Nature degradation could cause a 12% loss to UK GDP - University of Oxford
New research has found that damage to the natural environment is slowing the UK economy, and could lead to an estimated 12% reduction to GDP in the years ahead - larger than the hit to GDP from the global financial crisis or Covid-19.
The first-of-its-kind analysis quantifies the impact that nature degradation, both domestically and internationally, could have on the UK’s economy and financial sector, and highlights that these risks need to be acknowledged and addressed to strengthen the UK’s economic and financial resiliency.
The report - Assessing the Materiality of Nature-Related Financial Risks for the UK - analyses the impact of the degradation of natural ecosystems, both domestically and internationally, to the economy and financial sector in the UK.
Nature-related risks are as detrimental or more to the economy as those from climate risks, the analysis shows. Yet, 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. This is leaving the economy and financial sector exposed, while these risks continue to rise unchecked. The UK is one of the most nature-depleted countries in the world - three quarters of the UK has a high level of ecosystem degradation, with risks to financial services and the wider economy as a result. The analysis shows however, that half of the UK’s nature-related financial risks originate overseas.
Within the analysis, a new inventory charts these domestic and international nature-related risks to the economy, many of which are not currently captured in national risk assessments. The inventory captures financial risks arising from the deterioration of nature and biodiversity, including: soil health decline; water shortages; global food security repercussions; zoonotic diseases that pass from animals to humans, like bird flu, swine flu, and Covid-19; and antimicrobial resistance, where bacteria and viruses no longer respond to medicines; as well as transition and litigation risks.
Read the report: Assessing the Materiality of Nature-Related Financial Risks for the UK