Why companies should help pay for the biodiversity that’s good for their bottom line

In the “The Lorax,” an entrepreneur regrets wiping out all the make-believe truffala trees by chopping them down to maximize his short-term gains. As the Dr. Seuss tale ends, the Once-ler – the man responsible for this environmental tragedy – tells a young child that “Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not.”

Likewise, many corporations that profit from nature’s bounty, such as Unilever, Patagonia and Interface, appear to be reaching a similar conclusion. They are realizing that it’s time for the business world to do more about conservation.

We, two economists who have extensively researched natural resources and development, are proposing a new way to solve the problem of species and ecosystem loss. Corporations that benefit from biodiversity could forge what some are calling a “new deal for nature” by paying part of the tab for biodiversity conservation.

Biodiversity

Biodiversity, the variety of all natural ecosystems and species, is being lost at an unprecedented rate. According to the recent World Wildlife Fund Living Planet Report, the populations of mammals, birds, fish, reptiles and amphibians have fallen by an average of 60 percent in just over 40 years. The scientists Gerardo Ceballos, Paul R. Ehrlich and Rodolfo Dirzo have dubbed this decline and an impending wave of extinctions a “biological annihilation.”

We argue that many businesses are threatened by the loss of species and ecosystems, such as declining bee populations and dwindling stocks of fish, forests, wetlands and mangroves. Without an array of ecosystems and species, it’s tough for farmers to grow crops or ranchers to raise animals.

The pharmaceutical industry needs them to make and create drugs. For example, one team of U.S.-based researchers estimates that the pharmaceutical value of marine biodiversity for anti-cancer drug discovery could range from US$563 billion to as much as $5.7 trillion.

Insurance companies depend on coastal wetlands to minimize the impact of big storms. For example, an international group of researchers estimated that preserving one hectare of mangroves in the Philippines yields more than $3,200 in flood-reduction benefits each year.

A global treaty, the Convention on Biological Diversity does set worldwide conservation targets. But we believe they may not be ambitious enough. Cristiana Pașca Palmer, who serves as the UN’s biodiversity chief, is considering raising the treaty’s targets to conserve at least half of terrestrial, inland water, coastal, and marine habitats to preserve biodiversity.

But the existing efforts to preserve biodiversity are not only inadequate. They’re underfunded.

New way to pay

Global biodiversity protection requires $100 billion annually, according to a previous study one of us conducted, yet the international community spends up to $10 billion each year on biodiversity conservation.

Much of the world’s biodiversity is in developing countries, which lack the financial wherewithal to adequately conserve it.

The Lorax could speak for the trees, but he lacked the cash to preserve them. Random House Children’s Books
As we have explained with our colleague Thomas J. Dean in Science magazine, we believe that involving businesses in an international environmental agreement could help bridge a chronic funding gap.

A key part of this new deal for nature would be making the corporations that depend on the health of natural ecosystems and species help foot the bill to preserve biodiversity.

Benefiting the bottom line

Why would corporations want to get involved?

First off, it may benefit their bottom line. Big companies depend on robust natural ecosystems systems and individual species.

We calculate that the increase in revenue and profits from biodiversity conservation could generate between $25 billion and $50 billion annually to fund global conservation efforts.

The seafood industry stands to gain $53 billion annually from an increase in marine stocks. This could generate $5 billion to $10 billion each year to spend on preserving biodiversity.

The insurance industry could see an additional $52 billion from increasing the area of protected coastal wetlands with a similar investment.