EXPLAINER

Declining Natural Capital: High Stakes for Asia and the Pacific

The people and economies of the Asia-Pacific region depend on natural capital for ecosystem services, food security, and livelihoods. Photo credit: F. Ricciardi/IG: @fransaround.
The people and economies of the Asia-Pacific region depend on natural capital for ecosystem services, food security, and livelihoods. Photo credit: F. Ricciardi/IG: @fransaround.

The widespread loss of natural ecosystems and biodiversity is much more than a conservation issue; countless lives and livelihoods depend on them.

Introduction

Asia and the Pacific is one of the most biologically and culturally diverse regions on the planet that hosts high numbers of unique animal and plant species and ecosystems. Seventeen of the planet’s 36 biodiversity hotspots are found here, along with three quarters of all coral reefs and more than half of all remaining mangrove areas on earth. It is also home to almost 60 per cent (4.5 billion) of the current global human population, 52 per cent (400 million) of the 767 million global poor, and as much as 75 per cent of the global population of 370 million indigenous people

The people and economies of the region rely heavily on this wealth of natural capital and the vital ecosystem services it provides. More so the rural poor, who directly depend on natural capital for their livelihoods and ability to cope with climate change.

While unprecedented economic growth over the last decades has reduced poverty and increased quality of life for many, it has come at an enormous cost. Rapid urbanization and infrastructure expansion, excessive water extraction and land conversion for agriculture and industry, unsustainable aquaculture, and fossil fuel use for energy and transport have, among other human activities, degraded the region’s natural capital and increased global greenhouse gas emissions resulting in changes in climate. This in turn has led to the further deterioration of land, soils, freshwater and marine ecosystems thereby increasing water and food insecurity and climate vulnerability, creating a vicious cycle.

The depletion and ultimate loss of natural capital can have far-reaching consequences to human health and well-being and pose fundamental threats to human security. It is therefore critical for countries in Asia and the Pacific to restore, protect, and sustainably manage their remaining natural capital stocks.

The Current State of Natural Capital in Asia and the Pacific

Results from a landmark study by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) released March 2018 show that the region’s natural capital is in dangerous decline.

Overexploitation of the region's forests, grassland, oceans, coasts, freshwater, and other ecosystems to meet increasing demand for food, energy, housing, and commodities such as palm oil, pulp, rubber, and timber has resulted in deforestation, land degradation, desertification, and biodiversity loss. The massive regional trade in wildlife and wildlife products for food, traditional medicines, ornaments and pets is leading to loss of species. Household hazardous waste, e-waste, and food waste are increasing and plastic waste and marine pollution is of urgent concern.

Key Statistics

Up to 135 million people are at risk of distressed migration as a result of land degradation in the next 30 years.

Source: United Nations Convention to Combat Desertification.

60% of grasslands and more than 20% of deserts are degraded. Overgrazing by livestock, invasive species, or conversion to agriculture has resulted in rapid decline of native flora and fauna.

Source: IPBES. 2018. Assessment Report on Biodiversity and Ecosystem Services for Asia and the Pacific.

Over 400 million people in the People's Republic of China are affected by soil erosion, causing annual economic losses of $10 billion, while in India, reports of degradation have increased “by a factor of six.”

Source: United Nations Convention to Combat Desertification.

Southeast Asia showed a reduction of 12.9% in forest cover between 1990 and 2015 because of increasing exports of palm oil, pulp, rubber, and timber products.

Source: IPBES. 2018. Assessment Report on Biodiversity and Ecosystem Services for Asia and the Pacific.

By 2014, more than 1.5 billion hectares of the world’s natural ecosystems had been converted to croplands.

Source: IPBES. 2018. Summary for Policymakers of the IPBES Assessment Report on Land Degradation and Restoration.

Up to 90% of coral in South and South-East Asia will suffer severe degradation, i.e. frequency of disease, bleaching and death by 2050 due to overfishing, pollution, land run-off, sea level rise, ocean warming and acidification .

Source: IPBES. 2018. Assessment Report on Biodiversity and Ecosystem Services for Asia and the Pacific.

