For how the global economy needs biodiversity, look no further than your pint of beer
- The natural world supports much of our economic activity, generating trillions of dollars, yet natural resources are too often treated as valueless
- Factoring environmental dependency and impact into all business decisions will go a long way to ensure biodiversity is protected
Drinking a pint in a pub may not feel like a nature-dependent activity, but it is. Like countless other consumer purchases, from clothing to mobile phones, many of the inputs that brewers need to make beer derive from the natural world.
In fact, the market economy can be thought of as a system of creating wealth from applying human ingenuity to the gifts that nature provides us. We harvest the bounties of nature, and bring them to market to trade for a profit.
As technology and other processes have made the wealth-creating process more efficient, they have also increased the apparent distance between the economy and the environment. But dig deep enough into any value chain and eventually you end up where we started: transforming environmental resources into states that facilitate human consumption.
In fact, biodiversity – the variety of life on earth – underpins the economy to a scale of US$44 trillion, according to the World Economic Forum. Numbers this large tend to be hard to relate to, but this is not meant as a hypothetical. It is a measure of economic activity equivalent to around half of the global economy. Broaden the definition of “value”, and the real number may be even larger.
This understanding of biodiversity as a fundamental component of wealth creation is driving a rapid awakening in business’ attitudes and activities in response to biodiversity loss, and it’s not just sectors that are more obviously reliant on the environment, such as agriculture or tourism, but businesses in almost every sector via their extended value chains.
In fact, there are ongoing initiatives to include business-critical nature-related information in company financial disclosures, making them an explicit concern on which management would be expected to act. This acknowledges that both a company’s impact and dependence on nature are intricately linked to the financial and commercial viability of its business activities.
So, back to that pint. Beer is made of hops, barley, yeast, and water. Hops are a flower and barley is a grain. Along with being a part of biodiversity themselves, they require good soil, sufficient water cycles, and pollinators to grow, while yeast is also a biological component.
But what about the transport to bring the beer to the pub? The tyres may be made from natural rubber, and the metals for the electronics in the dashboard extracted from sensitive environments. The roads required to distribute the kegs might be subject to flooding, exacerbated by the removal of forests upstream.
Perhaps the sand to make the pint glass is sourced from fossil beaches or lake beds. The pub itself? Perhaps it’s made of timber.
How about those birds singing in the trees in the pub’s garden? The list could go on. Some aspects might seem a stretch, or of relatively small concern, but taken in aggregate across the economy, they are not.
The different ways that ecosystems support human well-being, including via the economy, are often called ecosystem services. These ecosystem services are provided by the environment for free.
However, without an associated financial cost, they are often treated as “valueless”, and therefore not properly incorporated into decision-making. Greater consideration of the value that biodiversity provides will go a long way towards ensuring it is protected.
As a start, business managers should consider how their value chain is linked to the environment, what impact they have on it and what exposure they have to different types of risks. Not just because they care for the environment (hopefully they do), but because it’s a material business concern.
It won’t always be obvious: vulnerabilities might come from unexpected places several steps away from the business, be that in specific sectors in specific locations exposed to specific risks. A forward-looking business will want to consider not just what that impact and exposure looks like today, but what it is likely to look like in five, 10, 20 or more years.
The challenge will require numerous stakeholders acting together, and business leaders should share the same level of urgency towards biodiversity loss as is increasingly becoming the norm for issues around climate change. It’s an economic imperative as well as an environmental one.
Next time you are drinking a pint, or enjoying any number of other products of the economy for that matter, spare a moment to consider all the ways that nature might have contributed to that moment, and perhaps offer a “cheers” to biodiversity.
Jake Kuyer is associate director of economics and sustainability at Oxford Economics