PMI Academy Partner: T. Rowe Price - Counting the Cost of Biodiversity Loss

The natural world is undergoing unprecedented, exponential deterioration,¹ with human activity being the principal driver.² Consequently, the rates of species loss are unparalleled in human history. One million species are threatened with extinction within the next few decades,³ setting Earth on an alarming trajectory for what biologists warn could be the sixth mass extinction.⁴

The Importance of Preserving Biodiversity

Biodiversity is defined as the natural world. It refers to plants, animals, insects and microorganisms, all of which work together to support life on earth. We believe that preserving biodiversity is essential to the long-term social and economic development of humanity and also that biodiversity loss and climate change are fundamentally interlinked twin crises.

Natural carbon sinks (both on land and underwater) play a key role in controlling climate change as they absorb significant amounts of human-generated greenhouse gas emissions. In turn, climate change, whether through changing rainfall patterns, extreme weather events, or ocean acidification, is having a materially negative impact on biodiversity. Furthermore, biodiversity is so vital to maintaining a sustainable future for humanity that its loss undermines 80% of the United Nations Sustainable Development Goals targets relating to poverty (SDG 1), hunger (SDG 2), health (SDG3), water (SDG 6), cities (SDG 11), climate (SDG 13), oceans (SDG 14), and land (SDG 15), whereas biodiversity preservation and restoration support the delivery of targets for the SDGs related to education (SDG 4), gender equality (SDG 5), reducing inequality (SDG 10), and peace and justice (SDG 16).

To contextualize the cost of biodiversity decline in economic terms, the World Economic Forum (WEF) states that over 50% of global gross domestic product is highly or ^moderately dependent on natural ecosystems.⁵ This is unsurprising since biodiversity is an implicit enabler asset that underpins many human activities.⁶ For example, pollination by bees and other pollinators is vital to global food security—75% of the world’s food crops rely on it.⁷ According to the WEF, investing in opportunities that directly address the threats to biodiversity has the potential to generate up to $10.1 trillion in annual business value and 395 million jobs by 2030.⁸ 

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