8 of the 10 rivers around the globe carrying the highest amounts of plastic waste are located in Asia. This waste accounts for up to 95% of the global load of plastics in the oceans.

Source: IPBES. 2018. Assessment Report on Biodiversity and Ecosystem Services for Asia and the Pacific.

11.1 billion plastic items are entangled on coral reefs leading to coral disease. This number may increase 40% by 2025.

Source: J. Lamb et al. 2018. Plastic Waste Associated with Disease on Coral Reefs. Science. Vol. 359, Issue 6374, pp. 460-462. 

Freshwater ecosystems in the region support more than 28% of the world’s aquatic and semi-aquatic species, but nearly 37% of species are threatened by overfishing, pollution, infrastructure development, and invasive alien species.

Source: IPBES. 2018. Assessment Report on Biodiversity and Ecosystem Services for Asia and the Pacific.

In Southeast Asia, fisheries production, particularly marine fisheries, declined from almost 70% of the region’s total in year 2000 to only 40% in 2014.

Source: IPBES. 2018. Assessment Report on Biodiversity and Ecosystem Services for Asia and the Pacific.

If unsustainable fishing practices continue, there could be no exploitable fish stocks left by as early as 2048.

Source: IPBES. 2018. Assessment Report on Biodiversity and Ecosystem Services for Asia and the Pacific.

58% species population decline between 1970–2012. If current trends continue, by 2020 vertebrate populations may have declined by an average of 67% since 1970.

Source: WWF Living Planet Report 2016.

Biodiversity loss is projected to reach 38%–46% by 2050. Driven mainly by crop agriculture followed by forestry, infrastructure development, urban encroachment, and climate change.

Source: IPBES. 2018. Summary for Policymakers of the IPBES Assessment Report on Land Degradation and Restoration.

$7 billion to $23 billion per year is the estimated value of the illegal wildlife trade, driven by high demand for wildlife products and traditional medicines, particularly from East and Southeast Asia.

Source: Asian Development Bank. 2017. Protecting and Investing in Natural Capital in Asia and the Pacific: Technical Assistance Report. Manila (TA 9461 Regional).

Land degradation between 2000 and 2009 is responsible for annual global emissions of up to 4.4 billion tonnes of carbon dioxide. This is driven by high and rising unsustainable per capita consumption, agricultural expansion, natural resource and mineral extraction, and urbanization.

Source: IPBES. 2018. Summary for Policymakers of the IPBES Assessment Report on Land Degradation and Restoration.

An estimated 9.6 million people in Bangladesh will migrate because of climate factors between 2011 to 2050. Six million have already been displaced. River bank erosion alone displaces around 100,000 people a year.

Source: IOM. 2016. Assessing the Climate Change Environmental Degradation and Migration Nexus in South Asia.

Between 1995 and 2015, there were some 2,495 water-related disasters that struck Asia, killing 332,000 people and affecting a further 3.7 billion.

Source: ADB. 2016. Asia Pacific Shows Progress in Water Security, But Challenges Remain – ADB. News release. 30 August. 

By 2050, 3.4 billion people could be living in water-stressed areas in Asia and the Pacific while water demand will increase by 55%.

Source: ADB. 2016. Asia Pacific Shows Progress in Water Security, But Challenges Remain – ADB. News release. 30 August. 

Natural capital provides people with indispensable goods and “ecosystem services” that include:

  • Provisioning services, or goods obtained directly from ecosystems (e.g., food, fresh water, medicine, timber, fiber, fuel, fisheries, aquaculture, agriculture, medicinal resources);
  • Regulating services, or benefits obtained from the regulation of natural processes (e.g., climate control, carbon sequestration and storage, moderation of extreme events, soil fertility, water filtration, waste decomposition, pollination, biological control, regulation of water flow);
  • Supporting services, or regulation of basic ecological functions and processes necessary for all other ecosystem services (e.g., nutrient cycling, photosynthesis, soil formation); and,
  • Cultural services, or psychological and emotional benefits gained from human relations with ecosystems (e.g., tourism, enriching recreational, aesthetic, and spiritual experiences).

