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    >> “Climate Solutions” is also available as a podcast and an e-book.


    By Stephen Hart and Andrew Neill

    Nature is at the heart of stable carbon, water and energy cycles. We often don’t see the microscopic living connections and sometimes fail to grasp the bigger picture of how they weave and flow around the planet. It’s an adaptable system that has evolved and changed, modified by human intervention and natural disasters. But we mustn’t take that adaptability for granted.

    What we consume and burn feeds a blanket around the planet, seeps into the oceans and pervades our own bodies and every other living thing. We have severed many of nature’s living connections and cycles. Our economic progress has been accompanied by a reckless disregard for the cost to our world. Mankind not only depends on nature for physical survival and shares the same physical vulnerabilities, but there also are profound implications for our sense of place in the world.

    We have a chance to build a new connection between biodiversity and our wellbeing. Choosing between innovative, thriving communities or the natural world is a false dilemma, but first we need to become aware of the connections. When we invest in and maintain our biodiversity, we expand our way of thinking about economics. Biodiversity and connections in the landscape are our natural infrastructure. It is just as important to economic development in the decades ahead as the infrastructure we build with concrete, steel and fibre optic cables.

    Here’s a new ABC for decision-makers, complementing age-old truths with the urgency of the climate crisis, recent discoveries and important developments in green finance.

     

    Healthy soil sustains a resilient cover of vegetation, a cooling engine of vertical transport of water and heat.

    Ecosystem engineers

    The ability of nature to claim and continuously reclaim all realms of the earth has evolved with biodiversity. Nature’s own builders create their habitats and pave the way for other life, including ours. These are the ecosystem engineers. Let us detail how they work.

    In natural landscapes, species such as large herbivores, beavers and wild boars create shifting mosaics of open and dense vegetation, shape rivers and work the soil. They engineer environments for other plants and animals who also play an important role in soil generation and the recycling of nutrients.

    Predators have a special place in this story, influencing the behaviour and controlling populations of herbivores, who would otherwise be able to strip vegetation and start a cycle of degradation of the landscape. In today’s landscapes, these ancient behaviours and relationships can be difficult to observe. Many species exist on the fringes of their original habitats as wilderness disappears.

    Soils are the digestive system of plants. They store more carbon than the atmosphere. Healthy soil sustains a resilient cover of vegetation, a cooling engine of vertical transport of water and heat. Long-lived soil carbon is sequestered by plants, fungi and other microflora and fauna over decades—even centuries—conditioned by geology and natural fertilisation. Natural forests shape local climate systems and shelter vast ecosystems and underground carbon stores.

    The physical and chemical properties of water make the oceans the Earth’s main sink and conveyor of heat and carbon dioxide. However, life in the oceans plays a critical role. Plankton, for example, produce half the world’s oxygen and sequester carbon as they die off into the deep. They are also the basis for a food web that extends up rivers and to birds and animals on land, thus returning nutrients.

    Even though hunted to small numbers, whales play an important role alongside physical processes and other species such as krill for the recycling and redistribution of nutrients and the earth’s climate by feeding in the deep and fertilising the plankton.

    ©Phillipe Bourseiller

    Eroding natural infrastructure

    This natural infrastructure is being eroded with insufficient protection and space. The breaking down of nature’s regulators of carbon, energy and water worsens the impact of human greenhouse gas emissions by releasing stored carbon and preventing natural processes from re-absorbing them.

    Replacing the living connections provided by nature can be costly or impossible. Think about what we stand to lose in the near future if we do not act now. We can create a sense of financial scale by trying to quantify the role that nature has in our economies.

    A good example is the pollination of crops that is essential to the fruits and vegetables grown across the world. We need healthy, stable populations of multiple pollinator species to ensure food security  and adequate nutrition for a growing population, or else we face the costs of disrupting the food system. Globally, crop pollination contributes the equivalent of €150 billion every year, a value created by native biodiversity with very low costs. Yet alarmingly, pollinator populations are in severe decline.

    We can attempt to capture the combined value the world’s ecosystems provide to the economy, so-called ecosystem services. For those ecosystem services that can be assigned financial values, it is estimated that they contribute $125 trillion to $140 trillion a year. However, the complexity of ecosystems means that we don’t always understand which threads in nature’s tapestry are the most important for the whole picture, and we don’t understand the full consequences of losing them.

    In its landmark 2019 report, the International Science-Policy Platform on Biodiversity and Ecosystem Services said that one million species are in imminent danger of being lost. The consequences for mankind of such a disruption of nature will be severe. Loss of diversity is already occurring within species with decreasing genetic variation, including in staples for humans, making food systems less naturally resilient to disease and climate change.

    The greatest pressures on nature and its biodiversity are land-use change, a growing population and inefficient resource use and distribution. Nature will need space to have a chance of adapting to climate change. Over the next decades, climate change is set to become a major driver of extinction alongside land use, as many regions are moving out of life-sustaining temperature ranges for their ecosystems.

