A significant loss of biodiversity would lower credit ratings around the world, the report warns

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According to the first major study on the subject, severe global biodiversity losses could cause enough economic damage by the end of the decade to severely reduce more than half of the world’s sovereign credit ratings, including China.

Research published Thursday (local time) by a group of British universities examined a number of scenarios, including one in which a partial collapse of key ecosystems would devastate nature-dependent industries such as agriculture and fisheries on which some economies depend.

The document estimated that the negative impact would entail 58% of the 26 countries studied facing a downgrade of at least one notch of their sovereign rating.

As ratings affect how much governments have to pay to borrow on global capital markets, downgrades will cost between $ 28 billion and $ 53 billion in additional interest per year.

“The impact of ratings in the partial collapse ecosystem services scenario is, in many cases, significant and substantial,” the report said, adding that these additional debt costs would mean governments would have even less to invest.

The study, conducted by the universities of East Anglia, Cambridge, Sheffield Hallam and SOAS, shows that China and Malaysia would be the most affected nations, with ratings downgrades by more than six notches in the partial collapse scenario.

India, Bangladesh, Indonesia and Ethiopia are expected to face downgrades of about four notches, while almost a third of the countries analyzed would lose more than three.

“Biodiversity loss can affect economies in a number of ways. A collapse in fisheries, for example, causes economic shockwaves along national supply chains and in other sectors,” said co-author Patrycja Klusak, a researcher affiliated with Bennett. Institute. University and Associate Professor at the University of East Anglia.

((Translation by the Rio de Janeiro editorial staff))

REUTERS PF

Source: Terra

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