Ms.Nina Schmüser


Biodiversity Loss: the Causes, the Importance, and the Role of Ecosystem Services



This article discusses the global problem of biodiversity loss, its causes and why biodiversity is important for human society. It primarily summarizes the latest research on the state of biodiversity, at EU-level and globally. Beyond that, this article describes ways to solve this ongoing problem. For this, the article employs the approach of ecosystem services and goods from economic sciences which evaluates and quantifies the benefits of biological ecosystems. The quantification and valuation of services and goods that ecosystems deliver to human society can give clear insights on how to protect biological resources. This is important for policy-makers worldwide.


CBA: Cost-Benefit Analysis

CBD: Convention on Biological Diversity

EU: European Union

GNP: Gross National Product

IPBES: Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services

TEV: Total Economic Value

UN: United Nations

US: United States (of America)

WTA: Willingness to Accept (Losses)

WTP: Willingness to Pay (for Benefits)

1 Introduction

Recently, in October 2020, the European Commission published a new assessment of the state of nature in the European Union (EU). It demonstrates the ongoing decline of protected environments and species. The largest decline in species is visible for birds and fish, of the habitats in the EU are only 15 % in a good condition (European Commission 2020). This pressure on nature’s biodiversity is increasing worldwide. Just in May 2019, the United Nations (UN) published a report about the devastating fact that roughly one million species are at risk of extinction just within the next decades (UN News 2019). The report was based on a study of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) which analyzed the state of biodiversity over the past 50 years. According to the study, around 25 % of species in fauna and flora are already vulnerable to extinction and natural ecosystems have decreased on average by 47 %. Further, the global biomass and species abundance of wild animals has fallen by 82 % since prehistory. Unless action is taken, the rate of global species extinction continues to accelerate, while this rate is already more than 10 % higher than the average rate of the past ten million years. These alterations in nature across the globe have significantly been caused by human drivers (IPBES 2019). The consequences of human-made climate change, water and air pollution become increasingly visible. Thus, human society is more and more in need to understand its dependence on natural ecosystems (Postel et al. 2012).

The examples of IPBES’s findings highlight that there is a global problem of biodiversity loss. However, what are the particular causes of biodiversity loss and why is biodiversity important for human society? Answers to these questions are discussed in this article which summarizes the latest research on biodiversity at the EU-level and globally. Beyond that, it employs literature from economic sciences to review the theory of ecosystem services, how biodiversity can be valued, and its use to cope with the problem of biodiversity loss.

The article is structured as follows. Chapter 2 defines biodiversity, discusses the proceeding loss of biodiversity and the causes of it. Chapter 3 examines the value of biodiversity to human society. Further, explains the approach of ecosystem services and goods and why it makes sense to put economic values on those. Chapter 4 discusses valuation methods to estimate the economic value of ecosystem services and goods. Chapter 5 summarizes the article, discusses the advantages of and concerns with the economic valuation, and draws a conclusion.

2 Biodiversity Loss

The UN Convention on Biological Diversity (CBD) defines biological diversity, or biodiversity, as “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”. Ecosystems are interacting and dynamic complexes of animals, plants, and other living organisms. Biological resources are on the other hand defined as “genetic resources, organisms or parts thereof, populations, or any other biotic component of ecosystems with actual or potential use or value for humanity” (UN CBD 2000). In this sense, biological resources are the part of biodiversity that are of value for life on earth. This leads to the assumption that humans generally have an interest in protecting biological resources. However, many species have been eliminated from habitats that are used and heavily altered by humans. Although extinction is a natural process, it occurs at an unnaturally fast rate since the last 50 years (Chapin et al. 2000, IPBES 2019).

Figure 1: Biodiversity Status in the European Union (Data from 2018)

(Source: European Commission 2020)

At the EU-level, the assessment of the European Commission with data from 2018 shows that around 39 % of the bird population is in a poor or bad status1. The long-term (38-year) trend reveals that just about 47 % of bird populations are stable or increasing while 32 % are decreasing. Further, the report examines 224 terrestrial habitats and nine marine habitats in the EU-area of which are only 15 % in good conservation status. The vast majority of the habitats are in an unfavorable status – 45 % and 36 % are in poor or bad status, respectively. Among other species than birds are 27 % in a good conservation status whereas 63 % are in a poor or bad status. These species encompass plants, mammals, fish, and other animals and living species (European Commission 2020). An overview of the biodiversity status in the EU is depicted in Figure 1.

