Richard Anderson , BBC News 20 Oct 10;
The natural world supports the livelihoods of hundreds of millions of people the world over.
It also provides the foundations upon which all the world's major corporate enterprises are built.
For it is not just farmers, fishermen, tour operators and the like that are dependent on nature.
Miners, energy providers, food and clothes retailers - you name it, most companies rely to varying degrees on natural resources.
The majority of businesses, for example, would struggle to survive without clean and accessible water.
The rapid degradation of the natural world by humans, therefore, has a very real and detrimental impact on the ability of people to support themselves and their families, and hits the bottom line of businesses in every sector of the economy.
Fish quotas
Few industries have been hit harder than fishing.
In many areas of the world, fish stocks have fallen by more than 90% since the onset of commercial fishing. Not only does overfishing threaten a vital food source, but it threatens the livelihoods of millions of fishermen.
For some, there simply aren't enough fish left to catch, while for others the quotas and restrictions on time at sea designed to prevent the total collapse of fish stocks are hitting incomes hard.
John Kirkwood has spent his entire working life as a fisherman in the village of Pittenweem, Fife, on the east coast of Scotland.
He left school in 1974 and went straight into a summer job fishing "and just ended up staying at sea".
"I bought my first boat for £460,000 in 1986, which was a big gamble for me, and have been a skipper ever since, fishing white fish such as cod and haddock," says Mr Kirkwood.
"We made a good living back then," he says of himself and his six crew. "There were no restrictions and no quotas."
But in the mid-1990s, the European Union began introducing regulations to protect rapidly-dwindling fish stocks.
"The cuts became deeper every year, so we just weren't able to buy enough," Mr Kirkwood says.
"We were better off than many others, but the quotas have put a lot of boats out of business.
"There was a big decommissioning in 2001 and 2003, which cut the Scottish fleet by more than a half."
And nowhere has the impact of quotas and restrictions on days at sea been felt more deeply than on the northern banks of the Firth of Forth.
"There used to be 20 large vessels fishing white fish, but we are the last. When we go, there will be no big boats fishing out of Fife," Mr Kirkwood says.
And it won't be long before they are all gone.
"The income we get now is the same as it was in 1998 - our earnings have stood still for the past 12 years.
"So I am retiring at 53, a good two or three years before I had intended to."
And it's not just overfishing that affects stocks - pollution can have a more sudden and devastating impact on freshwater fish.
For example, river pollution caused by rapidly expanding oil palm plantations and extensive logging in the Kinabatangan floodplain in Malaysia have caused the local fisheries to collapse, with local fishermen losing their major source of income.
Ski resorts
Another sector that has been hit by damage to the natural world - often referred to as biodiversity loss - is tourism.
For example, lions across Africa have disappeared from 80% of their former habitat, hitting game reserves and associated businesses.
Rising temperatures caused in part by greenhouse gases have also seen glaciers and snow coverage shrinking, hitting winter sports resorts that are seeing ski seasons cut short.
Rising sea temperatures and water levels are also affecting coastal regions and small islands such as the Maldives, and particularly those businesses dependent on coral reefs, 20% of which have disappeared in the past few decades alone.
Disappearing corals
Adrenalin Dive, based in Townsville in Queensland, Australia, is being squeezed on many sides.
Paul Crocombe set up the business in 1987, running trips for tourists to the Great Barrier Reef.
"We used to visit Keepher Reef, 38 nautical miles from Townsville, but this has been severely impacted by coral bleaching and by Crown-of-thorns starfish that eat up the reefs," Mr Crocombe explains.
"This has affected a lot of reefs - Flinders Reef was exceptional but now suffers severely from bleaching due to the higher water temperatures.
"At first the corals get brighter and more colourful as they give off algae, but once all the algae is gone, the corals go white and then die."
The problem is compounded by the Crown-of-thorns starfish, which tend to prey on stressed reefs.
"Now we have to go to Wheeler Reef, which is about as quarter as far again, which adds travel time and fuel costs," Mr Crocombe says.
This, he estimates, requires an extra 30,000 litres of fuel a year, costing the business 42,000 Australian dollars ($41,000; £26,000).
The extra time taken on the trip also puts some potential customers off.
"People say they don't want to go that far so we need a faster, more modern boat to keep the time, and our fuel costs, down.
