Economics of biodiversity

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The biodiversity of the Masai Mara nature reserve in Kenya is a tourist attraction MasaiMaraCheetahs01.jpg
The biodiversity of the Masai Mara nature reserve in Kenya is a tourist attraction

Biodiversity plays an essential role in the global economy. [1] This includes its role in providing ecosystem services - the benefits that humans get from ecosystems. Biodiversity plays a major role in the productivity and functioning of ecosystems, affects their ability to provide ecosystem services. [2] For example, biodiversity is a source of food, medication, and materials used in industry. Recreation and tourism are also examples of human economic activities that rely on these benefits. In 2018, the WWF Living Planet Report argues that the whole global economy of US$125 trillion ultimately relies on nature. [3]

Contents

The benefits of biodiversity are often evaluated in an anthropocentric way and the inherent value of biodiversity, outside of its benefits to humanity, has been debated by economists. [4] [5] Despite these benefits, economic activities often result in harm to biodiversity, such as through deforestation. [1]

The majority of species have yet to be evaluated for their current or future economic importance. [6] Raw materials, pharmaceuticals and drug production all directly and indirectly depend upon biodiversity. [6]

Agriculture and food

Biodiversity plays an essential economic role in agriculture as the origin of all crops and domesticated livestock, contributing both to food security and to livelihoods. [7] Around 25% of the global population is estimated to work in agriculture. [8] Estimating the economic value of biodiversity (and the costs of its continued loss) in agriculture and through the use of wild species for food is both challenging and controversial.

Agricultural biodiversity (agrobiodiversity) refers to all the components of biodiversity that are relevant to food and agriculture, and that make up agricultural ecosystems. [9] More specifically, the term food biodiversity refers to the diversity of organisms used for food. Agrobiodiversity provides income through food and raw materials, as well as by supporting ecosystem services that are essential for agricultural productivity, including pollination, pest control, nutrient cycling, and climate regulation. [10]

Income is generated from the harvest and sale of wild species, as well as from those that have been cultivated and domesticated. This can play an important role in supporting the livelihoods of people living in developing economies. For example, wild meat (bushmeat) is harvested by rural households in some countries to support dietary requirements and as a source of subsistence income, though the practice is controversial. [11] The trade in bushmeat occurs both legally and illegally, for cultural reasons as well as socio-economic ones. [12]

Biodiversity includes genetic diversity, providing genetic resources for food and agriculture. The term genetic resources refers to "genetic material of actual or potential value", according to the Convention on Biological Diversity. [13] These resources are important as the raw material for evolution by natural and artificial selection to enable the development of new cultivars with higher yields, greater tolerance to abiotic stresses, and greater resistance to pests and diseases. [14] The role of genetic diversity in reducing risk to commercial output from farms or forests has been said to contribute to the indirect economic value of biodiversity. [15] Genetic resources may also be used in biotechnology, such as for genetic engineering, though concerns have been raised that the use of such methods could increase genetic erosion. [16] Estimating the economic value of conserving such resources is difficult [17] and their global value is largely unquantified as a result. [18]

About 70% of crop genetic diversity and 30% of livestock genetic diversity has been lost. [19] The loss of genetic diversity reduces the resilience of food systems to pests, diseases, abiotic stresses, and climate change, posing a threat to food security. [20] These risks can reduce yields, therefore having an economic and social impact. In addition, species diversity (an aspect of biodiversity) in the global food system is relatively low when compared to the total number of described species; it was estimated that only 40 species of mammals and birds have been domesticated for agriculture and less than 200 plant species are produced on a significant scale globally. [21] This compares to a total of approximately 6,400 mammal species, 11,000 avian species, and 391,000 plant species (out of which 6,000 have been cultivated for food and agriculture). [21]

Despite the importance of biodiversity to agriculture and its role in the global economy, the global food system is thought to be a primary driver of biodiversity loss, according to the United Nations Environment Programme. [22] For example, this may occur as a result of deforestation and land use change for agricultural expansion.