Particularly bird populations and habitats populations that closely linked to agriculture continue to decline in the EU. This is reflected in the large scale of agricultural land-use and intensive farming practices. Further, forestry activities are reported as the second largest pressure on species. Many forest-dependent species are negatively affected by the removal of old, drying, and dead trees as well as by other forest management practices such as clear-cutting. A key pressure on biodiversity is pollution where agricultural activities account for 48 % of the pollution-related pressure, together with mixed-source pollution (28 %) and urbanization (21 %). Moreover, the invasion of alien species serves as a major threat to regional species. Hydropower installations for energy production are reported as a large threat to fish (European Commission 2020). Generally, the reported pressures on species and habitats in the EU are diverse and interrelated. Several human activities result in more than just one pressure on biodiversity. Particularly modern agriculture and urbanization place high pressures on European biodiversity through land-use and pollution.

At the global level, the IPBES reports similar pressures on biodiversity. The state of nature has never been changed as quickly in human history as in the last 50 years which is caused by direct and indirect drivers of change. The direct drivers with the largest impact on global biodiversity have been (1) changes in the use of land and sea, (2) the exploitation of organisms, (3) climate change, (4) pollution, and (5) species invasions2. These five direct drivers are the results of a series of underlying causes – the indirect drivers of global change. These, in turn, are determined by values and behaviors of human society that contain patterns of production and consumption, the dynamics and trends of the human population, trade, technological innovations, as well as local and global governance. The rate of change in nature is thus different in various regions around the globe. The IPBES particularly identifies the growth of population, global economy and trade which accelerate the need for energy, materials, and food supply as indirect drivers to global change. These also drive the global expansion of agriculture which in turn contributes to water- and land-use, pollution, and climate change. The report points out that over one-third of the global terrestrial land surface is used for crop and animal farming (IPBES 2019).

Altogether, the reports of the European Commission and the IPBES reveal that human society failed to protect biological resources in the past. The remainder of this chapter describes the dynamics between human activities and global changes that result in a changed biodiversity and ecosystem processes.

Figure 2: The Role of Biodiversity in the Global Change

(Source: own representation of Chapin et al. 2000 with data from IPBES 2019)

Inspired by Chapin et al. (2000), Figure 2 shows the dynamics of global change between the mentioned direct and indirect drivers of global change that impact biodiversity and ecosystem processes. Human activities are driven by economic benefits as well as by cultural, intellectual, aesthetic, and spiritual benefits (1). However, these activities cause global changes in nature (2). Whereas the direct drivers directly affect the state of biodiversity (3), the biodiversity changes in turn species traits and the invasion of alien species. The changes in species traits resulting from changed biodiversity can have impacts on the ecosystem services and goods3 which directly affect human benefits (4). Further, the change in species traits affects ecosystem processes (5). These altered ecosystem processes affect ecosystem services and goods that benefit human society (6) and react in a further change of biodiversity (7). Additionally, the mentioned global changes can also have direct effects on the ecosystem (8) (Chapin et al. 2000, IPBES 2019).

Taken together, this chapter presents data on the state of biodiversity in the EU and globally. The facts show that human society has failed to protect biological resources in the past. Further, this chapter identifies direct and indirect drivers of global change in nature and presents the dynamics between human activities and the global change in biodiversity and ecosystem services and goods. These dynamics of change in biodiversity – and particularly its benefits to human society – are important to understand such that biological resources can be protected in the future.

3 Ecosystem Services and Goods to Evaluate the Benefits of Biodiversity

Economists would argue that the failure of the protection of biological resources is a typical case of market failure. In economics, the market is assumed to allocate all resources and commodities efficiently when a number of assumptions are fulfilled. Market failure arises when property rights are not fully defined for global resources and commodities, and when externalities exist. This is often the case when environmental issues arise. The market is unable to produce an efficient allocation and needs to be corrected with environmental policies (Perman et al. 2003).

