Conservation

Por: Javier Aliaga Lordemann*

Biodiversity loss constitutes a considerable threat to the global financial system, with over 50% of world GDP (approximately 44 trillion US dollars) depending on nature (World Economic Forum, 2020). As ecosystems degrade, essential services such as pollination and climate regulation are compromised, leading to market volatility and instability, particularly in sectors that depend on natural resources.

Global Biodiversity Outlook 5 underscores that one million species are at risk of extinction (UNEP, 2020), a situation that threatens industries such as agricultural and fishing. For example, overfishing can cause economic losses in the fishing industry, estimated to be worth 362 billion US dollars globally (FAO, 2020). This being said, the financial institutions must recognize the fact that their investments are vulnerable to biodiversity loss.

It is crucial to understand the impacts of different sectors on biodiversity (see Figure 1). Industries such as agriculture and mining significantly affect ecosystems, with 80% of tropical deforestation attributable to expansion of the agricultural frontier (FAO, 2018). Unsustainable practices expose financial portfolios to environmental risks and regulatory changes.

Figure 1: How finance impacts and depends on nature

Source: UNEP FI (2023), Case Studies PRB Nature Target Setting Guidance

The concept of doble materiality is essential; financial institutions must consider both the financial impacts of biodiversity loss and their ecological effects. This dual perspective helps to align financial strategies with the goals of sustainability, as emphasized by the Task Force on Climate-related Financial Disclosures (TCFD, 2017).

Financing biodiversity is critical, but there is a yearly financing gap of 300 billion US dollars for the needs that exist to halt biodiversity loss (OECD, 2020). Needed are innovating financing mechanisms such as green bonds for mobilizing conservation resources.

The financial institutions indirectly also have an impact on biodiversity through investments in harmful industries. Financing deforestation or fossil fuel extraction can lead to reputation risks and greater regulatory scrutiny, as observed in the EU Regulation on sustainability-related disclosures in the financial services sector (EU, 2020).

The interaction between climate change and biodiversity loss complicates risk management. Climate change aggravates biodiversity reduction, while loss of biodiversity reduces the level of resilience to climate impacts (IPCC, 2019). A holistic approach is needed.

Financial institutions are increasingly including biodiversity metrics in their frameworks of environmental, social and governance (ESG); this allows them to align their investments with sustainability goals. Studies indicate that companies with robust sustainability practices often outdo their peers (Eccles et al., 2014).

Taking on the issue of biodiversity loss demands a change of paradigm in financial operations. In valuing natural capital, the financial sector can contribute towards conserving ecosystems while ensuring long-term viability. Here, the actors demand greater responsibility in terms of the impacts on biodiversity, forcing the institutions to adapt in order to avoid significant financial repercussions.

In Latin America, which is home to approximately 40% of the world’s biodiversity, deforestation and climate change threaten ecosystems and livelihoods. The Inter-American Development Bank (IDB) reports a loss of 1.5 million hectares of forest annually, mainly attributable to farming (IDB, 2020).

Key biodiversity challenges in Latin America:

• Deforestation: driven by farming, especially livestock breeding and soybean production
• Soil degradation: Intensive farming results in 25% of arable land being degraded (FAO, 2021).
• Loss of marine biodiversity: Overfishing and contamination threaten marine ecosystems.
• Impact of climate change: Alterations in weather patterns affect the distribution of species and aggravate biodiversity loss.

The financing gap in Latin America for the conservation of biodiversity is significant. The UNEP estimates that 300 billion US dollars are needed annually to halt biodiversity loss at the global level (UNEP, 2020).

Bolivia is a biodiverse country that faces severe challenges:

• Deforestation: high rates due to farming and illegal felling of trees
• Soil degradation: Unsustainable agricultural practices cause erosion and nutrient depletion.
• Depletion of water resources: Overexploitation threatens freshwater ecosystems.
• Loss of wildlife habitats: Urbanization causes habitat fragmentation.

Mobilizing resources for tackling biodiversity loss is critical (see Figure 2). Instruments such as green bonds and biodiversity loans provide the capital needed for conservation projects.

Figure 2: Estimated growth in financing resulting from scaling up the proposed mechanisms by 2030 (in billions of 2019 dollars per year)

Source: Deutz et. al., 2020, Financing Nature: Closing the global biodiversity financing gap

Key strategies for mobilizing resources:

• Developing biodiversity financing mechanisms
• Fostering public-private partnerships
• Integrating biodiversity in financial decision-making
• Improving regulatory frameworks that foster sustainable practices

Collaborative efforts are essential for preserving biodiversity in Bolivia and fostering sustainability in Latin America. This article aims to put the first elements on the discussion table; then we will delve into the ideas in future blogs.

