The Strategist

Developing countries are warned of economic default over loss of biodiversity on Earth

06/23/2022 - 06:50

According to a report posted on the website of the Public Policy Institute at Cambridge University, the loss of biodiversity on Earth as a result of floods, droughts, and widespread deforestation could have serious economic repercussions, including higher taxes, spending reductions, increased inflation, lower sovereign credit ratings, and lower national GDPs.

The research warned that "environmental deterioration and biodiversity loss might harm economics in many locations."

According to the report, a fall in the credit ratings of the 26 nations under consideration "would increase yearly interest payments on debt by up to US$53 billion a year, placing many developing countries at serious danger of sovereign debt default – in fact, bankruptcy".

The study's authors employ the concept of "ecosystem services," citing examples such as "plants repairing soil and avoiding floods" and "bees pollinating crops." Economic repercussions may result from the loss of these "ecosystem services."

The analysis warns that the GDP of various nations would have drastically fallen by 2030 if the state of the planet's biodiversity is not improved. For instance, Bangladesh's GDP might decrease by nearly 20% in eight years. In contrast, it is not anticipated that the GDP of nations like the USA, South Africa, Russia, Canada, Japan, and Poland would alter considerably. The countries with the highest risks include Bangladesh, Ethiopia, Indonesia, Congo, Pakistan, Angola, and Madagascar.