Biodiversity and climate are strongly intertwined. They can both be considered in terms of physical and transition risks.
Forests and ecosystems, such as mangroves, coral reefs, and marshes, serve as carbon sinks and contribute to the mitigation of greenhouse gas emissions. In addition, they can also be important nature-based solutions that can help adapt to the effects of climate change, e.g., protection against coastal erosion and prevention of flooding.
Like climate, biodiversity is not the same in different areas or locations and this is worthy of note because we tend to think of biodiversity in terms of pristine rainforests, but it is just as important a consideration in urban landscapes.
Biodiversity risks share a number of common characteristics with climate change – both are far-reaching in terms of breadth and magnitude and contain tipping points beyond which it may be impossible to recover. They are both uncertain yet also foreseeable, with an impact that could be determined by short-term actions.
At a high level, risks in relation to biodiversity can be calculated in a similar way as those for climate change. These risks can be identified in the following ways:
Physical risks
Physical risks are damage to physical assets or the loss of ecosystem services necessary for production processes.
Examples include local and regional financial losses in the agricultural sector from reduced pollination from insects and global financial losses in medicine and technology sectors from reduced genetic biodiversity inhibiting research and development.
Transition risks
Transition risks include policy changes, legal developments and technology changes.
These risks are increasingly likely to surface with the call by several stakeholders for the UN’s Convention of Biological Diversity (CBD) to announce the adoption of a global nature net-positive goal by 2030 and the full recovery of nature by 2050 at CBD COP15 in 2022.
Disruption risks
Disruption risks occur when the loss or impact on nature disrupts societies or markets. An example is when the encroachment on natural habitats leads to the outbreak of zoonotic disease.
Differences between biodiversity and climate change risks?
Biodiversity has become more of financial risk while climate change is more mature and understood as a business risk.
Previously, climate change was viewed as an environmental externality, but this has shifted over the past decade to environmental risk, and now a financial one. Biodiversity is arguably a fair way behind climate change on this curve.
Partly as a result of this immaturity, despite its similarities with climate change risk, understanding and managing biodiversity risk is different and here’s why:
No single metric
While it is relatively simple to calculate carbon emissions, measuring biodiversity can be complex and multi-faceted. There are two elements:
- The ways to assess the biodiversity value of ecosystems by measuring the number of endangered species or other appropriate metrics.
- Use this assessment to measure your impact of activities on biodiversity, such as the volume of pollinators to agriculture or ongoing clean river flows.
Don’t see offsets as “like for like”
Offsets cannot make up for the loss of destroying ancient ecosystems containing rare species. Some biodiversity will always be lost in offset exchanges as no two areas of habitat or species populations are identical.
Also, making biodiversity offsets meaningful can involve a long-term commitment to take full account of direct, indirect, and cumulative impacts, geographically and over time.
When it comes to managing biodiversity risk, priority should be given to avoiding and reducing the impact on biodiversity loss, and offsets should be considered as a last resort.
The need to take into account multiple values
Landscapes should be managed for productive, wilderness, and cultural values. Protecting biodiversity doesn’t have to involve locking up land as wilderness. We can look into the deep knowledge of indigenous people to understand how these values can coexist.