    We need healthy, stable populations of multiple pollinator species to ensure food security.

    Climate change and land use

    We are not managing soils sustainably. Land degradation has occurred in different times and places throughout human history. However, population pressure, global trade and the mechanical and high-input agricultural practises of the 20th century have turned land degradation and loss of topsoil into an accelerating, global phenomenon. Twenty-three percent of our land is experiencing reduced productivity, and this percentage is increasing.

    Industrial exploitation of soil, with high inputs, has created high agricultural yields, but it is changing the deep structure and life of soil, releasing carbon back into the atmosphere. It has also created dependence on energy, chemicals and water abstraction. The result is often an erosion of the capacity of soils to absorb and retain water, reducing their ability to buffer drought and flooding. Clearing woodlands and inappropriate livestock management have also set in motion a chain of degradation and erosion of topsoil and water management.

    Intentional clearing of natural forests and more frequent fires—with immediate loss of habitat and the release of vast amounts of carbon dioxide into the atmosphere—is compounded by a loss of trees from the migration and import of diseases and pests caused by global trade and the shifting climate. The protection of existing forests and appropriate afforestation are essential to halt rising atmospheric CO2.

    The protection of existing forests and appropriate afforestation are essential to halt rising atmospheric CO2.

    Commercial forestry can support sustainable landscapes and foster rural economic growth and employment, if principles of sustainable forest management are respected. In addition, the biomass from forests is an important renewable fuel resource. Global demand for wood, renewable fibre and other forest products continues to grow steadily at 3% a year. This demand is driven primarily by biodegradable packaging, soft tissue products and renewable energy. Wood is also central to meeting the demand for innovative biomaterials such as construction materials that can store carbon and replace those that require a lot energy to produce.

    In the EU, forests and other wooded land accounts for over 40% of the land. In recent decades, afforestation and natural succession, for example on abandoned land, have increased this area by about 0.4% a year. The actual volume of the EU’s forests is also rising, with only 60% of the annual forest growth being harvested. With government programmes, large scale and rapid afforestation is possible, but we need to act faster.

    ©Phillipe Bourseiller

    Protecting our ocean allies against climate change

    Whales and all other marine life are affected by rising temperatures, declining oxygen and rising acidity from CO2. Ecosystems, notably near-coastal waters and coral reefs, have been altered by an overload of nutrients from land and the decimation of predators, such as sharks, tuna and trout. The loss of sea grass meadows is removing one of the world’s largest carbon sinks and nurseries of ocean life, including key commercial species. Noise pollution, marine traffic and trawling of the sea floor for fishing are also taking a heavy toll.

    The polar regions are most affected. In the Arctic an irreversible train of rising temperatures, melting, runoff from decomposing soils and acidification is projected to change the face of the Arctic ocean and land in the next two decades—faster than native species are likely to adapt.

    Plastics and chemicals affect every part of the marine food web, including consumers such as ourselves. An estimated 8 million metric tonnes of plastic waste enters the oceans every year, threatening marine ecosystems and the communities that depend on the seas for their livelihood. Ninety percent of plastic waste enters the oceans through 10 major river systems, two in Africa and eight in Asia. About 2 billion people worldwide still lack access to regular waste collection, while around 3 billion lack access to controlled waste disposal. Lack of wastewater collection and treatment in many developing cities is another major source of plastic waste.

    An estimated 8 million metric tonnes of plastic waste enters the oceans every year, threatening marine ecosystems.

    In the coming decade, marine energy, marine biotechnology, coastal tourism, transport and food production are poised to offer large development and investment opportunities.  With the oceans already in a state of overexploitation, it is important to prioritise restorative business models that contribute to rebuilding ecosystem health.

    Most of the ocean lies beyond national jurisdictions, requiring complex international cooperation, while coastal zones belong to Exclusive Economic Zones and have the potential to be addressed through effective national policies and regulation and sustainable development. The financial sector potentially also has an important role to play in encouraging a sustainable blue economy.

    The European Investment Bank’s Sustainable Blue Economy Finance Principles point the way to what sustainable investment looks like in an ocean context. The goal is to ensure that ocean-related investment delivers long-term value without having a negative impact on marine ecosystems, on efforts to reduce carbon emissions, or on ocean-based businesses of all sizes and the livelihoods of people who depend on them. The Principles are also intended to support the development of financial instruments and development models that prove most effective in the context of ocean investment, gradually building a coalition of financing institutions in support of the Principles.

    ©Phillipe Bourseiller

    Biodiversity on nature’s own terms and coexistence

    Population centres have always challenged the landscape and nature around them. Like beavers, humans have sought to tame rivers to make them less capricious and more reliable as a resource. For nature to grow, it needs space on its own terms, connectivity and a reversal of overexploitation and chemicals flowing into land, rivers and sea.