Biological pest control

A ladybird larva eating aphids Ladybird aphid 7462.jpg
A ladybird larva eating aphids

An important ecosystem function associated with biodiversity is pest control. [23] Control species can suppress pest populations and reduce loss of crop yields without the negative impacts of chemical pesticides. [24] This has economic benefits and maintaining natural pest control is important to humanity's ability to grow crops. [25] It can also be applied within horticulture. [26]

Biological pest control can reduce economic losses incurred as a result of pests, disease vectors, and invasive species. [27] However, its use can have unintended effects where control species are introduced without adequate research. [28] For example, the cane toad was introduced to Queensland, Australia in 1935 to control cane beetles that attack sugarcane roots but are now regarded as an invasive species through their damaging impacts on native species. [28] [29]

Horticulture

Horticulture refers to the small-scale cultivation of plants, such as for use in gardening. It encompasses both domesticated and wild species, cultivars, genotypes, and alleles. [30] These plants may be used for food, medicine, or aesthetic and ornamental purposes. [31] Horticultural plant biodiversity can be highly profitable and provides opportunities for employment. [32] In the UK, growth of ornamental plants was worth £1.7 billion in 2023. [33]

Originally, plants for horticultural use were sourced from wild populations, but now tend to come from nurseries, botanical gardens, and private collections. [34]

Aquaculture and fishing

Aquaculture and fishing are underpinned by biodiversity, with significant economic importance globally. [35] By 2006, over 3 billion people were dependent on marine and coastal biodiversity for their livelihoods and 38 million people were estimated to be directly employed by fishing. [36] In 2023, the global fishing market was estimated to be worth $656.96 billion, based on revenue. [37]

Medicine

Biodiversity plays a vital role in the maintenance of human health and a wide variety of products derived from plants, animals, and fungi are used in medicine. Biodiversity acts as a source of medicinal compounds, impacts the provision of ecosystem services that improve health and protect against disease, and as an inspiration for biomedical techniques that could be utilised to cure diseases (such as CRISPR/Cas9). [38] Over 40% of pharmaceutical products are derived from nature, identified through indigenous knowledge and scientific methods, and 70% of all cancer drugs are natural or bioinspired products. [39] This has significant economic implications. For example, the market for traditional medicine was predicted to reach a value of $115 billion by the end of 2023. [39]

Wild plant species have been used for medicinal purposes since pre-historic times [40] and over 60% of the world's population still depends on herbal medicine as their primary source of healthcare. [41] Some major antimalarial drugs are derived from plants. For example, quinine, derived from the bark of South American Cinchona trees is used as an anti-malarial. [38] Artemisinin, another anti-malarial, was isolated from sweet wormwood by Tu Youyou. [42] In addition, anti-cancer drugs like Taxol, Vincristine, and Vinblastine were isolated from plants. [43]

Industry

Beyond agriculture and pharmaceuticals, biodiversity plays an important role in industry. It acts as a source of natural resources, materials, and products that are sold, consumed, or used in manufacturing. Many livelihoods are dependent on biodiversity as a result. [44] Examples of some of the raw materials that originate from biodiversity include wood, plant fibers (such as cotton), animal fibers (such as wool and silk).

Ecosystem services, relied upon by industry and businesses, are underpinned by biodiversity. As a result, estimates of the value of these services to the global economy have been made, though this practice is controversial, with an estimate of US$125 trillion a year worldwide by WWF's 2018 Living Planet Report. [3]

Biodiversity includes the morphological diversity of life forms. [45] This can provide economic opportunities as inspiration for research and development of industrial materials and structures. [46] For example, the ridges on pectoral fins of humpback whales have inspired the shape of wind turbine blades. [47] The field of biomimetics is dedicated to the emulation of models, systems, and elements from nature to solve complex human problems. In the United States, biomimicry is estimated to account for $425 billion of the country's GDP, according to the Fermanian Business and Economic Institute. [46] This provides potential economic opportunities for developing countries with high levels of biodiversity, but has mainly been explored in developed economies. [48]

Tourism and recreation

Through cultural ecosystem services, biodiversity provides economic benefits in the form of recreation and tourism, while also benefitting human wellbeing. [49] [50] Biodiversity influences the potential of ecosystems to provide recreational services. [51] This includes outdoor recreation, such as hiking, hunting, fishing, and wildlife watching.

Sumidero Canyon Ecological Reserve in Sumidero Canyon -- in the state of Chiapas, Southwestern Mexico. Sumidero ecotourism reserve.JPG
Sumidero Canyon Ecological Reserve in Sumidero Canyon — in the state of Chiapas, Southwestern Mexico.