Biodiversity and biological resources do not have a determined owner, they are part of natural ecosystems. However, biological resources are, by definition of Chapter 2, valuable for human society. Biller (2018) argues that biological resources protection is simply not of priority for the global policy agenda because they lack an easy description and quantification. Thus, if we know the value – or the importance – of biodiversity, it will be easier to protect it (Biller 2018).

Obviously, it is neither possible nor meaningful to estimate the full value of biodiversity and ecosystems. The value is clearly infinite since the existence of human society is directly dependent on functioning ecosystems. However, it is important to gain insights into the services and goods they deliver to human society. Thus, it is meaningful to understand the value that is lost when human society fails to protect biodiversity and ecosystems (Costanza et al. 1997, Biller 2018). For these reasons, biologists introduced the term ecosystem services to describe the life-supporting and life-improving services to life on earth by natural ecosystems. These supporting and improving services are the cleansing, recycling, and renewal of the natural environment. In this sense, ecosystem services can be viewed as the “earth’s infrastructure” (Heal 2000).

Beyond that, ecosystems maintain biodiversity and produce ecosystem goods which are e.g. forage, seafood, wood, fuels from biomass, natural fiber, and the precursors of industrial products as well as pharmaceutical products. Thus, ecosystem services and goods contribute directly to the economic value of human society (Heal 2000, Postel et al. 2012). In 1997, Costanza et al. estimated the value of the services and goods delivered by the biosphere to be around 16-54 trillion US dollars annually, with its estimated average at 33 trillion US dollars. Compared to that, the global gross national product (GNP) was in 1997 around 18 trillion US dollars. To this, they explicitly state that the estimate must be viewed as a minimum because of the omnipresence of uncertainties. Hence, these numbers display the enormous importance of ecosystems for our modern economy (Costanza et al. 1997). However, besides the economic goods, ecosystems also provide more intangible goods such as cultural, aesthetic, and spiritual benefits to human society (Chapin et al. 2000, Postel et al. 2012).

Since the introduction of the Millennium Ecosystem Assessment in 2001, the knowledge about biodiversity and ecosystems has largely increased – and with it also the understanding of its relevance for the existence and quality of life on earth (IPBES 2019). This is important to obtain more precise estimates on the value of ecosystem services and goods. Since ecosystem services and goods are broad and diverse it is a key challenge to determine which part should be valued. Especially because the costs of biodiversity loss have to be borne locally, it may be reasonable to conduct local evaluations. A further challenge is to find the right approach to value ecosystem services and goods (OECD 2002, Biller 2018). The next chapter discusses valuation methods.

4 Valuation of Ecosystem Services and Goods

Generally, the valuation of ecosystem services and goods can be done with economic valuation and non-economic valuation approaches. Evaluations are usually conducted in the geographical boundary of nation-states but can also be widened to greater regions, e.g. the area of the EU (OECD 2006, Maes et al. 2012).

Non-economic valuation, or deliberative, or participatory, approaches examine a society’s opinions and preferences in other terms than money. These approaches are often used together with economic valuation4(DEFRA 2011).

Economic valuation approaches reveal the preferences of a society (OECD 2006). For measuring the value of biodiversity, the Total Economic Value (TEV) method has been widely used. The TEV can be described as the sum of the use and non-use values of biodiversity to human society. Use values are the values derived from the (1) direct use, of extractive goods (e.g. natural resources such as timber), and non-extractive goods and services (e.g. bird watching), and (2) indirect use (e.g. environmental services such as air cleanings). However, the estimation of the TEV of biodiversity is very demanding, uncertain, and controversial5. Thus, researchers rather focus on estimating the costs and benefits of preserving biodiversity and ecosystems (Heal 2000, Biller 2018).