    Different visions for the way we use land in the future emerge, and they can exist side by side and strengthen each other. One way involves nature taking its course, with human influence restricted to a minimum, also called rewilding. Another way involves a rich biodiversity co-existing with human activities, in managed open and forest landscapes, and even in cities. When we promote the return of the wild, it is important to work with communities consider potential conflicts between wildlife and people.

    Against the backdrop of diminishing arable land and growing environmental challenges, the world looks to agriculture and agribusiness to increase productivity and efficiency. To nourish the 815 million people who are hungry around the world and the additional 2 billion people at risk of being undernourished by 2050, investments in agriculture and food production are crucial.

    Increased efficiency and productivity of agriculture and innovative bioeconomy are also essential for releasing some agricultural land back to nature for recovery and improving the chances of adapting to unavoidable climate change. Producing more food with fewer inputs, the use of by-products and waste recovery will support competitiveness, resilience to climate shocks and sustainable value chains.

    There are also agricultural approaches that restore the health of soil and its water retention capacity, yielding multiple benefits. At the core of these approaches, we must manage the simultaneous transformation of the land and the livelihoods of people that depend on it, creating supply chains that share the benefits more equitably.

    Some of the key challenges to be overcome are entrenched ownership and land valuations inflated by subsidies, slowing down progress on the transformation of land use, even where the opportunity cost in terms of other economic activity is low, for example where land is already degraded.

    Working with nature brings new opportunities and risks

    Much of the world’s biodiversity stands to be lost in the coming decades, and that has economic implications as well as natural ones. We need to build a sustainable economy and financial system with new opportunities and risks. Our approach to land should not be determined by history. Rather it must be about active choices grounded in the present and a tangible recognition of the costs involved in developing and maintaining nature.

    Investing in nature’s own infrastructure for climate regulation is a necessary component of climate mitigation and adaptation, and for reversing the large-scale release of carbon from degrading natural carbon stores. Working with nature to regulate water and heat will also be an important tool for maintaining liveable environments on regional and local levels, such as in cities. Restoring and releasing areas back to nature on land and at sea will be essential for improving the chances of ecosystems to adapt to inevitable changes in climate.

    When we work with nature we tap into life’s connections and synergies. It is up to us capture the multiple benefits. Finance can become an enabler of transformation if the timescales and specific risks relating to natural outcomes can be managed. The EU is at the forefront of exploring new sustainable financial approaches, such as the Natural Capital Financing Facility, which is yielding lessons for a future architecture around biodiversity and nature-based solutions.

    We have the knowledge and understanding to create a future where our actions are in balance with natural processes and in which the fruits of nature are distributed more evenly. To gain time for the innovations that will transform our economies to a low-carbon future, we must invest in natural solutions now.

    Innovation and technology can work for the benefit of efficiency and equity—alongside nature.

    ©Phillipe Bourseiller

    Climate solutions on biodiversity if you’re a…

    Policy-maker: Create regulations that mandate actions and investment in nature. Create new revenue sources for rebuilding and maintaining nature. The financial system will follow this investment. Establish stable, long-term objectives for natural infrastructure on nature’s terms, with adaptable strategies that will allow innovation and entrepreneurship. Transform subsidies so that they do not stand in the way of projects that reconnect landscapes and give back space to nature. Reward biodiversity and climate benefits as well as innovation for efficiency and resilience in agriculture — think in terms of long-term food and climate security. Invest in governance and effective implementation of these transformations. Enforce the simple things and existing regulations. For example, stop the use of poisons and damage to physical habitats and their cumulative erosion. Create the monitoring and statistics that establish the true drawdown on nature at home and in the countries from which we import. Give science the resources and freedom it needs to light up the road ahead.

    Financial Institution: Learn about biodiversity, nature and climate risks. Study resilient and circular business models. Use excellent resources, such as the Global Assessment Report on Biodiversity and Ecosystem Services and the European Investment Bank’s Natural Capital Financing Facility, exploring ways to develop the financial system for nature. Our publication, Investing in Nature, sets out ways to develop cases for financing nature projects. There is an increasing need for mission-driven financial players and intermediaries with the right skills to provide transformative finance that can support changes in livelihoods, landscapes and innovation for nature and climate. Engage with the European Investment Bank to devise the instruments that will help you deal with climate risks and uncertainties.

    Citizen: Be curious and compassionate about the natural world and the people affected by the changes. A world with more nature is a place that you and your children will want to live in. Help politicians make the right choices and get involved in local initiatives. Within your daily routine, find out what you can do to give nature a little space. Weeds can be pretty ⁠— learn to love the ugly ones.

    Stephen Hart is an investment officer in the Environment and Climate Finance Policy unit of the European Investment Bank and the focal point of the Natural Capital Financing Facility. Andrew Neill is a PhD student at Trinity College, Dublin.


    >> “Climate Solutions” is also available as a podcast and an e-book.