Another form of recreation supported by biodiversity is tourism. Biodiversity is "at the heart of what drives the tourism industry", according to the United Nations Environment Programme. [52] The beauty of tourist destinations or the species they support can attract tourists to visit certain areas. [53] For example, destinations like rainforests, beaches, national parks, and nature reserves are attractive to tourists. The revenue generated through tourism is vital to many economies worldwide and accounts for 10% of the global job market. [54] [55]

Nature-based tourism, such as to visit protected areas, also has an important economic impact. [56] For example, ecotourism, where the motivation of tourists is to observe and appreciate nature and the cultures in natural areas, while supporting their maintenance. [57] In 2023, the global ecotourism market was estimated to be worth US$216.49 billion. [58]

Despite the economic benefits from biodiversity through tourism, the tourism industry has negative impacts on biodiversity. [53] For example, through habitat destruction and pollution. As a result, sustainable tourism emerged with the aim of reducing the negative impacts of tourism on the environment. [59]

Illegal wildlife trade

The illegal wildlife trade profits from biodiversity through the sale of products derived from non-domesticated animals, including those classed as endangered by the IUCN. According to the Zoological Society of London, the illegal wildlife trade is estimated to be worth $23 billion a year. [60] Cultural demand (such as for bushmeat or use in traditional medicine) is one factor motivating the illegal wildlife trade, however, terrorist and criminal organisations engage in illicit trafficking of plants and animals to fund the purchase of weapons, fund civil conflicts, and other illegal activities.

Exploitation of biodiversity through wildlife smuggling has a negative impact on biodiversity itself, including by driving population declines, species extinctions, and the loss of genetic diversity. [61] It can also impact biodiversity through biosecurity risks, including the potential to spread diseases that native populations may not be resistant to and through the introduction of alien species. [12]

Impact of economic activity on biodiversity

Despite the role of biodiversity in underpinning the economy, economic activities often cause harm to biodiversity and the economic incentives they provide mean that they are often favoured over conservation and restoration activities. [62] This contributes to the loss of biodiversity observed on a global scale with numerous causes, such as habitat loss, land-use change, pollution, and overexploitation. [62]

According to an estimate from BCG, more than 90% of the anthropogenic drivers of biodiversity loss result from economic activities linked to agriculture, infrastructure, fashion, and energy. [63] In addition, the IUCN estimates that 79% of threatened species are impacted by agriculture, infrastructure, and energy and mining activities. [64]

The failure to halt terrestrial biodiversity loss between 2000 and 2010 was estimated to cost the global economy $500 billion. [55] Continued biodiversity loss and environmental degradation poses a long-term risk to society and the economy, such as by increasing the risk of pandemics, floods, and droughts. [65]

See also

Related Research Articles

<span class="mw-page-title-main">Biodiversity</span> Variety and variability of life forms

Biodiversity is the variability of life on Earth. It can be measured on various levels. There is for example genetic variability, species diversity, ecosystem diversity and phylogenetic diversity. Diversity is not distributed evenly on Earth. It is greater in the tropics as a result of the warm climate and high primary productivity in the region near the equator. Tropical forest ecosystems cover less than one-fifth of Earth's terrestrial area and contain about 50% of the world's species. There are latitudinal gradients in species diversity for both marine and terrestrial taxa.

<span class="mw-page-title-main">Monoculture</span> Farms producing only one crop at a time

In agriculture, monoculture is the practice of growing one crop species in a field at a time. Monoculture is widely used in intensive farming and in organic farming: both a 1,000-hectare cornfield and a 10-ha field of organic kale are monocultures. Monoculture of crops has allowed farmers to increase efficiency in planting, managing, and harvesting, mainly by facilitating the use of machinery in these operations, but monocultures can also increase the risk of diseases or pest outbreaks. This practice is particularly common in industrialized nations worldwide. Diversity can be added both in time, as with a crop rotation or sequence, or in space, with a polyculture or intercropping.

<span class="mw-page-title-main">Invasive species</span> Non-native organism causing damage to an established environment

An invasive species is an introduced species that harms its new environment. Invasive species adversely affect habitats and bioregions, causing ecological, environmental, and/or economic damage. The term can also be used for native species that become harmful to their native environment after human alterations to its food web. Since the 20th century, invasive species have become serious economic, social, and environmental threats worldwide.

<span class="mw-page-title-main">Sustainable agriculture</span> Farming approach that balances environmental, economic and social factors in the long term

Sustainable agriculture is farming in sustainable ways meeting society's present food and textile needs, without compromising the ability for current or future generations to meet their needs. It can be based on an understanding of ecosystem services. There are many methods to increase the sustainability of agriculture. When developing agriculture within sustainable food systems, it is important to develop flexible business processes and farming practices. Agriculture has an enormous environmental footprint, playing a significant role in causing climate change, water scarcity, water pollution, land degradation, deforestation and other processes; it is simultaneously causing environmental changes and being impacted by these changes. Sustainable agriculture consists of environment friendly methods of farming that allow the production of crops or livestock without causing damage to human or natural systems. It involves preventing adverse effects on soil, water, biodiversity, and surrounding or downstream resources, as well as to those working or living on the farm or in neighboring areas. Elements of sustainable agriculture can include permaculture, agroforestry, mixed farming, multiple cropping, and crop rotation.

<span class="mw-page-title-main">Conservation biology</span> Study of threats to biological diversity

Conservation biology is the study of the conservation of nature and of Earth's biodiversity with the aim of protecting species, their habitats, and ecosystems from excessive rates of extinction and the erosion of biotic interactions. It is an interdisciplinary subject drawing on natural and social sciences, and the practice of natural resource management.

<span class="mw-page-title-main">Habitat conservation</span> Management practice for protecting types of environments

Habitat conservation is a management practice that seeks to conserve, protect and restore habitats and prevent species extinction, fragmentation or reduction in range. It is a priority of many groups that cannot be easily characterized in terms of any one ideology.

<span class="mw-page-title-main">Agricultural biodiversity</span> Agricultural concept

Agricultural biodiversity or agrobiodiversity is a subset of general biodiversity pertaining to agriculture. It can be defined as "the variety and variability of animals, plants and micro-organisms at the genetic, species and ecosystem levels that sustain the ecosystem structures, functions and processes in and around production systems, and that provide food and non-food agricultural products.” It is managed by farmers, pastoralists, fishers and forest dwellers, agrobiodiversity provides stability, adaptability and resilience and constitutes a key element of the livelihood strategies of rural communities throughout the world. Agrobiodiversity is central to sustainable food systems and sustainable diets. The use of agricultural biodiversity can contribute to food security, nutrition security, and livelihood security, and it is critical for climate adaptation and climate mitigation.

<span class="mw-page-title-main">Habitat destruction</span> Process by which a natural habitat becomes incapable of supporting its native species

Habitat destruction occurs when a natural habitat is no longer able to support its native species. The organisms once living there have either moved to elsewhere or are dead, leading to a decrease in biodiversity and species numbers. Habitat destruction is in fact the leading cause of biodiversity loss and species extinction worldwide.

Food biodiversity is defined as "the diversity of plants, animals and other organisms used for food, covering the genetic resources within species, between species and provided by ecosystems."

<span class="mw-page-title-main">Forest management</span> Branch of forestry

Forest management is a branch of forestry concerned with overall administrative, legal, economic, and social aspects, as well as scientific and technical aspects, such as silviculture, forest protection, and forest regulation. This includes management for timber, aesthetics, recreation, urban values, water, wildlife, inland and nearshore fisheries, wood products, plant genetic resources, and other forest resource values. Management objectives can be for conservation, utilisation, or a mixture of the two. Techniques include timber extraction, planting and replanting of different species, building and maintenance of roads and pathways through forests, and preventing fire.

<span class="mw-page-title-main">Biodiversity in agriculture</span> Increasing biodiversity in agriculture

Biodiversity in agriculture is the measure of biodiversity found on agricultural land. Biodiversity is the total diversity of species present in an area at all levels of biological organization. It is characterized by heterogeneous habitats that support the diverse ecological structure. In agricultural areas, biodiversity decreases as varying landscapes are lost and native plants are replaced with cultivated crops. Increasing biodiversity in agriculture can increase the sustainability of farms through the restoration of ecosystem services that aid in regulating agricultural lands. Biodiversity in agriculture can be increased through the process of agroecological restoration, as farm biodiversity is an aspect of agroecology.

Crop diversity or crop biodiversity is the variety and variability of crops, plants used in agriculture, including their genetic and phenotypic characteristics. It is a subset of a specific element of agricultural biodiversity. Over the past 50 years, there has been a major decline in two components of crop diversity; genetic diversity within each crop and the number of species commonly grown.

The environmental impact of agriculture is the effect that different farming practices have on the ecosystems around them, and how those effects can be traced back to those practices. The environmental impact of agriculture varies widely based on practices employed by farmers and by the scale of practice. Farming communities that try to reduce environmental impacts through modifying their practices will adopt sustainable agriculture practices. The negative impact of agriculture is an old issue that remains a concern even as experts design innovative means to reduce destruction and enhance eco-efficiency. Animal agriculture practices tend to be more environmentally destructive than agricultural practices focused on fruits, vegetables and other biomass. The emissions of ammonia from cattle waste continue to raise concerns over environmental pollution.

<span class="mw-page-title-main">Agricultural pollution</span> Type of pollution caused by agriculture

Agricultural pollution refers to biotic and abiotic byproducts of farming practices that result in contamination or degradation of the environment and surrounding ecosystems, and/or cause injury to humans and their economic interests. The pollution may come from a variety of sources, ranging from point source water pollution to more diffuse, landscape-level causes, also known as non-point source pollution and air pollution. Once in the environment these pollutants can have both direct effects in surrounding ecosystems, i.e. killing local wildlife or contaminating drinking water, and downstream effects such as dead zones caused by agricultural runoff is concentrated in large water bodies.

<i>The Economics of Ecosystems and Biodiversity</i> Study

The Economics of Ecosystems and Biodiversity (TEEB) was a study led by Pavan Sukhdev from 2007 to 2011. It is an international initiative to draw attention to the global economic benefits of biodiversity. Its objective is to highlight the growing cost of biodiversity loss and ecosystem degradation and to draw together expertise from the fields of science, economics and policy to enable practical actions. TEEB aims to assess, communicate and mainstream the urgency of actions through its five deliverables—D0: science and economic foundations, policy costs and costs of inaction, D1: policy opportunities for national and international policy-makers, D2: decision support for local administrators, D3: business risks, opportunities and metrics and D4: citizen and consumer ownership.

Akure Forest Reserve is a protected area in southwest Nigeria, covering 66 km2 (25 sq mi). The Akure Forest Reserve, established in 1948 and spanning approximately 32 hectares. It was created with the primary aim of safeguarding the genetic diversity of the forest ecosystem. About 11.73% (8.2 km2) is estimated to be cleared for cocoa farming and other food crops. Aponmu and Owena Yoruba speaking communities owned the forest, though, there are also minor settlements surrounding the forest. They include Ipogun, Kajola/ Aponmu, Kajola, Ago Petesi, Akika Camp, Owena Town, Ibutitan/Ilaro Camp, Elemo Igbara Oke Camp and Owena Water new Dam.

<span class="mw-page-title-main">Animal genetic resources for food and agriculture</span>

Animal genetic resources for food and agriculture (AnGR), also known as farm animal genetic resources or livestock biodiversity, are genetic resources of avian and mammalian species, which are used for food and agriculture purposes. AnGR is a subset of and a specific element of agricultural biodiversity.

<span class="mw-page-title-main">Biodiversity loss</span> Extinction of species or loss of species in a given habitat

Biodiversity loss happens when plant or animal species disappear completely from Earth (extinction) or when there is a decrease or disappearance of species in a specific area. Biodiversity loss means that there is a reduction in biological diversity in a given area. The decrease can be temporary or permanent. It is temporary if the damage that led to the loss is reversible in time, for example through ecological restoration. If this is not possible, then the decrease is permanent. The cause of most of the biodiversity loss is, generally speaking, human activities that push the planetary boundaries too far. These activities include habitat destruction and land use intensification. Further problem areas are air and water pollution, over-exploitation, invasive species and climate change.

<span class="mw-page-title-main">Climate change in Indonesia</span> Emissions, impacts and responses of Indonesia

Due to its geographical and natural diversity, Indonesia is one of the countries most susceptible to the impacts of climate change. This is supported by the fact that Jakarta has been listed as the world's most vulnerable city, regarding climate change. It is also a major contributor as of the countries that has contributed most to greenhouse gas emissions due to its high rate of deforestation and reliance on coal power.

<span class="mw-page-title-main">Kunming-Montreal Global Biodiversity Framework</span> International agreement on conservation of biodiversity

The Kunming-Montreal Global Biodiversity Framework (GBF) is an outcome of the 2022 United Nations Biodiversity Conference. Its tentative title had been the "Post-2020 Global Biodiversity Framework". The GBF was adopted by the 15th Conference of Parties (COP15) to the Convention on Biological Diversity (CBD) on 19 December 2022. It has been promoted as a "Paris Agreement for Nature". It is one of a handful of agreements under the auspices of the CBD, and it is the most significant to date. It has been hailed as a "huge, historic moment" and a "major win for our planet and for all of humanity."

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