A new study demonstrates that, in the coming decades, current environmental degradation trends will result in significant economic losses, particularly affecting the poorest nations. However, there is hope: These losses can be turned into gains by investing in nature.
Specialists from the College of Minnesota and Purdue College distributed their discoveries in the Procedures of the Public Foundation of Sciences. The group fostered a first-of-its-sort, worldwide earth economy model to capture communications between the economy and the climate. Importantly, these interactions include how humans benefit from nature’s pollination of crops, supply of timber, carbon storage, and catch for marine fisheries, as well as how those benefits affect the economy as a whole.
According to Justin Johnson, who is an assistant professor of Applied Economics at the University of Minnesota, “We have long thought of the economy and the environment as working against each other.” Nature’s investments do not stifle the economy; rather, they boost it. However, until recently, modeling those interactions was difficult.”
“This new study required a detailed understanding of how and where land use patterns change as a result of economic activity, with sufficient spatial detail to understand the environmental consequences of these changes. It is an enormous accomplishment.”
Tom Hertel, a distinguished professor of Agricultural Economics at Purdue University.
The researchers discovered:
- In 2014, policy options for investing in nature led to gains of $100–350 billion USD annually, with low-income nations seeing the largest percentage increases in GDP. The elimination of agricultural subsidies, the financing of research into increasing crop yields, and international payments to poorer nations to support conservation are among the policy options analyzed in this study.
- On the other hand, if current trends in environmental degradation persist, there will be annual losses of $75 billion, and low-income nations will see annual GDP losses of 0.2 percent.
A suite of ecosystem service models known as InVEST, developed by Stanford University’s Natural Capital Project, was combined with a global general equilibrium economic model known as GTAP, which was created by the Center for Global Trade Analysis at Purdue University. GTAP and Contribute are both broadly utilized across the world by states, non-legislative associations, and the confidential sector; however, assembling them was a huge endeavor.
Tom Hertel, a renowned Purdue University professor of Agricultural Economics, stated, “Traditional economic models of this kind almost completely ignore the fact that the economy relies on nature.” This new review required an itemized comprehension of how and where land use designs change because of monetary movement, with enough spatial detail to figure out the natural results of these changes. It’s a huge accomplishment.”
This study’s findings show that the poorest people in the world often place the highest value on environmental public goods and services because they have fewer options when the environment is damaged. As a result, investing in nature typically results in a more equitable world. Even though this study only looks at a small portion of the ways that the economy and the environment interact, it finds significant effects.
Obviously, nature gives substantially more than pollinators, lumber, carbon, and fish,” said Johnson. “Our work in the future will include many more ecosystem services, allowing for much better decision-making. This is only the start. We hope to make analysis of this kind a standard tool for policymakers.”
More information: Johnson, Justin Andrew et al, Investing in nature can improve equity and economic returns, Proceedings of the National Academy of Sciences (2023). DOI: 10.1073/pnas.2220401120