4 Types of Ecosystems Services

 

Degraded ecosystems lose their inherent ability to provide these goods and services. Deforestation, for example, compromises freshwater, food, energy, and medicines. It also increases the risks of disease and pest outbreaks to crops, animals, and humans as well as drought, deadly flash floods, and landslides with large damages to infrastructure like dams and roads.

Natural capital is inherently scarce and its loss often irreversible

Natural capital cannot easily be produced or manufactured like physical/built capital such as machinery. Certain forms of natural capital such as underground water aquifers or topsoil may take generations to regenerate if they are used up. Forests or fish stocks are often slow growing. While some types of natural capital such as tree plantations and fishery aquaculture are more easily reproduced, their biodiversity values are significantly lower.

Estimated regeneration rates of selected natural capital

Source: Asian Development Bank (ADB). 2017. Opportunities for Investing in Sustainable Natural Capital in Asia Pacific. Consultant’s report. Manila (TA 8564 Regional).

Natural capital is fundamental to the region’s economies

On average, 30% of national wealth (GDP, exports, and government revenues) in Asia and the Pacific comes from natural capital. Dependence varies widely, from as high as 85% in Bhutan to 39% in Viet Nam and 19% in the Philippines. 

A 2016 study valued ecosystem services for terrestrial ecosystems in 47 countries in Asia and the Pacific at $US14 trillion/yr in benefits, most of which are non‐marketed and do not show up in GDP.

Bhutan’s ecosystem services have been valued at $15.5 billion/year significantly greater than GDP of $3.5 billion a year. Ninety per cent of the population is dependent on agriculture and forestry while 72.5% of the country is covered by forests that provide the rural poor with fodder, fuel wood and building materials. 

In the Greater Mekong Subregion (GMS), natural capital accounts for 20%–55% of the total wealth of countries and has been a key contributor to the region’s rapid economic growth over the last 30 years. Agriculture (including forestry) is the subregion’s main source of employment. The Mekong River supports the world’s largest inland fishery, with annual turnover of up to $3.9 billion. Natural capital also sustains the manufacturing and service sectors, including Viet Nam’s thriving furniture industry, as well as tourism for the GMS and the entire Asia-Pacific region.

The poor directly depend on natural capital

Nearly three quarters of the world’s poorest citizens are directly dependent on natural capital: 50 per cent are smallholder farmers, 20 per cent are rural labourers, and 10 per cent depend on herding, fishing and forestry. Land, water, marine,and soil degradation, consequently reduce fishing and agricultural yields, drastically lowering the earning capacity of groups.

Nearly 200 million people directly depend on the forest for their non-timber forest products, medicine, food and fuel, as well as other subsistence needs.

90% of fisheries jobs across the region are small-scale, with millions of people working across the value chains. 

The “GDP of the poor,” an indicator of household income in rural and natural asset–dependent communities, illustrates the significant dependence of rural poor on natural capital. In Indonesia, while agriculture, forestry, and fisheries have an aggregate value of 11% of GDP, but for poor households (99 million in total), this increases to 75%. In India it as much as 53%.

The region’s urban poor are also particularly vulnerable to the negative impacts of degraded natural capital in cities. Living in densely populated slums with no access to safe water and sanitation, exposed to air and water pollution, and often surrounded by hazardous wastes, they constantly face and suffer from health risks. As well, they are the most affected by climate impacts such as urban heat and flooding.

Natural capital underpins food and water security for the region and the rest of the world

Agro-ecosystems in the region represent 30 per cent of the world’s agricultural land and 87 per cent of the world’s small farms, most of which support a wide range of native crops. By weight, more than 50 percent of the world's catch of marine and river fish and 89 percent of global aquaculture comes from the region.

People in the region are heavily dependent on fisheries for food, with aquaculture growing by nearly 7 per cent annually. More than 120 million people in the Coral Triangle alone depend directly on marine and coastal resources for their food security and livelihoods.

