A new report by Britomart-based EY, produced in collaboration with WWF, looks at the importance of biodiversity in the economy – and how taking care of nature could result in financial benefits, too. Gina Morrissey, EY’s senior manager for Climate and Sustainability Services, talks about the report’s findings.
JEREMY HANSEN Gina, you and the team at EY have written this report with WWF entitled A Nature Positive Aotearoa, which looks at the country’s opportunities in natural capital. How did the report come about?
GINA MORRISSEY The report is a
first attempt at valuing the financial opportunity of taking action to protect and restore nature in Aotearoa New Zealand. New Zealand’s economy is heavily reliant on nature, from the tourism sector to our primary industries. Yet we also have the highest proportion of threatened native species in the world, with over a third of indigenous species now at risk of extinction. We teamed up with WWF to analyse the economic impacts of Aotearoa New Zealand meeting key targets under the Kunming Montreal Global Biodiversity Framework, which is kind of like the Paris Agreement of the nature world. New Zealand signed up to the targets along with 196 other nations last year. Those targets include the restoration of 30 percent of degraded ecosystems, conserving 30 percent of land, forests and seas, and halting species extinction.
JEREMY HANSEN Biodiversity is usually considered something that is worthy of sustaining on its own, without linking it to economic outcomes. But one of the interesting things about this report is that you do link biodiversity to economic outcomes. What did you discover?
GINA MORRISSEY The monetisation of nature can seem a bit distasteful, but it’s important if we want action to be taken. And our key findings show that there is an economic imperative to protecting and restoring nature in this country: we found that there would be a net positive economic impact of $270 billion over a 50-year period if we took significant action towards meeting the Global Biodiversity Framework targets. Our modelling included upfront costs associated with nature action such as the costs associated with the planting and restoration of wetlands, and the avoided costs that might impact, say, our tourism industry if New Zealand didn’t take action and was perceived as environmentally degraded. We also identified benefits of taking action, such as the additional carbon sequestration provided by wetland restoration and native planting and found that this could save the government over $50 billion in avoided international carbon credit purchases.
JEREMY HANSEN The report notes that pursuing these goals will result in some short-term costs for some sectors, notably parts of the country’s primary industries. Do you want to run through an example of what those short-term costs might be, but how the longer term plays out more favourably?
GINA MORRISSEY One of the actions that we identified as a possibility was putting in place water conservation orders to conserve 30 percent of our waterways. In the short term, we see that impacting on the agricultural sector’s productivity. But in the longer term, if they’re planting trees and protecting wetlands, for example, we see rewards coming through an emerging biodiversity credit market or carbon markets. Our analysis showed that within 16 years of taking actions, the monetary benefits from these actions outweigh the short-term impacts on output.
JEREMY HANSEN We’re seeing markets like the EU create more and more stringent requirements for emissions reporting of imported products. Are primary industries going to have to improve their standing in this area anyway?
GINA MORRISSEY Yes. At the moment, 80 percent of our exports by value are going into markets that have mandatory sustainability reporting requirements enforced or proposed. For example, the EU’s Corporate Sustainability Reporting and Due Diligence Directive, and the US requiring climate disclosures from the year ending 31 December 2025. The UK New Zealand free trade agreement also has a high level of environmental protection. So there’s definitely pressure on our export sector to take action.
JEREMY HANSEN The report mentions the concept of “natural capital”, and I wanted to ask how you define that.
GINA MORRISSEY It’s not about saying nature is a resource, but that it provides value that underpins a lot of economic transactions. Currently, nature is not being appropriately valued in a financial sense. We hope this report helps people understand the value nature provides in an economic sense and that it’s worth protecting and restoring.
JEREMY HANSEN Did working on this report make you feel hopeful?
GINA MORRISSEY Yes and no. There’s a massive gap in financing: to meet the targets noted in the report, investment in these areas needs to increase six-and-a-half times. But the fact that we were able to say that there is benefit in taking action – economic and otherwise – has the potential to drive change. The report is not an answer, but a conversation starter and there are heaps of neat initiatives and work being done to incentivise action. So I’m hopeful, but we do need to move quickly.
