29 SEP 2021
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New Nature Economy: Asia’s Next Wave

Asia Pacific is at the heart of the global biodiversity crisis. Fighting climate change is critical, but will not be enough to address the biodiversity crisis. Where are the business opportunities and how can the investments required be unlocked to support a nature-positive economy in the region? This report provides the Asia Pacific deep-dive from the World Economic Forum's The Future of Nature and Business report published in 2020.

Business-as-usual would mean that up to 42% of all biodiversity in Southeast Asia could be lost by 2100, half of which would be global extinctions.

Asia Pacific is rich in endemic biodiversity found nowhere else on the planet, with diverse ecosystems ranging from the tropical forests of Southeast Asia to the coral reefs in the Pacific Ocean. However, the region is also at the epicentre of biodiversity and nature loss. Nearly one million species are at risk of extinction because of human activity. Climate action failure, biodiversity, and nature loss, and infectious diseases ranked as the top three risks humanity will face in the next 10 years, according to the World Economic Forum’s 2020 Global Risks Report.

 

How does the biodiversity crisis matter for the economy and for businesses? 

Key economic activities supported by nature could be disrupted. The IPBES Global Assessment Report outlines nature’s 18 contributions to humanity, including supporting a range of key economic activities through regulation of the environmental process (e.g., regulation of air quality, pollination, and buffering against floods) and materials that sustain our lives (e.g., energy, food, and medicine).

Biodiversity and nature loss disrupt these key contributions of nature to people, in turn placing critical economic activities at risk of disruption. However, other sectors with less direct dependencies on nature still face significant disruption risks. A business-as-usual route that disregards our economy’s impact on biodiversity and nature loss is therefore not a viable option. 

 

Systemic transitions in three socioeconomic systems are key to solving the biodiversity crisis

Three systems of critical socioeconomic importance to Asia Pacific are together responsible for the most significant business-related pressures to biodiversity; but these are also the systems with the largest opportunities in pursuing nature-positive development. These are i) food, land and ocean use system; ii) infrastructure and built environment system; and iii) energy and extractives system. Together, these systems endanger around 85 percent of all threatened and near-threatened species in Asia Pacific.

The transitions needed are fundamental and require entire business, economic, and consumption models to be transformed, without which irreversible climate change, biodiversity loss and other environmental risks will continue to harm the economy and human well-being.

 

Nature-positive development in Asia Pacific could unlock USD 4.3 trillion of value and 232 million jobs annually by 2030

59 nature-positive business opportunities could transform the three major socioeconomic systems from a net-negative to net-positive impact on nature. Unlocking these business models will change the way we farm and fish; how our infrastructure is designed, built, serviced, and connected; and how we extract and recycle natural resources, and power our economy.

Altogether, the nature-positive business opportunities identified in the report for Asia Pacific add up to USD 4.3 trillion in annual business value by 2030, or around 43 percent of the USD 10.1 trillion annual opportunity identified at the global level.

 

Business opportunities in the three socio-economic systems could deliver US$4.3 trillion of economic value and 232 million jobs annually by 2030.

 

Innovative solutions needed to unlock the USD 1.1 trillion to power the nature-positive economy

In total, unlocking the 59 nature-positive business opportunities across these three systems will require an annual investment of USD 1.1 trillion. While substantial, this is a fraction of the USD 31.1 trillion announced by the Asian Development Bank’s 45 member countries to combat the COVID-19 pandemic.

Business, government, and society have an opportunity to turn the vision of a nature-positive economy in the Asia Pacific region into reality, but this will be challenging. There remain a number of key barriers to unlocking these opportunities, chief among them mobilising the requisite capital to develop new business models.

In an exclusive survey conducted for the report, investors and business leaders across Asia Pacific identified key challenges to overcome in the pursuit of nature-positive business models. These barriers can be broadly categorised into four areas: regulatory challenges, market barriers, information gaps, and the lack of supportive enablers for investment.

To overcome these barriers, business and community leaders proposed a range of innovative solutions to galvanise the investment required in the coming decade. The top three suggestions include:

  1. New externality pricing models to capture the true cost of natural capital and environmental externalities;
  2. Harmonised biodiversity reporting standards to ensure accountability towards biodiversity goals; and
  3. New financial products and mechanisms, such as blended finance models as well as regulations to enforce compliance with existing and future environmental policies.

More research and development, as well as greater public-private dialogue, will be critical to creating an enabling environment for investment in a nature-positive economy. 

This report by Temasek, in collaboration with the World Economic Forum and AlphaBeta, makes the business case for nature-positive solutions in the region by exploring the risks, opportunities and financing needed for a nature-positive economy. 

New Nature Economy: Asia’s Next Wave
File size: 9.8 MB


New Nature Economy: Asia's Next Wave