Of the total population of 333 million people in the Greater Mekong Subregion (GMS), more than 60 million (mostly rural poor) depend directly on natural capital for their daily energy, food, water, and income needs. Fisheries provide 47%–80% of animal protein consumed in the GMS, and more than 80% of Cambodian and Lao PDR households depend on biomass for cooking and lighting.

Seven main rivers including the Brahmaputra and the Ganges are fed by the Eastern Himalayas and provide freshwater for more than a billion people in the region. According to the Asia Water Development Outlook, a key dimension of water security is how well a country can manage its river basins and sustain ecosystem services. Rivers in the Pacific islands still show good river health and advanced economies are doing well due to strong governance. Declining river health is most evident in Bangladesh, the lower Yangtze River Basin of the PRC, Nepal, and Mekong Delta in Viet Nam.

Healthy ecosystems are vital to climate and disaster resilience

Healthy ecosystems reduce disaster risks and vulnerability of people to the impacts of climate change. Wetlands and watersheds protect water quality, while providing natural protection against downstream floods.

Coral reefs and mangroves forests in coastal areas have similar value for buffering storm surges and tsunamis by reducing wave heights and energy, while forests reduce landslides near roads and dams.

Their destruction and degradation can exacerbate climate impacts and place populations at risk.

Depleted natural capital can give rise to conflict, displacement, and forced migration

Declining natural capital often lies at the root of displacement, conflict, and forced migration all over the globe. Entire populations have needed to uproot from lands and areas they rely on for survival and sustenance. Up to 135 million people are at risk of distressed migration as a result of land degradation in the next 30 years.

Desertification and drought can increase the risk of conflict and intensify ongoing conflicts particularly when combined with political tension, weak institutions, economic marginalization, lack of social safety nets or group rivalries converge, people are often unable to cope.

In the PRC, increasing desertification threatens nearly 400 million people living on the nation’s agricultural periphery. Communities of displaced “ecological migrants” have sprung up in Xinjiang, Tibet, and Inner Mongolia. A substantial portion of those directly threatened by encroaching deserts are ethnic minorities, exacerbating concerns about increased ethnic tensions in peripheral regions.

In the Maldives, environmental change remains one of the key drivers of population migration. Coastal erosion, depletion of ground water, and loss and damages from extreme weather events have contributed to population migration in the country.      

Resources

Asian Development Bank (ADB). 2017. Opportunities for Investing in Sustainable Natural Capital in Asia Pacific. Consultant’s report. Manila (TA 8564 Regional).

ADB. 2015  Investing in Natural Capital for a Sustainable Future in the Greater Mekong Subregion 

ADB-WWF. 2012.  Ecological Footprint and Investment in Natural Capital in Asia and the Pacific. Manila.

A. Angelsen, et al. 2014. Environmental Income and Rural Livelihoods: A Global Comparative Analysis.

Development Asia. 2018. How to Promote Investments in Natural Capital in the Greater Mekong Subregion

Ask the Experts

  • Bruce Dunn
    Director, Environment and Safeguards, Sustainable Development and Climate Change Department, Asian Development Bank

    Bruce Dunn is an environmental scientist with more than 20 years of experience in environmental impact assessment, natural resource management, and biodiversity conservation. He has worked extensively across Asia and the Pacific, with various development agencies and projects.  Currently, he coordinates on environmental and social safeguard policy issues for ADB operations.

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  • Cristina R. Velez
    Knowledge and Communications Consultant, Asian Development Bank

    Cristina R. Velez has developed knowledge and communications strategies and products for 15 years both in North America and in the Philippines. Her focus areas have been oceans and forests, clean energy and transportation technologies, food and water security, solid waste management, and post-Typhoon Yolanda (Haiyan) recovery and reconstruction. She holds a Bachelor of Science in Communications from Boston University. 

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   Last updated: October 2018



Disclaimer

The views expressed in these articles are those of the authors and do not necessarily reflect the views of the Asian Development Bank, its management, its Board of Directors, or its members.




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  • Bruce Dunn
    Director, Environment and Safeguards, Sustainable Development and Climate Change Department, Asian Development Bank

  • Cristina R. Velez
    Knowledge and Communications Consultant, Asian Development Bank