Image: Reuters Berita 24 English - The first significant study on the subject, https://www.bennettinstitute.cam.ac.uk/blog/biodiversity-loss...
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| Image: Reuters |
Berita 24 English - The first significant study on the subject, https://www.bennettinstitute.cam.ac.uk/blog/biodiversity-loss-sovereign-credit-ratings , has warned that significant global biodiversity loss could, by the end of the decade, seriously harm the economies of more than half of the world's sovereign credit ratings, including China's.
The study, which was released on Thursday by a collection of British institutions, examined a number of scenarios, including one in which some economies that depend on agriculture and fisheries would be destroyed by a partial collapse of critical ecosystems.
It predicted that the negative effects would cause the sovereign credit ratings of 58 percent of the 26 countries under study to be downgraded by at least one notch.
The downgrades would result in between $28 and $53 billion in extra yearly interest expenses, as ratings have an impact on how much governments must pay to borrow on the international capital markets.
According to the paper, "the ratings impact under the partial ecosystem services collapse scenario is in many cases large and substantial." It also noted that because of the increased debt costs, governments would have even less money to spend and that mortgage rates would rise.
China and Malaysia would be the most seriously affected, with rating downgrades of more than six notches in the partial collapse scenario, according to a study by the Universities of East Anglia, Cambridge, Sheffield Hallam, and SOAS in London.
Nearly a third of the countries examined would see downgrades of more than three, while India, Bangladesh, Indonesia, and Ethiopia would all experience downgrades of about four notches.
China's annual interest payment bill would increase by $12 to 18 billion as a result of the country's decline in creditworthiness, and the highly indebted corporate sector would bear additional costs of $20 to 30 billion.
Malaysia's expenses would increase by $1 to 2.6 billion, and its businesses would have to come up with an extra $1 to 2.3 billion.
The report made reference to what investors typically perceive to as a higher risk "junk"-grade credit rating, saying that "more critically, these two sovereigns would pass from investment to speculative-grade."
"Losing biodiversity can have many negative effects on an economy. According to co-author Dr. Patrycja Klusak, affiliated researcher at Cambridge's Bennett Institute and Associate Professor at the University of East Anglia, "a collapse in fisheries, for example, produces economic shockwaves along national supply chains and into other industries."
