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In a perfect world, all nature would be balanced, and natural ecosystems and webs of species would be healthy and functioning. However, in the real world, humanity and the natural world face significant threats and challenges in the form of – but not limited to – climate change, political turmoil, war, biodiversity decline and species extinction.
Global biodiversity is shrinking at an alarming rate, and an estimated one million species of flora and fauna are at risk of extinction. The environmental and financial consequences of biodiversity loss were identified in the World Economic Forum’s The Global Risk Report 2020, which ranked biodiversity loss as the third most impactful risk facing the global economy.
The impact of species extinction on humanity, businesses, industry and the financial system has been well researched and documented. However, links between human systems of finance, accounting, business and nature are now becoming more apparent, as key ecosystem services, such as pollination, are damaged and, in some cases, destroyed.
In linking nature with finance, the concept of natural capital emerges. Just as financial, intellectual and human capital are viewed as integral ‘building blocks’ of business, natural capital is also required for businesses and economic production to operate. It can be defined as follows: “Natural capital – that part of nature which directly or indirectly underpins value to people, including ecosystems, species, freshwater, soils, minerals, the air and oceans, as well as natural processes and functions… In combination with other types of capital, natural capital forms part of our wealth; that is, our ability to produce actual or potential goods and services into the future to support our wellbeing.”
The interrelationship between biodiversity and natural capital is often discussed, particularly as biodiversity is seen to constitute only a part of what is widely understood as ‘natural capital’. Biodiversity encompasses a host of ecosystems and species of flora and fauna, but fails to acknowledge freshwater, soils or any of the other elements encapsulated by natural capital. However, to have rich biodiversity and functioning ecosystems, healthy air, water and soils (examples of natural capital) are all required. In essence, to reduce biodiversity loss, natural capital needs to be protected; and for it to be protected, biodiversity needs to be better managed and conserved.
With the agricultural sector now recognised as one of the major drivers of biodiversity decline on land, the notion of protecting natural capital and biodiversity is an integral piece of the puzzle required to reduce global biodiversity loss.
It is widely acknowledged by key players in the international financial and business communities that challenges linked with biodiversity loss and species extinction are as substantial as those associated with climate change. This is evident through many businesses now shifting their focus from addressing climate change and its impacts to a two-pronged approach that seeks to also address biodiversity loss across the agri-food supply chain.
The true impact on biodiversity of mono-agriculture and intensive farming practices, such as the use of fertiliser and pesticides, is now clear. However, the impact of agriculture on biodiversity and natural capital is not a new phenomenon, with agricultural land use acknowledged as the most significant factor affecting biodiversity loss and species extinction.
With an ever-growing focus on quantity, food production has been intensified to the point where less and less natural habitat is available to wild species of animals, birds, insects, flowers and plants. Latest estimates also suggest that food production will need to be increased by 30%-60% to meet the demands of a population set to reach 10 billion by 2060.
“More and more food is required to feed the ever-growing human population, but biodiversity and ecosystems need to be protected,” says Dr Jill Atkins, professor of accounting at Cardiff University, and editor of Protecting Natural Capital and Biodiversity in the Agri-Food Sector.
With an estimated one million species already at risk of extinction, substantial efforts are therefore needed to not only halt global biodiversity loss but reverse it.
Focusing on the agricultural industry, there are high-level international efforts to address biodiversity loss, with the Food and Agriculture Organization (FAO) of the UN leading the way with its 2019 report The State of the World’s Biodiversity for Food and Agriculture. The publication of this report led to the development of the voluntary Framework for Action on Biodiversity for Food and Agriculture in 2021. This framework was updated in 2022 to detail that land and water use/management – in relation to the agricultural industry – were the main drivers of biodiversity loss. The updated framework also highlighted an increase in awareness of the need to manage biodiversity and protect ecosystem services through implementing biodiversity-friendly practices in most countries.
The agricultural industry cannot shy away from its contribution to global biodiversity loss and species extinction. What it can do, however, is provide solutions and mechanisms that can assist in mitigating agriculture’s negative impact. The development of initiatives and agri-environment schemes, such as the UK’s environmental land management schemes and Australia’s environmental stewardship programme, are examples of how this can be done.
“The attitudes of those in the agri-sector must change to ensure the continuity of human and non-human life,” says Dr Warren Maroun, professor of accounting and auditing, University of Witwatersrand in South Africa. “If current levels of biodiversity loss continue, key ecosystem services will cease to operate, with the very real possibility of ‘biological annihilation’.”
Flowing from Plynlimon in the Cambrian Mountains in Wales all the way down to the Severn Estuary, the River Wye is a thing of natural beauty. It’s also a major habitat for Atlantic salmon. As of 2019, a peak population of around 50,000 Atlantic salmon were fished each year, says the Wye Salmon Association. But now the numbers sit at a measly 2,000-3,000 per year – a decline of 94%-96%.
According to a report published by the House of Commons in 2022, an estimated 60%-70% of the pollution in the river can be attributed to agriculture, with 42% from poultry farms and their soils, which have been treated with artificial fertiliser, resulting in significant run-off into the river. It is also worth noting that 28% of the pollution is caused by waste generated by water companies in England and Wales.
“Once the birthplace of British tourism, it now exists as a case study into what happens when pollution and its consequences are not curtailed enough,” says John Peirce, research student at Cardiff University and contributing author to Protecting Natural Capital and Biodiversity in the Agri-Food Sector.
Katherine Lister is marketing and communications manager at Burleigh Dodds Science Publishing
This article has been adapted from chapter 1 of Protecting Natural Capital and Biodiversity in the Agri-Food Sector (Burleigh Dodds Science Publishing, 2024), by Jill Atkins and John Peirce.
