11. Natural capital and COVID-19

The essential link between natural resources and human health and well-being has been reinforced by the pandemic. For example, land-use change and wildlife exploitation are known to influence the emergence, incidence and distribution of infectious diseases (IPBES, 2020[1]; OECD, 2020[2]). At the same time, some studies indicate that air pollution may contribute to more severe COVID-19 outcomes, while access to green space has been a valuable resource during lockdowns (as discussed in Chapters 3 and 6). Better management of natural capital1 lies at the heart of multiple, interlinked crises that governments currently face: biodiversity loss, climate change, novel infectious diseases, and the fundamental threats these pose to both healthy economies and healthy lives (OECD, 2021[3]). Yet natural capital is often side-lined in economic decision-making and has faced chronic underinvestment. It has been estimated that between 1992 and 2014, produced capital per person doubled globally, human capital per person increased by about 13%, but the stock of natural capital per person declined by nearly 40% (Dasgupta, 2021[4]).

The focus of this report is on changes in well-being in the first 15 months of the pandemic, considering both current well-being outcomes and the resources (capitals) that will support them in the future. However, capturing the evolution of natural capital during this period is challenging and should be complemented with a longer-term perspective. 2020 data are lacking for the large majority of the natural capital indicators (covering stocks and flows, risks and resilience factors) typically included in the OECD’s How’s Life? and Environment at a Glance dashboards. While frequent monitoring is important (and abrupt changes can signal important shifts in the state of natural capital, particularly those related to human actions), long-run trends in natural capital are typically the main focus of policy analysis – as described in other OECD work (OECD, 2021[5]; OECD, 2020[6]). Alongside this, monitoring of policy responses such as the OECD Green Recovery Database (OECD, 2021[7]) and the International Programme for Action on Climate (IPAC) initiative (OECD, 2021[8]) provides timely feedback to policy makers. A key concern for the pandemic recovery is ensuring that major threats to future well-being, in the form of climate change and biodiversity loss in particular, remain at the top of the policy agenda, and that they are fully integrated in recovery packages (see also Chapter 1 of this report). The evidence that follows is therefore focused on these two areas, which represent only a subsection of the natural capital considerations addressed in the How’s Life? report.2

Biodiversity3 and ecosystem services underpin human health and well-being via critical life support functions such as clean air provisioning. Biodiversity also underpins economic activity, both directly and indirectly (Dasgupta, 2021[4]). The goods and services provided by biodiversity range from raw materials, fuel and food to clean air and water, space for recreation, protection against erosion and flooding, and processes such as pollination, nutrient cycling and carbon sequestration (OECD, 2021[3]). Biodiversity loss also increases the risk of infectious diseases being transferred across wildlife, livestock and people (United Nations, 2020[9]; Gottdenker et al., 2014[10]). For example, wildlife exploitation and land-use change (such as agricultural expansion close to wilderness areas) can bring people and domestic animals into closer proximity to pathogen-carrying wildlife. Human activities can also disrupt the ecological processes and high levels of species diversity that help to regulate and contain disease transmission in natural areas (OECD, 2020[2]).

Pressure on biodiversity has been increasing globally due to land and sea-use change, pollution, natural resource over-exploitation, climate change and invasive alien species (IPBES, 2019[11]). Biodiversity is declining faster than at any time in human history (Dasgupta, 2021[4]). Twenty-five percent of the world’s remaining species are now threatened with extinction, and populations of mammals, birds, reptiles, amphibians and fish have shrunk on average by 68% since 1970 (OECD, 2021[3]). Since 1992, 2.9% of natural or semi-natural vegetated land (i.e. tree-covered areas, grassland, wetland, shrubland and sparse vegetation) worldwide have been lost to other types of land cover. This represents an area four times the size of Spain, with OECD and G20 countries accounting for over half of this loss (OECD, 2021[5]). Urban areas have doubled in size since 1990 (OECD, 2021[3]). Biodiversity loss and climate change are intrinsically linked. On the one hand, land use change (such as deforestation) contributes to climate change; on the other hand, the changing climate is a significant, and growing, driver of biodiversity loss (OECD, 2021[3]).

Available evidence suggests that the pandemic has not slowed the pace of land use change in some of the most at-risk biodiverse regions. For example, pandemic restrictions have not stopped deforestation in Latin America (UNDP Latin America and the Caribbean, 2020[12]). External threats to these forests from mining, oil, agricultural and forestry companies, cattle ranchers, farmers, illegal groups and land speculators have increased markedly over the last decade (Walker et al., 2020[13]; Ellis et al., 2017[14]). With the arrival of the pandemic, governments had to limit their monitoring and enforcement efforts, for both health and budgetary reasons, thereby exacerbating the vulnerability of forests, water and other natural resources, including those in Indigenous territories (ECLAC, 2020[15]).