"If we don't change boats, then our business becomes marginal," explains Mr Crocombe.
He already employs fewer full-time staff, and is now relying on the banks to provide funds for the new craft.
"We are chasing finance now but a new boat costs A$3m, while a second-hand boat costs A$1.2m.
"I think that eventually we will get it, somehow."
Water costs
But it is not just small businesses that are hit directly by biodiversity loss.
A recent study by the UN-backed Principles for Responsible Investment (PRI), conducted with corporate environmental research group Trucost, estimated the cost of environmental damage caused by the world's largest 3,000 companies in 2008 at $2.15tn, the equivalent of one-third of their combined profits.
Increasingly these costs - what economists call externalities - will become internalised.
Consumer products giant Unilever, for example, has been forced to take action to secure the water supply to its tea plantations in Kenya's Rift Valley.
"The local population has chopped down large sections of the Mau Forest, which directly impacts on our ability to catch water," explains Gavin Neath, Unilever's senior vice president of sustainability.
To compensate, the company has spent about £300,000 over the past 10 years on planting more than one million indigenous trees in the forest. It has also spent a similar sum on safeguarding forestry and biodiversity in Tanzania.
Changing rain patterns in California, Spain and Greece are also raising issues over tomato production, just another one of the "serious issues" that could hit the company in the next 10 years, Mr Neath says.
Europe's largest carmaker Volkswagen has also committed to investing $430,000 (£270,000) in re-planting forests and digging rain water pits to secure the water supply to its factory in the Mexican town of Puebla, while brewer SABMiller has paid farmers in Bogota, Colombia, $150,000 to replant trees for the same reason.
The world's largest steel producer, ArcelorMittal, has invested almost $2.1m since 2006 on protecting what is, after iron and coal, the most important component in making steel, by restoring the ecosystems surrounding the Great Lakes in North America that supply water to nine facilities.
Coffee giant Starbucks has also committed millions of dollars to protect the water supply and to ensure natural shade cover to its coffee plantations in Mexico and Indonesia.
Rising costs
More and more major corporations are waking up to the fact that they have to pay to protect or replace the earth's natural resources and services that have, until now, been seen as free.
Many will be forced to do so by increased regulation, just like fishing quotas and pollution taxes, such as carbon credits, that already exist.
And these costs are not peripheral.
According to Trucost and PRI, environmental costs amounted to more than half the combined earnings of about 2,500 major listed companies in developed and emerging markets across the world in 2008.
And as resources come under greater pressure, as they inevitably will, so the bill will continue to rise.
Big business will be forced to adapt, but many smaller businesses and individuals will not have that luxury.
Nature's sting: The real cost of damaging Planet Earth
By Richard Anderson Business reporter, BBC News 11 Oct 10;
You don't have to be an environmentalist to care about protecting the Earth's wildlife.
Just ask a Chinese fruit farmer who now has to pay people to pollinate apple trees because there are no longer enough bees to do the job for free.
And it's not just the number of bees that is dwindling rapidly - as a direct result of human activity, species are becoming extinct at a rate 1,000 times greater than the natural average.
The Earth's natural environment is also suffering.
In the past few decades alone, 20% of the oceans' coral reefs have been destroyed, with a further 20% badly degraded or under serious threat of collapse, while tropical forests equivalent in size to the UK are cut down every two years.
These statistics, and the many more just like them, impact on everyone, for the very simple reason that we will all end up footing the bill.
Costing nature
For the first time in history, we can now begin to quantify just how expensive degradation of nature really is.
A recent, two-year study for the United Nations Environment Programme, entitled The Economics of Ecosystems and Biodiversity (Teeb), put the damage done to the natural world by human activity in 2008 at between $2tn (£1.3tn) and $4.5tn.
At the lower estimate, that is roughly equivalent to the entire annual economic output of the UK or Italy.
A second study, for the UN-backed Principles for Responsible Investment (PRI), puts the cost considerably higher. Taking what research lead Dr Richard Mattison calls a more "hard-nosed, economic approach", corporate environmental research group Trucost estimates the figure at $6.6tn, or 11% of global economic output.
This, says Trucost, compares with a $5.4tn fall in the value of pension funds in developed countries caused by the global financial crisis in 2007 and 2008.
