One of the two main global risks pointed out by experts in the last two editions of the AXA Future Risk Report is climate change. Although Covid-19 and the measures to contain it have become important due to their direct and personal impact on the world’s population of all ages, the increase in temperature on the planet has had various effects on ecosystems and biodiversity.
The quantification of the effects of climate change is complex, and perhaps that is why some people do not give it the importance it really has; however, it is a fact that we are increasingly exposed to natural phenomena such as hurricanes, floods, fires and droughts. It is imperative that we become more aware of our exposure to these risks and the cost that comes with it.
Some studies, such as “Biodiversity at risk: preserving the natural world for our future” by AXA Research Fund, estimate that the world’s ecosystems provide benefits between $125 and $140 billion dollars a year, which is equivalent to 1.5 times the gross domestic product (GDP) worldwide.
To make sense of this figure, we must take into account that nature provides humanity with raw materials to create indispensable goods and services: the food we eat, the water we drink, the air we breathe, as well as the regulation of the global climate. We all depend on the existence of plant and animal life.
However, the negative effects of economic growth on the environment are undermining the sustainability of our current model, and we must begin to question the efficiency of traditional indicators of wealth and development, such as GDP.
Our generalized notions about economics were based on the fact that natural resources were infinite, at a time when the world had a population of less than 4 billion people. As a result, economic growth is occurring at the expense of natural capital, which is being depleted on a massive scale to meet the demands of a world population headed for an estimated 10 billion by 2050.
There are alternative indicators that have been developed taking into account social and environmental aspects, such as the Inclusive Wealth Index, which focuses on how a country manages its total social capital. In fact, according to this variable, some countries are getting poorer as the decline in natural capital is outpacing the rise in other forms of capital.
Valuing natural capital and determining how to integrate it into economic indicators represents a change in approach and also a practical challenge, due to our limited understanding of the relationship between ecosystems and the value of the services they provide.
To better estimate the value of nature and help take appropriate action, it is essential that we improve our understanding of the relationship between biodiversity and climate change, to what extent it is linked to food security, and therefore to potential conflicts. : the cost of natural capital erosion to our economies and society, and the role that insurance plays in mitigating these risks and their economic effects.
Without a doubt, the participation of both the public and private sectors is key in the efforts to recover lost biodiversity, considering the magnitude of the resources required. Currently, around US$39 billion per year is spent globally on conservation, while an estimated US$300-400 billion is needed to preserve healthy ecosystems.
The magnitude of this challenge makes us conclude that a true solution depends on all the people who inhabit this planet and who want life to continue on it. Let’s start today everyone to take actions to achieve it.
*The author is Vice President of Public Affairs and Communication of AXA Mexico and Director of the AXA Mexico Foundation.