It will be some time before the full impact of COVID-19 on biodiversity is known. 2020 data are not yet available for most of the indicators currently used by the OECD to assess these aspects of natural capital (OECD, 2021[5]; OECD, 2020[6]), and even when data are available, long-term implications are difficult to determine. For the Red List Index of threatened species and the share of marine and terrestrial protected areas, there has been little or no change in the values reported between 2019 and 2021 for OECD countries. The main pattern of note for the Red List Index is the further worsening since 2000, particularly in those OECD countries already facing significant pressures on threatened species (Figure 11.1). Protected areas, which reflect policy efforts to conserve biodiversity, have increased nearly eight-fold since 2000 for marine areas across OECD countries on average, while terrestrial areas have increased by 6 percentage points (Figure 11.2). Nevertheless, progress has been weak since 2019, as several OECD countries approach or even exceed levels embodied in Aichi Biodiversity Target 11.4 Many protected areas still lack effective management and, worldwide, their coverage is not yet representative of the diversity of ecosystems on the planet (OECD, 2021[3]).

Human-induced climate change is already affecting people’s well-being today. Global average temperatures have already risen by around 1.1°C relative to the period 1850-1900, and global mean sea levels increased by around 20 centimetres between 1901 and 2018 (IPCC, 2021[18]). A higher frequency of extreme weather events is already visible – from heatwaves and heavy precipitation to droughts and tropical cyclones. With further warming, these phenomena will become more widespread, with increasing risk of ice sheet collapse or abrupt changes in ocean circulation (IPCC, 2021[18]). The consequences of climate change threaten ecosystems and biodiversity, affect water resources and human settlements, and imply significant impacts on food production, socio-economic activities, economic output and human well-being (OECD, 2021[5]).

Both the contributions to and the consequences of climate change are unevenly distributed. In 2015, an estimated 49% of global carbon emissions were produced by the richest 10% of the world population, with just 7% produced by the poorest 50% (Kartha et al., 2020[19]). The same study estimates that nearly half of the 60% increase in emissions globally between 1990 and 2015 was due to the richest 10% of the population, while the contribution of the poorest half was “practically negligible” (Kartha et al., 2020[19]). Meanwhile, the impacts of environmental degradation are concentrated among vulnerable groups and households (OECD, 2021[20]). For example, climate change is projected to have significant impacts on rural and coastal communities dependent on farming or fisheries, while extreme heat and weather events will particularly affect outdoor workers, who are often low-earners (OECD, 2021[20]). At the same time, heat stress in urban areas is more likely to affect impoverished communities. In the United States, evidence suggests that communities of colour are particularly exposed, due to neighbourhood characteristics such as a lack of tree cover and wide expanses of heat-absorbing concrete (Witze, 2021[21]).

The collapse in economic and social activity caused by the pandemic has led to some temporary reductions in global emissions. While official national estimates of greenhouse gas emissions are not yet available for 2020,5 global emissions of anthropogenic fossil CO2 are thought to have reduced by around 7% (with estimates ranging from 5.8% to 13%) (IPCC, 2021[18]). The International Energy Agency (IEA) estimates that total energy-related CO2 emissions (which account for around two-thirds of all greenhouse gas emissions) fell by 5.8% globally in 2020, the largest annual percentage fall since the Second World War (IEA, 2021[22]). Reductions in energy-related CO2 emissions were estimated to be largest in advanced economies (almost 10% on average), while emissions from emerging market and developing economies fell by 4% relative to 2019 (IEA, 2021[22]).

Reductions in transport contributed the largest falls in global energy-related CO2 emissions. Over 50% of the total fall is accounted for by lower oil use in the transport sector (IEA, 2021[22]). For example, emissions from international aviation fell by almost 45% in 2020, and road transport’s demand for oil fell 10% relative to 2019. Only one sector was estimated to have increased energy-related CO2 emissions in 2020: sport utility vehicles (SUVs), whose emissions went up by an estimated 0.5% (IEA, 2021[23]).6 Energy-related CO2 emissions in the power sector fell by 3.3% globally, due to the combined impact of reduced electricity demand and increased power generation from renewables, which increased their share of global electricity generation from 27% in 2019 to 29% in 2020 (IEA, 2021[22]).

