Biodiversity hit to economies estimated at up to $25tn a year in landmark report

The global economy is losing up to $25tn a year because sectors such as agriculture, energy and fishing fail to account for how their actions fuel interconnected crises in nature, climate and human health, a landmark international biodiversity science policy report found.

Tackling biodiversity loss, climate change, water scarcity, food insecurity and health risks in isolation was not only compounding those issues but also driving spiralling economic costs, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) said.

The body established by 94 countries is the equivalent of the Intergovernmental Panel on Climate Change, bringing together authoritative global agreement on science. “By treating these as individual problems, we are wasting money, we’re duplicating efforts,” Pam McElwee of Rutgers University and a co-author of the report.

“And if we were actually able to bring policy sectors together, there would be significant cost savings.” The report, approved by IPBES member states in Namibia on Monday after three years of work by 165 scientists, estimated that unaccounted-for costs from current business practices were between $10tn and $25tn annually, equivalent to a quarter of global GDP.

These costs arise when industries fail to factor in the damage their operations cause across systems. For example, unsustainable farming practices may boost yields in the short term, but the overuse of chemical inputs causes run-off pollution, which harms water quality downstream and increases human health burdens, including waterborne diseases.

“The problem with our current system is that we don’t have a way to account for those trade offs in decision making right now, we essentially ignore them,” said McElwee. “We pass those costs on, whether it’s to insurance companies or to poor and marginalised people who are suffering from these pollution burdens or the malnutrition burdens.”

Treating the crises as a “complex, interconnected system” was essential, she added, stressing the need for meaningful discussions about trade-offs in business decisions. The report comes as concerns rise about stalled progress in UN negotiations this year on matters of biodiversity, desertification, plastics pollution and reducing the greenhouse gas emissions behind climate change.

At the UN biodiversity summit in Cali in October, talks ended without agreement on a global funding strategy, as negotiations broke down when too few delegates remained to finalise decisions. Developing nations expressed frustration over the failure to secure sufficient financial support to meet biodiversity commitments under the Kunming-Montreal Global Biodiversity Framework, which aims to halt nature loss by 2030.

Last weekend, the UN desertification summit in Riyadh concluded without an agreement on a legally binding response to drought, as the push supported by poorer nations including Africa was also thwarted. Delaying action on these crises drives up costs significantly, the IPBES report warns.

Inaction on climate change would add $500bn annually to future costs, while the price of tackling biodiversity loss doubles if left unaddressed for 10 years, it found. 

Biodiversity is declining at a rate of between 2 and 6 per cent per decade, weakening ecosystems that underpin food security and climate resilience, according to the IPBES scientists.

In addition, extreme weather events linked to climate change have caused 12,000 disasters over the past 50 years, leading to $4.3tn in damages, with 90 per cent of the effects falling on lower-income countries.

A major contributor to these escalating crises is misaligned financial incentives, the scientists said. Governments currently spend $1.7tn annually on public subsidies that encourage environmentally harmful practices, including fossil fuel production, overfishing and unsustainable agriculture. These subsidies often compound the very crises they aim to address.

“These public sector investments often enable the private sector to follow along,” said McElwee. “If we were to better incentivise business models to move away from that sort of investment into . . . regenerative agriculture [and] sustaining our forest ecosystems and giving them proper value, that would go a long way toward reducing a lot of those externalities.”

In addition to public subsidies, the report identified $5.3tn in annual private financial flows that directly damage biodiversity, such as investments in deforestation, pollution-heavy industries and overexploitation of resources, which McElwee said must be tackled through “better information and transparency about public financing activities, increasing positive investments through tools like green and blue bonds, and removing harmful subsidies”.

Despite the scale of the challenge, the report argued that proven solutions are already available and being implemented successfully in various parts of the world. “We don’t have to wait for some sort of technological advancement across any of these elements.

We have solutions in hand now,” McElwee said. The report highlights more than 150 case studies that demonstrate how integrated approaches can deliver benefits across biodiversity, climate, water, health and food systems.