The findings from sustainability non-profit Ceres reveal that food production is facing the steepest annual price tag of $253bn due to nature loss, driven by land and sea use change, overexploitation, climate change, pollution, and invasive species.
Biotechnology and pharmaceuticals, chemicals, consumer goods retail, food and beverage retail, forestry and packaging, household and personal goods, and metals and mining are also facing mounting costs, with a cumulative loss of $2.15trn over the next five years possible on current trends.
The financial toll to each of these sectors was calculated using sophisticated economic modelling to quantify the cost of degrading ecosystem services, such as soil retention, climate regulation, and pest and disease control.
For example, food companies are already having to account for a decline in pollination services – which alone are valued at nearly $25bn per year – with US farmers paying over $400m last year for hired pollination services; a price that will rise with further ecosystem degradation.
“By calculating the costs of inaction, our report shows for the first time the staggering financial risks of escalating nature loss to major sectors of the global economy,” said Meryl Richards, program director for food and forests at Ceres.
“Ceres’ findings deliver companies and their investors a clear and compelling business case for addressing nature risk and building resilience now to prevent paying more for operational and supply chain disruptions, legal fees, and regulatory compliance later on.”
Although the forecasts are alarming, the researchers said that they are conservative, covering the costs of physical risks to direct business operations and not most supply chain risks. The actual price points are likely to be much more expensive once all risks – from higher investment requirements to litigation fees – are factored in.
The report also shows that climate impacts are set to cause the greatest economic toll to companies across sectors by degrading critical ecosystem services, underscoring the interconnected risks between climate and nature
It comes after a separate report from the Green Finance Institute (GFI) recently revealed that nature degradation could potentially lead to a 4.7% reduction in UK GDP by 2030.
However, it also highlights how nature represents a “major growth opportunity”, with many businesses already seeing financial returns and a competitive advantage by targeted action, such as regenerative agriculture and water efficiency.
“The empirical evidence is clear that business investment in nature is a powerful engine for economic growth,” said GFI associate director, Charlie Dixon. “UK businesses are keen to contribute to the delivery of the UK’s nature targets, but need better guidance and coordination in order to do so.”
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Chris Seekings is the Deputy Editor of ISEP’s Transform magazine, which is published biomonthly for ISEP members. Chris’s role involves writing sustainability-related news, features and interviews, as well as helping to plan and manage the magazine’s other day-to-day activities.