This temporary fall in CO2 emissions, however, will have little bearing on climate change unless followed up with strong policy action in the recovery (OECD, 2020[24]). 2020 emissions reductions have not prevented an overall rise in atmospheric concentrations of CO2 in 2020 (IPCC, 2021[18]; NOAA Global Monitoring Laboratory, 2021[25]), and evidence from past crises suggests that a strong rebound in emissions is likely as economic activity picks up (United Nations Environment Programme, 2020[26]; OECD, 2020[24]). Indeed, monthly energy-related CO2 emissions estimates for 2020 suggest a gradual return to business as usual, with global emissions in December 2020 2.1% higher than in the previous year (Figure 11.3). In the final months of 2020, many advanced economies were entering their second wave of the pandemic and applying new restrictions, yet the impact on energy demand of these second-wave lockdowns was lower than in the first, meaning that many advanced economies were close to reverting to 2019 emissions levels by the end of the year (IEA, 2021[22]). For example, in the European Union, a 10% net reduction in energy-related CO2 emissions over the course of 2020 was mostly concentrated in the first eight months of the year (Figure 11.4).

The pandemic has offered a preview of the scale of the challenge involved in meeting greenhouse gas emissions reduction targets. At the end of 2019, UNEP estimated that global emissions would need to be cut by 7.6% every year for a decade in order to limit global warming to 1.5°C, as envisioned in the 2015 Paris agreement (United Nations Environment Programme, 2019[27]). This implies that global emissions reductions of a scale similar to those achieved during the first year of the pandemic would need to be repeated, year-on-year, for a further nine years.

Policy choices made in COVID-19 recovery packages will shape future developments, at a time when both biodiversity loss and climate change are at critical junctures. OECD and key partner governments have so far announced very substantial stimulus and recovery packages, to respond to the consequences of COVID-19 and to reignite economic activity (see Chapter 1). This spending will set the direction for future economic development in OECD countries for years to come, and could do so in a way that will either help or harm biodiversity loss and climate change. Preliminary OECD analysis (from February 2021) concluded that, across 43 countries,7 green measures make up a small proportion (17%) of overall stimulus packages – and, within that amount, only 7% of green stimulus supports biodiversity (OECD, 2021[7]). In addition, there is a lack of coherence across this spending – with the volume of stimulus that is deemed to have negative or mixed consequences for the environment set to be at least as large as that which is environmentally-positive (OECD, 2021[7]).

References

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Notes

← 1. Natural capital concerns both natural assets (e.g. natural land cover, biodiversity) and ecosystems and their services (e.g. oceans, forests, soil and the atmosphere). Alternative terms used to denote natural capital include nature, the natural environment, the biosphere, and the natural world. In the context of the OECD Well-Being Framework, indicators of natural capital include stocks and flows into and out of these natural systems, as well as risk and resilience factors affecting them. Four elements are examined in different issues of the OECD report How’s Life?: biological resources and biodiversity, climate change, soil quality and freshwater resources, and waste and materials.

← 2. For example, topics such as water and soil quality, and waste and materials – pressures on all of which also interact with biodiversity and climate change.

← 3. According to Article 2 of the Convention on Biological Diversity, biodiversity or “biological diversity” means the variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems (https://www.cbd.int/convention/text/).

← 4. Aichi Biodiversity Target 11 states: “By 2020, at least 17 per cent of terrestrial and inland water areas and 10 per cent of coastal and marine areas, especially areas of particular importance for biodiversity and ecosystem services, are conserved through effectively and equitably managed, ecologically representative and well-connected systems of protected areas and other effective area-based conservation measures, and integrated into the wider landscape and seascape” (https://www.cbd.int/sp/).

← 5. National Inventory Submissions 2020 to the United Nations Framework Convention on Climate Change (UNFCCC), combined with replies to the OECD State of the Environment Questionnaire, provide greenhouse gas emissions data up to 2018; 2021 submissions will address the situation up to 2019.

← 6. This continues a trend that has seen carbon emissions from SUVs triple globally over the past decade, to a level that is now equivalent to the entire maritime industry, including international shipping (IEA, 2021[23]). By contrast, in advanced economies, all other sectors (including electricity generation, heating of buildings, manufacturing and heavy industry, and other forms of transport) have either stabilised or reduced energy-related CO2 emissions over the 2010-2020 period.

← 7. In addition to the 38 OECD members, 5 OECD key partner countries are included: Brazil, China, India, Indonesia and South Africa.

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