Nature degradation could cause a 12 percent loss to UK GDP

Nature degradation could cause a 12 percent loss to UK GDP

Damage to the UK's environment is slowing the UK's economy - and could lead to a 12% reduction in GDP. This impact is greater than the effects of the global financial crisis or COVID-19.

A new report – Assessing the Materiality of Nature-Related Financial Risks for the UK
by Green Finance Institute (GFI) outlines the risks to the UK's economic resiliency. The 2008 financial crisis took around 5% of the value from the UK's GDP, and COVID resulted in a 11% reduction - while nature degradation could cause a 12% loss.

GFI worked with DEFRA, HM Treasury, The Taskforce on Nature-related Financial Disclosures and received input from the Financial Conduct Authority for their report. They found that while the economic costs of climate change are becoming increasingly accepted, the risks posed by nature degradation amount to a material cost that has not been sufficiently factored into financial and business decision-making.

The UK is one of the most nature-depleted countries in the world, with three quarters of the UK experiencing high levels of nature-degradation. This has far-reaching ramifications, ranging from soil health decline, water shortages, food security, diseases passing from animals to humans and anti-microbial resistance. The agricultural sector is specifically named in the report as being at risk, with water, climate regulation, soil quality, and pollution all impacting food production.

A new plan for nature

Soil Association Policy Director Brendan Costelloe said: “This report shows that we cannot survive without nature and highlights the folly of investing in industrial farming practices that deplete the wildlife we depend on to produce food. UK food production, and every business that depends on that, is threatened by the catastrophic declines in wildlife we are seeing and by degradation of one of our most vital resources for survival – soil. Farmland makes up 70% of Britain and we can’t fix the decline in nature and reduce the associated financial risks without a transformation in food and farming. Many farmers are working with nature and many more are keen to do. But we remain too dependent on over-intensive, chemical-reliant methods that destroy habitats such as industrial livestock systems fed on imported soy.

“These new findings are a rallying call to investors to back nature-friendly farming. If they want if they want to safeguard our precious natural capital and secure long-term returns on their investments, they must divest from agricultural practices drive biodiversity decline, and invest in agroecological and organic farming that allows food production and nature to flourish together, while also delivering resilience in the face of climate change. It is also vital that the government acts on its promise to deliver a land use framework, which can help to scale agroecological farming across the country and give greater protection from harmful farming to sensitive locations. The consequences of not acting now are dire, for the whole of society.”

The GFI's full report is available here.

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