Climate goals are unattainable without a healthy planet. Yet natural capital and ecosystem services are deteriorating at an alarming pace, says Allianz Research in a recent report. Ecological decline is now a direct macro-financial threat.
In the report, titled “Can we afford to save nature? The economics of the Half-Earth scenario”, Allianz Research says that closing the $700bn annual biodiversity finance gap is essential. Current fund flows total just $143bn, though private investment has grown rapidly, from $9.4bn in 2020 to over $100bn in 2024, driven by new nature-focused funds, credit instruments and green bonds.
Insurers are on the front line of the required finance because they can underwrite restoration projects, offer ecosystem-based coverage and create transition products that reward sustainable practices. By valuing and protecting natural assets, insurers also shield themselves from the rising physical and liability risks of ecological decline, such as flood losses from wetland degradation or stranded assets as regulation tightens. Investors, too, are stepping up.
Biodiversity-themed funds now exceed $1.6bn, while portfolio managers increasingly use tools like the Global Biodiversity Score to align investments with nature goals. Public programmes are amplifying these efforts: the EU’s InvestEU aims to mobilise EUR10bn for natural capital, and France’s SNCRR initiative is building biodiversity credit markets. To meet the Kunming–Montreal targets, including $200bn a year in biodiversity finance by 2030, financial institutions must expand capital flows, strengthen safeguards and make biodiversity impact reporting as standard as carbon disclosure.
Costs
The report says that the Living Planet Index shows a -73% decline in wildlife populations over the past five decades. Without rapid action to halt and reverse biodiversity loss, the ecosystems that support food, water, climate stability and economic growth will continue to erode.
Nature underpins more than half of global GDP. Continued biodiversity loss could slash global GDP by -2.3% by 2030, relative to a baseline in which biodiversity remains at 2020 levels, with far deeper impacts on developing economies (-7% to -10%). Drivers include deforestation, pollution, intensive agriculture and climate change.
The Half-Earth scenario, which proposes to protect 50% of land on the planet, offers a bold pathway to restore critical ecosystems. Large-scale protection of land would restore biodiversity to 2010 levels. Such a transition pathway brings adjustment costs: by 2050, global cropland could shrink -11%, raising food prices by +15% and global CPI by +24%, with developing economies seeing sharper GDP impacts (up to -19%) than advanced markets (around -4%).
The costs of economic transition strategies to avoid widening global inequality are far lower than losses from unchecked nature decline. For example, the loss of just one ecosystem service such as pollination would inflict greater damages than large-scale conservation in major economies, such as Europe, the UK and the US, says the report. M