Economics of Biodiversity

Biodiversity, encompassing the variety of life on Earth at genetic, species and ecosystem levels, plays an indispensable role in supporting the global economy. Its contributions span agriculture, industry, medicine, and a wide range of ecosystem services that underpin human wellbeing. Natural systems provide food, raw materials, climate regulation, pollination, soil fertility and recreational value, forming the foundation of economic activity worldwide. Many estimates suggest that the global economy ultimately depends on nature for trillions of dollars’ worth of services each year.
Despite its importance, biodiversity continues to be degraded by human activities such as deforestation, land-use change, pollution and overexploitation. As a result, many species have not been fully evaluated for their economic significance, and the potential value of biodiversity remains largely untapped.

Agriculture and Food

Biodiversity plays a fundamental role in agriculture as the source of all domesticated crops and livestock, thereby contributing to global food security and the livelihoods of millions. A significant proportion of the world’s population is employed in agriculture, and most agricultural systems depend directly or indirectly on ecosystem services such as pollination, nutrient cycling, climate regulation and natural pest control.
Agricultural biodiversity includes the diversity of plants, animals and microorganisms used in farming systems. Within this, food biodiversity refers specifically to the range of organisms consumed by humans. Income in many regions, particularly in developing countries, is generated from both wild-harvested and domesticated species. For example, bushmeat remains an important though controversial source of food and income in certain rural areas.
Genetic diversity forms a crucial component of agricultural biodiversity. Genetic resources are essential for developing new crop varieties and livestock breeds with higher yields, improved disease resistance and better tolerance to environmental stresses. These genetic materials underpin selective breeding, support resilience in food systems, and reduce economic risk by safeguarding agricultural outputs against pests, diseases and climate change.
However, the loss of genetic diversity—estimated at around 70 percent for crops and 30 percent for livestock—poses major risks. Reduced genetic variation weakens resilience, thereby threatening both food security and economic stability. Furthermore, despite the vast number of known species, only a small subset contributes significantly to global food production.

Biological Pest Control

Biodiversity supports natural pest control, an essential ecological function that reduces crop losses without the adverse effects associated with chemical pesticides. Control species, such as predatory insects, help to suppress pest populations, improving yields and reducing economic losses. This principle applies widely across agriculture and horticulture.
Nevertheless, poorly planned introductions of control species can lead to ecological harm. The introduction of the cane toad into Queensland in 1935, originally intended to control crop pests, led to severe impacts on native species and became a noted example of invasive species mismanagement.

Horticulture

Horticulture involves the cultivation of plants for food, medicine, ornament and aesthetic purposes, employing both domesticated and wild species. Horticultural biodiversity can be highly profitable, generating employment and supporting local and national economies. The ornamental plant sector constitutes a major economic industry; for example, the value of ornamental plant growth in the United Kingdom reached billions in recent years. Historically, horticultural plants were sourced from the wild, but today they are predominantly produced in nurseries, botanical gardens and private collections.

Aquaculture and Fishing

Aquaculture and capture fisheries depend heavily on biodiversity. Marine and coastal ecosystems support the livelihoods of billions of people, and millions are directly employed in fishing. The global fishing industry represents one of the most economically significant sectors linked to biodiversity, with market values reaching tens of billions annually. Healthy aquatic ecosystems are therefore critical for maintaining employment, food supplies and economic stability in many regions.

Medicine

Biodiversity has profound implications for human health. Many medicinal products originate from plants, animals and fungi, and natural compounds continue to inspire biomedical innovations. A substantial proportion of modern pharmaceuticals—including the majority of cancer drugs—are derived from or modelled on natural substances. Traditional medicine remains essential for a large part of the world’s population, with markets valued globally in the hundreds of billions.
Examples of medicinal resources derived from biodiversity include:

• Quinine, sourced from Cinchona trees, used historically as a treatment for malaria.
• