Biodiversity Loss: The Overlooked Financial Crisis
- beelifeeu
- 4 hours ago
- 2 min read
A groundbreaking collaboration between Allianz Research and Wageningen University & Research has shed new light on the economic consequences of biodiversity decline—revealing that it is not just an ecological crisis but a looming financial threat.
The report, The New Risk Frontier in Finance: Concepts, Challenges, and a First Quantitative Case Study on Pollination Biodiversity Loss, warns that financial institutions face escalating economic, reputational, and legal risks as ecosystems deteriorate. This study, backed by one of the world’s largest financial services providers, echoes long-standing concerns from European environmental groups—and underscores a harsh reality: the global economy is deeply entwined with nature.
The High Stakes of Biodiversity Decline
In 2020, the Swiss Re Institute revealed that 55% of the global economy depends on well-functioning biodiversity and ecosystem services.
That same year, the World Economic Forum (WEF) found that reported that businesses rely on nature far more than previously recognised, with approximately $44 trillion in economic value.
The OECD estimates that ecosystem services contribute $140 trillion annually to the global economy. At the same time, the World Bank warns that unchecked biodiversity loss could shrink global GDP by up to 2.7% annually by 2030.
Yet quantifying these risks remains a challenge. Unlike carbon emissions, biodiversity loss is highly localised, with impacts varying by region. Current risk assessments rely on qualitative metrics, leaving financial institutions struggling to measure direct economic fallout.
A New Approach: Measuring the Cost of Pollination Collapse
To address this gap, Allianz and Wageningen University employed the MAGNET global economic model to analyse the financial repercussions of pollination services loss (PSL)—a critical ecosystem function.
Their findings are stark:
A total collapse of pollination could slash agricultural output by up to 7.87% in Belgium, with losses hitting $26 billion in the U.S.
Even a 20% decline in pollinators would shrink production by 0.45% to 1.92%, disproportionately affecting nations like Italy, Spain, and the U.S., where key crops (apples, nuts, and pears) rely heavily on pollinators.
But the damage doesn’t stop at farms. Downstream industries—processed foods, meat, beverages, and food services—would also suffer. Italy’s food sector could lose 4 billion annually, while Germany faces 2 billion losses—nearly matching direct agricultural impacts. Rising food prices and import dependencies would further strain economies.
Winners and Losers in a Biodiversity Crisis
Surprisingly, the report suggests some sectors could benefit. As agriculture falters, labour and capital may shift toward industry and services, boosting short-term growth in non-agricultural fields.
But these gains are illusory. The WEF’s 2024 Global Risks Report ranks biodiversity loss as the third-largest economic threat of the next decade, whether through resource scarcity or shifting sustainability demands.
The Bottom Line: Protecting Nature Protects the Economy
The financial sector can no longer afford to treat biodiversity as a niche environmental issue. Proactive measures—from sustainable investing to policy reforms—are essential to prevent systemic shocks, preserve natural capital, and secure long-term economic resilience.
The message is clear: Safeguarding biodiversity isn’t just about saving species—it’s about safeguarding the global economy.
Sources:
Allianz Report (2023) - https://www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/economic-research/publications/specials/en/2023/febuary/2023-02-28-Biodiversity.pdf
Swiss Re Institute (2020) - https://www.swissre.com/media/press-release/nr-20200923-biodiversity-and-ecosystems-services.html
World Economic Forum, New Nature Economy Report (2020) - https://www3.weforum.org/docs/WEF_New_Nature_Economy_Report_2020.pdf
WEF, Global Risks Report (2024) - https://www3.weforum.org/docs/WEF_The_Global_Risks_Report_2024.pdf