How Can We Address the Looming Biodiversity Extinction Crisis?
The mass extinction of species across the planet requires public development banks to take a central role in helping address biodiversity loss, climate change and human well-being.
The Earth is home to over 8 million species, each completely unique, and their shapes, sizes and habits are often more beautiful or strange than anything we can imagine. From bacteria in the deepest sea trenches to eagles soaring the highest peaks, the Earth’s biodiversity forms a vast and interconnected web of life. Yet much of this life is threatened, with more than 1 million species facing extinction.
The key drivers of this unprecedented crisis include habitat loss, pollution and climate change and arise from humanity’s growing populations and unsustainable use of natural resources. This will be a critical aspect of discussions at the upcoming United Nations COP15 biodiversity conference and COP26 climate change conference.
Public development banks, which are government-sponsored institutions such as bilateral and multilateral development banks and finance corporations, will be essential to addressing this biodiversity extinction crisis. Here are seven reasons why.
Development financing depends on nature. Public development banks contribute about 10% ($2.3 trillion) of all annual global investments and in 2019 had assets of $11.2 trillion―of which at least 28% ($3.1 trillion) was at high risk from biodiversity loss. This is because virtually all development funded by these massive amounts―including for energy, gas, water, agriculture, transport, and industry―is powered by natural capital (the raw materials provided by nature) and ecosystem services (generated from natural capital e.g., nutrient cycling and climate regulation).
These vital assets are generated or maintained by the rich natural diversity of species and communities and their interactions with each other and their environments. Biodiversity loss weakens the quality and supply of the natural assets which development depends on. For public development banks, there is a need to shift to “nature-positive” investments, which will require quantifying the economic benefits and impacts to biodiversity of spending, and measuring nature-related financial risks.
Achieving infrastructure targets requires nature-based solutions. Public development banks provide critical support to meet the infrastructure needs of developing countries―and nature-based solutions complement and help reduce infrastructure needs, by leveraging the services provided by nature. This includes restoring wetlands to support flood management and planting green belts to reduce urban heating.
The most effective nature-based solutions protect and restore biodiversity, because infrastructure cannot match the resilience of natural ecosystems. Operations by public development banks for urban and rural planning require a greater focus on restoring native plant and animal communities―the building blocks of natural ecosystems.
Food security relies on healthy natural ecosystems. Public development banks are important financiers of agriculture―and of all sectors, agriculture has the highest dependence on biodiversity. Yet agriculture is also the greatest cause of biodiversity loss, due to land conversion, excessive use of chemicals and water, and monoculture farming.
These issues are most severe in Asia, which has the highest number of people living on degraded farmland and most habitat loss yet also the highest food needs. Public development banks can assist policy reforms to remove harmful agricultural subsidies and set measurable targets for biodiversity in their operations―e.g., restoring habitats critical for bees, butterflies and other small animals that pollinate crops.
The key drivers of this unprecedented crisis include habitat loss, pollution and climate change and arise from humanity’s growing populations and unsustainable use of natural resources.
Poverty, gender, and health are linked with biodiversity. Countries with high levels of poverty are the highest priority for development support―and are also where people are the most vulnerable to biodiversity loss. In the Asia and Pacific region, over 480 million people depend directly on nature for food and livelihoods.
Biodiversity loss also disproportionately impacts women and children―rural women have a lead role collecting forest and wetland products and as resources decline, need to spend more time on these tasks. COVID-19 has caused catastrophic health impacts, and public development banks are on the front lines addressing this crisis―and ecosystem damage is a key driver causing the spread of the virus and other wildlife-related (zoonotic) diseases. Linking social and biodiversity targets will be important in development planning.
Meeting climate targets requires conserving biodiversity. Public development banks are realigning their operations to help address climate targets under the Paris Agreement and in 2020, the climate financing of eight multilateral development banks including ADB totaled $66 billion for mitigation and adaptation measures. Much of this support has focused on infrastructure-related work.
However, intact ecosystems provide the greatest protection against climate change―and healthy communities of native plants and animals form the basis for intact ecosystems. Climate change may cause the extinction of 15–37% of all species, and this will further weaken the ecosystem services that buffer against climate impacts.
For public development banks, scaling up nature-based solutions in climate strategies―e.g., restoring carbon- and species- rich ecosystems such as mangroves and wetlands―will be essential to help address climate change and biodiversity loss at the same time.
Safeguard duty of care. Public development banks are responsible for the environmental impacts of the projects they support, and the huge scale of development inevitably poses risks to biodiversity. Multilateral development banks have some of the highest safeguard standards in the world, but most public development banks have limited safeguard systems.
About $1.1 trillion of annual public development bank lending is estimated to threaten biodiversity, of which $540 billion (51%) is for lending in Asia. These threats arise as most operations are in resource-intensive developing economies with weak environmental regulations and high levels of biodiversity. Multilateral development banks can help promote best-practice biodiversity safeguards among public development banks.
Realigning with the global shift to nature. Climate change, COVID-19 and the decline of nature are moving biodiversity conservation into mainstream policy making. In 2020 the World Economic Forum’s Global Risks Report listed―for the first time―biodiversity loss and ecosystem collapse as one of the top five threats facing humanity.
Many public development banks measure their contribution toward the 17 Sustainable Development Goals ―and biodiversity loss is now known to be undermining progress for about half of these goals. The United Nations has launched the Decade on Ecosystem Restoration to scale up efforts by countries for biodiversity conservation and climate change. In this global shift to nature, public development banks are increasingly expected to contribute a lead role in supporting biodiversity conservation.
The biodiversity extinction crisis is among the greatest tragedies of our time. It is happening now, largely unseen, from our backyards to coral reefs and rainforests. In the shift to a green future, public development banks can take a central role to help address the linked issues of biodiversity loss, climate change and human well-being.