References

• Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), 2835-2857.
• European Commission. (2020). Sustainable finance: The EU Taxonomy. Retrieved from https://ec.europa.eu
• (2018). The State of the World’s Forests 2018. Retrieved from http://www.fao.org
• (2020). The State of World Fisheries and Aquaculture 2020. Retrieved from http://www.fao.org
• (2021). The State of the World’s Forests 2021. Retrieved from http://www.fao.org
• (2020). Biodiversity in Latin America: Challenges and Opportunities. Retrieved from https://www.iadb.org
• (2019). Special Report on Climate Change and Land. Retrieved from https://www.ipcc.ch
• (2020). Biodiversity Finance: A Global Review. Retrieved from https://www.oecd.org
• (2017). Recommendations of the Task Force on Climate-related Financial Disclosures. Retrieved from https://www.fsb-tcfd.org
• (2020). Global Biodiversity Outlook 5. Retrieved from https://www.cbd.int
• World Economic Forum. (2020). Nature Risk Rising: Why Financial Institutions Need to Act. Retrieved from https://www.weforum.org

____________________________________________________

* Investigador Senior Asociado de INESAD, jaliaga@inesad.edu.bo

Los puntos de vista expresados en el blog son de responsabilidad de los autores y no necesariamente reflejan la posición de sus instituciones o de INESAD.

By: Lykke E. Andersen*

One of my favourite Christmas presents this season was a book recommendation: Inheritors of the Earth: How Nature Is Thriving in an Age of Extinction written by British biologist and ecologist Chris D. Thomas.

As the gift-giver very well knows, I don’t particularly sympathise with ecologists, conservationists, and conservatives, as I find them irrational in their fixation on an imagined perfect world 50 to 150 years ago, which they cling on to at all costs, ignoring billions of years of evolution, and thinking they know better which species (and people) ought to be where and when.

The author of the book, Chris D. Thomas, is labelled “shockingly contrarian” because, in contrast to the popular perception of humans being in the process of causing the 6^th mass extinction on this planet, he argues that biodiversity has increased in almost every country, county or island as a direct consequence of human activity.

Read More »

By: Lykke E. Andersen*

To celebrate Earth Day 2017, which is tomorrow, I would like to highlight the important findings of a paper by Campbell et al. published earlier this month in Nature (1). The paper documents, through the analysis of air trapped in ice from Antarctica, that the growth of global terrestrial gross primary production (GPP) –the amount of carbon dioxide that is ‘fixed’ into organic material through photosynthesis– is larger now than it has been at any time during the last 54,000 years. This basically means that the planet is greener and nature is thriving more now than at any time during human history, despite all the havoc we humans are wreaking everywhere.

Read More »

By: Lykke E. Andersen*

During this week’s Climate Change Conference in La Paz, several participants expressed concern about Bolivia’s plans for oil drilling in National Parks following the recent Supreme Decree 2366 of 20 May 2015, which explicitly permits oil drilling in some protected areas in Bolivia in the name of poverty reduction and integral development for the people living in these areas.

In the conference session on Climate Change and Ecosystems, the panelists were asked if it was not contradictory to allow oil exploitation in national parks, and if anybody knew of any examples anywhere in the World where it had been done successfully. One of the panelists, Stanley Arguedas, Co-President of the Commission on Environmental Management of the International Union of Nature Conservation (CGE-IUCN) from Costa Rica, admitted that he did not personally know of any successful examples, but that, in theory, oil exploitation could be done in protected areas without compromising the objectives of the national park.

This tiny theoretical opening, coming from a top conservationist, is what I would like to explore in this blog.

Read More »

By Susana del Granado *

“The urgent challenge to protect our common home includes a concern to bring the whole human family together to seek a sustainable and integral development, for we know that things can change.”

Pope Francis, 2015

“I would like to enter into dialogue with all people about our common home” is one of the beginning lines of the Pope’s encyclical, released by the Vatican yesterday at noon. Traditionally the encyclical is a letter from the Pope to the Bishops about Catholicism, but it has evolved into an open letter to society discussing the Pope’s insights and concerns on a particular matter. Pope John XXII (1963) was the first, to my knowledge, to address society in general in his efforts to reform the Catholic Church.

Read More »

By Susana del Granado *

“A vision comes not from the intellect or the mind but from the heart, from the soul”

Donella Meadows

Today, June 5^th , we celebrate World Environment Day and, as a celebration, the United Nations Environmental Program has launched a campaign and a contest about “sharing your dream^[1]” to move people to imagine a sustainable future and to trigger discussion on the objectives for sustainable development^[2].

