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Economics of Climate Change Dwarf Financial Crisis, Study Says
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The world’s economy is losing more money each year from
nature loss than through the current financial crisis, according to a new European
The study puts the annual cost of forest loss at between $2
trillion and $5 trillion. This statistic comes from adding up the value of
environmental services provided by the world’s forests, such as filtering water
and absorbing global warming pollution.
The study was led by Deutsche Bank economist Pavan Sukhdev
and parallels the Stern
Review on the Economics of Climate Change. Sukhdev said that the global
ecosystem decline dwarfs the losses in this year’s financial crisis.
“It’s not only greater but it’s also continuous, it’s been
happening every year, year after year,” Pavan Sukhdev told the BBC. “So whereas
Wall Street by various calculations has to date lost, within the financial
sector, $1-$1.5 trillion, the reality is that at today’s rate we are losing
natural capital at least between $2-$5 trillion every year.”
Sukhdev leads The
Economics of Ecosystems and Biodiversity, a study initiated by Germany under
its European Union presidency; the European Commission provided funding. The
first phase concluded this past spring, when the team released its conclusion
that forest decline is costing possibly as much as seven percent of global
gross domestic product.
As forests decline, the natural world stops providing
services once essentially provided for free, such as carbon sequestering, food
farming, or reservoir building. When this happens, the human economy must
provide these necessary processes instead.