Nature's balance is collapsing, as highlighted by the World Wildlife Fund's 2024 Living Planet Report, which reveals that wildlife populations have plummeted by 73% since 1970, with Latin America and the Caribbean experiencing a staggering 95% decline [ef25c2c6]. The World Bank estimates that the global economy could face a potential loss of US$2.7 trillion by 2030 due to biodiversity collapse, while Oxford University warns that nature-related economic shocks could exceed US$5 trillion [ef25c2c6].
In response to these alarming trends, there is a growing call for an eco-friendly alternative to Gross Domestic Product (GDP) as a measure of economic success. The UN's Millennium Ecosystem Assessment, launched in June 2001, laid the groundwork for understanding the economic value of ecosystems and the services they provide [ef25c2c6]. China has taken a significant step in this direction by introducing gross ecosystem product (GEP) accounting in September 2020, which includes the valuation of ecosystem services such as air purification and ecotourism [ef25c2c6].
Innovative financial instruments, including biodiversity-linked bonds and habitat banks, are emerging as potential solutions to align profit with environmental protection [ef25c2c6]. However, a fundamental shift in economic valuation is necessary to ensure that economic growth does not come at the expense of nature. This transition is crucial for fostering sustainability and protecting biodiversity, which is vital for the health of our planet and future generations [ef25c2c6].
As financial institutions and governments grapple with the complexities of biodiversity finance, the integration of these new economic metrics could provide a more comprehensive understanding of value that encompasses both economic and ecological health. The upcoming UN biodiversity summit (COP16) will be pivotal in discussing these issues and the role of financial institutions in achieving sustainability goals [06ac8a8b].