A vision is a desirable future and, by definition, it is a positive image of what you want to see in the future. Donella Meadows, an environmental scientist and leading author of “The Limits to Growth”, while presenting at an ecological economics conference, inspired and requested her audience to envision a sustainable future. To develop that vision, she asked them to get comfortable, to close their eyes, to take a deep breath, and to dream:^[3] Read More »

By: Lykke E. Andersen*

The impacts of Homo sapiens on this planet are enormous.  We have turned about a fifth of the total land area of this planet into agricultural fields and pasture to feed ourselves; we are burning massive amounts of fossil fuels, thus altering the composition of the atmosphere and causing climate change; we are extracting at least 150 million tons of fish from the oceans every year; and we area leaving our trash everywhere. This predatory behavior has prompted John Gray, professor emeritus of London School of Economics, to call us Homo rapiens (1). Guilt over our adverse impacts is widespread, and the Voluntary Human Extinction Movement goes as far as suggesting that humans should stop breeding in order to save the planet (2).

It is true that we are a rather successful and aggressive species, at least so far. But we have only been here for a few hundred thousand years and the 4.5 billion year old planet has been through a lot worse than humans. More than 99% of all the species that have ever lived on this planet went extinct before humans arrived on the scene. Most disappeared simply because they were not adaptive and competitive enough to survive over a long period of time (background extinction), while others disappeared in mass extinction events, such as the one that wiped out the dinosaurs and most other land-based species 65 million years ago. Still, the level of biodiversity is probably higher than it has ever been (see figure 1).

Read More »

During the first week of September 2014, the California-based film company GLP films came to Bolivia to make a video about the Joint Mitigation and Adaptation Mechanism for the Integral and Sustainable Management of Forests and Mother Earth, which is Bolivia’s alternative to the international REDD+ mechanism to reduce deforestation (see expedition web-site).

The video project is financed by the Think Tank Initiative managed by the International Development Research Centre in Canada, and the resulting video is expected be featured at a side event at the COP20 in Lima in December 2014.

Under the direction of Lykke Andersen from INESAD, and with the help of many other institutions and individuals, a 6-person film crew, armed to the teeth with gear, visited La Paz, Rurrenabaque, Bella Altura, Pando, Santa Cruz, Concepción, and El Torno.

Read More »

Climate change, ozone layer, biodiversity, carbon footprint, glacial melt – these have become the buzz phrases of a generation. To some these problems seem far away, while others give up in light of their complexity and magnitude. But clearly we should not leave it to the ‘big boys’ of environmental politics to tackle the problems faced around the world. Active and informed engagement with environmental challenges will be necessary to find satisfactory solutions. Today, Development Roast brings you three initiatives from three countries offering environmental education and tools for engagement at the policy, academic, and grassroots levels.

Costa Rican Earth University is revolutionizing agricultural education

The Costa Rica-based Earth University offers students a holistic degree in Agricultural Sciences and Resource Management that teaches them about every stage of agricultural and forestry production: from crop management and harvesting to processing and waste management. Unlike many other agriculture degrees, Earth courses do not teach the components of the ecological system, such as biology, physics, and chemistry, separately. Instead, Earth’s holistic approach confronts its students with the complexity of ecological systems and the role people play in them from the beginning. Students also learn about the ins and outs of agricultural business by planning and running an agricultural enterprise with their classmates over the course of three years with a special emphasis on the ecological and social costs of agricultural business. On campus, the university practices what it preaches: In 2011, it opened its first ‘green’ dorm with energy-efficient lighting, solar water heaters, and a rainwater collection system for toilets and outdoor sinks. Read More »

A newly-released INESAD Working Paper reveals how bamboo forests in Bolivia have a significant role to play in the global fight against climate change. The multi-author paper, entitled “A Measurement of the Carbon Sequestration Potential of Guadua Angustifolia in the Carrasco National Park“, is based on a study of an unmanaged and previously unstudied bamboo forest. INESAD researchers found that this forest has the ability to store around 100 tons of carbon per hectare, in the stems, branches, and leaves of the bamboo, which is more than some species of tree such as Chinese Fir.

The carbon stored in a forest comes from the carbon dioxide (CO₂) that it absorbs. CO₂ is a harmful greenhouse gas produced by the burning of fossil fuels, which accumulates in the atmosphere and traps heat. This artificial change in the composition of the atmosphere is what causes climate change. Hence forests play a vital role in mitigating climate change, because they absorb CO₂ which would otherwise end up in the atmosphere.  See Exactly How Do Trees Fight Climate Change? for more details about this process. Read More »