Of course these figures are just estimates - there is no exact science to measuring humans' impact on the natural world - but they show that the risks to the global economy of large-scale environmental destruction are huge.
Natural services
The reason the world is waking up to the real cost of the degradation of the Earth's wildlife and resources - commonly referred to as biodiversity loss - is because, until now, no one has had to pay for it.
Businesses and individuals have largely operated on the basis that the natural resources and services that the planet provides are infinite.
But of course they are not. And only when the value of protecting them, and in some cases replacing them, is calculated, does their vital role in the global economy become clear.
Some are obvious, for example the clean and accessible water that is needed to grow crops to eat, and the fish that provide one-sixth of the protein consumed by the human population.
But others are less so, for example the mangrove swamps and coral reefs that provide natural barriers against storms that devastate coastal regions; the vast array of plant species that provide pharmaceutical companies with endless genetic resources used for live-saving drugs; and the insects that provide essential pollination for growing around 70% of the world's most productive crops.
Bee collapse
It is a hugely complex process, but an economic value can be placed on these resources and services.
In the US in 2007, for example, the cost to farmers of a collapse in the number of bees was $15bn, according to the US Department of Agriculture, contributing to a global cost of pollination services of $190bn, according to Teeb.
As Paven Sukhdev, a career banker and team leader of Teeb, says: "Bees don't send invoices".
Research by consultancy group PricewaterhouseCoopers also suggests the economic losses caused by the introduction of non-indigenous, agricultural pests in Australia, Brazil, India, South Africa, the US and the UK are more than $100bn a year.
In 1998, flash flooding in the Yangtze River in China killed more than 4,000 people, displaced millions more and caused damage estimated at $30bn. The Chinese government established that extensive logging in the region over the previous 50 years had removed the trees that provided essential protection from floods. It promptly banned logging.
Indeed the Centre for International Forestry Research has estimated that, in the 50 years prior to the ban, deforestation cost the Chinese economy around $12bn a year.
Business costs
The impact of biodiversity loss is felt hardest by the world's poor. The livelihood and employment of hundreds of millions of people depend upon the world's natural resources, whether it be fish to eat or sell, fertile soil for farming or trees for fuel, construction and flood control, to name just three.
As Mr Sukhdev explains: "Biodiversity is valuable for everyone, but it is an absolute necessity for the poor".
For example, Teeb has calculated that the Earth's natural resources and the services they provide contribute 75% of the total economic output of Indonesia, and almost half of India's output.
But it's not only the poor who suffer.
Businesses will increasingly be hit as they start paying for their part in biodiversity loss.
Not only will they have to pay to protect or replace services that nature has historically provided for free, but they will be forced to pay by regulatory instruments such as pollution taxes, like carbon credits and landfill taxes that already exist, and higher insurance premiums.
Then there is the cost of paying for the increased number of natural disasters, resulting in part from more extreme weather conditions caused by rising temperatures due to greenhouse gases, and even reputational damage among consumers that are becoming increasingly sensitive to environmental issues.
Trucost and PRI have estimated the cost of environmental damage caused by the world's largest 3,000 companies in 2008 at $2.15tn.
That equates to around one-third of their combined profits.
Again, these figures are only estimates, but the scale of the costs that will have to be paid by companies for their damage to the environment cannot be ignored.
As Gavin Neath, senior vice president of sustainability at consumer goods giant Unilever, says: "It's pretty terrifying. Nobody in business thinks that at some point this is not going to hurt us".
Pension values
And higher costs for business mean higher prices for consumers.
Only this summer, massive floods in Pakistan and China forced the global cotton price to 15-year highs, pushing up the costs of clothes, with retailers such as Primark, Next and H&M all warning of higher prices to come.
Drought and wildfires in Russia also sent wheat prices rocketing, sending global food prices sharply higher.
But consumers won't just be hit by rising prices. As Trucost's research shows, earnings and profits of the world's largest companies will come under increasing pressure, undermining share price growth.
And it is precisely these companies that pension funds invest in.
Pension values, therefore, are likely to suffer, reducing retirement incomes for all.
The cost of the current, rapid rate of degradation of the earth's natural resources will, then, be borne by everyone, environmentalist or not.
This is the first in a series of three articles on the economic cost of human activity on the natural world.
