The economic costs of nature loss will be the equivalent of cutting nearly 5% from Britain’s GDP by 2030, with soil degradation alone costing the country £1.4 billion, a major new report predicts.
“Business Investment in Nature: Supporting UK Economic Resilience and Growth”, published jointly by the Green Finance Institute (GFI) and WWF, spells out in detail how a degraded natural environment is negatively impacting businesses across the UK, significantly hindering economic growth.
At the same time, the report shows how swift and coordinated action can secure the UK’s future growth trajectory by building resilience, improving productivity, and leading in the technologies, materials and financial products that are needed to reduce business impacts on nature and support its restoration.
Without coordinated action, the country’s will be exposed to a range of increased nature-related risks, including water scarcity, pollution, flooding, soil degradation and resource scarcity. These, the report says, are already disrupting key sectors such as housing, energy, agriculture, manufacturing and tourism and longer term threaten asset viability and regional economic resilience.
This follows research from the GFI, University of Oxford, University of Reading, UNEP-WCMC and the National Institute for Economic and Social Research which estimated that continued nature degradation, exacerbated by climate change, in the UK could lead to a 4.7% reduction to UK GDP by 2030 – outweighing gains from current growth initiatives[1].
Material risk
The new report highlights the crucial role that soil quality will play in a move towards nature-positive economic policy. Today, soil degradation is estimated to cost the British economy up to £1.4 billion. The report says that reliance on artificial fertiliser (and fossil fuels) to tackle low levels of nutrients in soils currently “poses a material risk to businesses in the agriculture sector through input costs”. As well as threatening the viability of many UK farms, the impact of hikes in the cost of chemical inputs has also been partly responsible for food inflation hitting almost 20%.
Beyond reducing risk to growth, nature represents a major growth opportunity, as identified by the report.
UK businesses are increasingly investing in nature-based solutions and innovations to reduce their impacts on nature. The report cites over 40 examples illustrating how UK businesses and sectors are taking targeted action, such as regenerative agriculture, water efficiency and circular technologies, and are seeing financial returns and competitive advantage. This includes action from many of the sectors highlighted as priorities for growth under the UK Government’s Industrial Strategy.
While individual businesses are starting to act, they are calling for more guidance and better coordinated action in order to create a level playing field across sectors and to give them the confidence to invest at scale. To unlock these opportunities and manage nature-related risks, the report advocates for the development of Nature-Positive Transition Pathways (NPPs); national plans co-designed by government and the private sector that provide guidance on how different sectors are expected to align with, and deliver on, environmental targets.
Scale of opportunity
Vassilis Gkoumas, economist at WWF, said: “A real plan to save UK nature must bring the private sector with it. The evidence paper published today shows that the scale of the opportunity, and the statement of support demonstrates that many businesses want greater clarity around how they can contribute to the transition. Now we need more to come forward and play their part, and the UK government to recognise Nature-Positive Transition Pathways as a key part of their economic strategy”.
Charlie Dixon, Associate Director at GFI, said: “The empirical evidence is clear that business investment in nature is a powerful engine for economic growth. UK businesses are keen to contribute to the delivery of the UK’s nature targets, but need better guidance and coordination in order to do so. We urge more businesses to join the 28 that have demonstrated their support for the development of Nature-Positive Transition Pathways in the UK to bring this clarity.”
Photo by Gabriel Jimenez on UnsplashPhoto by Gabriel Jimenez on Unsplash