A commonly used approach is the cost-benefit analysis (CBA). According to the CBA, a benefit is defined as a rise in the wellbeing of human society whereas a cost is a decline in wellbeing. These are based on the revealed society’s willingness to pay (WTP) for benefits and willingness to accept (WTA) losses in ecosystem services and goods. In practice, the WTP for benefits and the WTA costs are aggregated across a society within a chosen geographical area. Thus, for a policy to be valid according to the CBA, the aggregated social benefits (SB) must exceed the aggregated social costs (SC) (for a society of n number of individuals i: Σi=1->n SBi > Σi=1->n SCi) (OECD 2006, Hindriks and Myles 2013).

In the aggregated examination of costs and benefits, it possible to put weights on the WTP or WTA. For example, the needs of lower-income individuals can be weighted higher. The principle of that is that lower-income individuals have a higher marginal utility of income, their WTP are accordingly higher for the same amount paid. Also, if the costs and benefits are aggregated over time, they need to be discounted accordingly. Future benefits are usually valued lower by individuals than present benefits. This is also due to price inflation (OECD 2006, Bodie et al. 2008).

In connection with the CBA, the question comes up how the society’s WTP and WTA can be elicited. This can be done with the (1) revealed preference or the (2) stated preference method. The revealed preference method makes use of data on the preferences of individuals regarding marketable goods. Trading data can therefore be used to estimate the society’s WTP for these goods. However, this method is only applicable to marketable goods and not for more intangible goods. Hence, economists have developed the stated preference method that relies on answers individuals give to structured questionnaires. The answers aim to reveal individuals’ WTP or WTA for a given change in ecosystem services or goods. However, the survey and methodological design can affect the quality of the evaluations. Thus, valuation methods used in practice are complex and have to account for a diverse set of factors (OECD 2006, DEFRA 2011).

Generally, depending on the ecosystem service or goods that are to be evaluated, different valuation methods may be more suited than others. In many contexts, more than one valuation approach is used to estimate ecosystem services and goods. Especially the valuation of intangible services and goods is demanding and can also be misleading (DEFRA 2011). Furthermore, it is morally questionable if humans should put an economic value on ecosystems or biodiversity according to human society’s preferences. Biodiversity and the services and goods ecosystems deliver to every existence on earth are infinite in their value. Also, biodiversity and ecosystems are complex and interconnected. It can be questioned as well if humans are capable to estimate all the benefits of ecosystem processes fully (Wegner and Pascual 2011). However, the valuation of ecosystem services and goods raises public awareness and about biodiversity loss and can serve as an efficient tool to raise policy support for the protection of biodiversity. Further, policies can be adjusted and targeted individually according to protect ecosystem services and goods (Maes et al. 2012).

5 Discussion and Conclusion

This article discusses the continuing loss of biodiversity based on the latest research from the European Commission and the IPBES. Since biodiversity and biological resources are essential for the existence and wellbeing of human society, they need to be protected. Human society is through its activities responsible for global changes in land and sea, the exploitation of organisms, climate change, pollution, and species invasions. These directly affect biodiversity and ecosystem processes. Thus, human society has failed to protect biodiversity in the past. To be able to protect biodiversity to a greater extent in the future, the appropriate description and quantification of ecosystem services and goods are reasonable. For this, economists estimate values on ecosystem services and goods. Different approaches are discussed in this article. Chapter 4 shows that this valuation can be complex and even misleading, especially when more intangible services and goods are to be evaluated. Also, it raises moral questions about how appropriate it is that human society is evaluating biodiversity only according to its own needs. It may be that humans do not fully understand the full value of ecosystem processes and its services and goods they deliver. However, this lack of understanding has led to the ongoing and severe biodiversity loss on a global scale. Human society has to take action. An interdisciplinary and comprehensive evaluation of ecosystem services and goods including benefits for other existences on earth than only human society is meaningful to conduct.


1This proportion was by 32 % in 2015 (European Commission 2020).

2The order is according to the magnitude of impact on global change. Figure 2 shows the direct drivers embedded in the dynamics of global change.

3The term and the importance of ecosystem services and goods are further explained in Chapter 3. 4

4Due to the limited scope of this article, these methods are not further discussed here. OECD (2006) and DEFRA (2011) explain these further.

5The study of Costanza et al. (1997) mentioned in Chapter 3 uses the TEV approach.


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