters threaten insurance companies billions of dollars of losses.

2. Image risks

Certain company over the years to pollute the air or the oceans, but given the current fashion for awareness, responsibility and sustainability, it thus risks incurring the wrath of investors, activists and even state regulatory bodies. Then will start declining stock prices, reduced sales, falling profits, mass layoffs, and the list goes on.

Realizing this, the representatives of many industries are ahead, changing the rules of the game themselves, until they were forced to do it "bottom" or "top". For example, players of the textile industry in General and the fashion industry in particular, being one of the main polluters of nature, in a hurry to sign environmental pacts and take on obligations to reduce carbon footprint throughout the production chain.

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3. Risks for companies

The extinction of species, depletion of natural resources — all through the economy affects us, what kind of world we live in. Problems can arise in the following areas of public life:

  • health — the spread of the virus, aggravation of respiratory diseases because of the dirty air;
  • diplomacy — the struggle for resources as the reason for the resurgence of new military conflicts;
  • trade analysts world economic forum and PwC give an example 2019, when due to the unprecedented fires in Brazil and the inability of the government to deal with them under threat of a trade agreement between the EU and Latin America (Europeans didn't want to sign it, while Brazil will sort out their problems);
  • rural development in developing countries living outside of Metropolitan areas, are critically dependent on the state of the environment that affects the position of these countries in General;
    equality is a key role in areas related to natural resources, women play so that the crisis in these sectors will have a negative impact on gender equality and social development.

How is it possible to slow down or halt these destructive processes? The authors of the report, I call attention to efforts of government, business and society to combat climate change and to shift this experience to the field of resource depletion and reduction of species.

This includes improving risk management and social control, the increase in "green" funds for combating species decline. Ultimately, a responsible approach to the single issue of the use of land and water is additional $4.5 trillion of world economic growth in the next ten years (reforestation, artificial meat, reducing food waste, and so on).

George Makarenko


Tags: economy , ecology

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