As part of PRISMA’s stakeholder engagement strategy, an online workshop for the research stream on Biodiversity and biophysical impacts was held on the 22nd of November 2023, featuring a presentation of recent work by Dr Johannes Emmerling, senior scientist at the RFF-CMCC European Institute on Economics and the Environment.

The workshop began with an overview of recent assessments of biodiversity and ecosystem services, how they are affected by climate change, as well as their importance for economic activity and development. As highlighted by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), human activities in general as well as climate change in particular are strong drivers of biodiversity loss whilst, at the same time, biodiversity loss can increase the challenge of limiting climate change. In addition, a report by the World Economic Forum suggests that more than half of global GDP is moderately or highly dependent on nature and its services, while comprehensive wealth assessments such as those provided by the World Bank suggest that natural capital represents a substantial share of the wealth of many nations.

Based on these premises, Dr Emmerling presented the results of a recently completed research work which seeks to make a start on incorporating natural capital and the economic impacts of biodiversity loss in a well-established multi-regional integrated assessment model, RICE50+. Taking the Dasgupta Review as its point of departure, the work incorporates natural capital into the model, where it both enters into the production function to affect economic output and provides non-market ecosystem services while being affected by climate change. In particular, as climate change redistributes terrestrial ecosystems across the globe, the world’s natural capital is expected to decrease, causing a 9% loss of ecosystem services by 2100. 

In the first application, the value of the natural capital incorporated into the model is derived from combining three terrestrial ecosystems models with the World Bank comprehensive wealth accounts and an extensive database of ecosystem services valuations. This allows for a regionalised assessment of the value of total market and non-market benefits presently derived from different types of terrestrial biomes and, using different climate change scenarios, how these benefits are expected to change. 

Incorporating these damages into the RICE50+ model for a scenario implying around 3 degrees of global warming by 2100, the researchers found that the mean annual GDP loss will reach 1.3% by 2100, with some countries experiencing losses of up to 3% and losses being strongly concentrated in poorer regions. Non-market benefits are expected to decline even more strongly, with possible losses of up to 40%.

While this work already accounts for many relevant linkages between biodiversity and the economic system, there are many aspects that still need to be explored better. For instance, the work presented in the webinar only accounted for natural capital and ecosystem services represented by terrestrial vegetation and hence did not include the role of oceans or terrestrial wildlife. The approach is at present also largely “linear”, in the sense that it does not incorporate the possibility of sudden tipping points in ecosystems, which would likely exacerbate economic losses.

The presentation of recent research results was followed by an extensive Q&A session with stakeholders from governmental bodies such as DG ENV and DG CLIMA of the European Commission, environmental foundations like the European Climate Foundation, NGOs such as the European Environment Bureau and Wildlife Conservation Society, research institutions like the Institute for European Environmental Policy, think tanks like IDDRI and TMG. The stakeholders were asked if modelling results aligned with their expectations, if any essential factors were not captured by the modelling approach, and if priorities for future work aligned with stakeholders’ opinions. 

Modelling specifics

The discussion started by clarifying that the modelling included over 800 ecosystem services ranging from water and pollination to recreational benefits. Moreover, timber was identified as the primary market ecosystem service, accounting for over 90% of total value given the focus on natural biomes. Stakeholders raised an issue of model sensitivity around the estimation of full benefits. It was clarified that while some uncertainty on estimates is unavoidable, not including significant outliers typically found in oceans, such as values of services provided by coral reefs and employing different vegetation and climate models, led to relatively robust results. Participants were also interested in how modellers dealt with spatial scale when assigning a value to ecosystem services. Each grid cell in the dataset contained information on the share of it covered by a relevant biome. The most significant part of the work constituted mapping the cells to ecosystem services to derive estimates for ecosystem services.

Modelling different scenarios

Stakeholders were interested in how modelling outcomes would change under different policy scenarios or interventions. The current study focused on establishing a baseline scenario given the existing policies. Several policy scenarios could be investigated in the future, including restoration efforts such as afforestation. Future work could target specific regions to get country-level implications. Since the global temperature target is to keep warming between 1.5°C and 2°C, stakeholders suggested focusing on relatively modest climate change scenarios rather than 3°C or showing how different temperature raises have different but significant impacts.

Terminology and potential issues with the modelling approach

In the context of environmental accounting, it was pointed out that the terminology on natural capital, which includes not only biodiversity but also biotic flows, should be used more carefully. Stakeholders pointed towards criticisms of the natural capital approach to ecosystem services and biodiversity, particularly potential pitfalls in summing different components of natural capital in monetary terms. Finally, the conception of how nature contributes to GDP could be challenged due to substitutability being very limited for some services and others being only marginally useful. Further literature was provided to explore the distinction of monetary values being connected rather than attributed to ecosystem services.

Communicating findings to policymakers

When communicating findings to policymakers, stakeholders suggested that instead of a 1.3%-3% GDP loss, the 50% dependence of GDP on nature reported by the World Economic Forum may be a more striking and convincing finding to direct policy to preserve biodiversity. It was pointed out that including tipping points could change the outcomes for GDP loss significantly. Stakeholders suggested that this study should reach policymakers working on biodiversity in the European Parliament and future COPs and that more research in this area is definitely needed.

• Read the article: Bastien-Olvera, B.A., Conte, M.N., Dong, X. et al. Unequal climate impacts on global values of natural capital. Nature 625, 722–727 (2024). https://doi.org/10.1038/s41586-023-06769-z.

This paper has received funding from the European Union’s Horizon Europe research and innovation programme under grant agreement no. 101081604 – PRISMA.

Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Climate, Infrastructure and Environment Executive Agency (CINEA). Neither the European Union nor the granting authority can be held responsible for them.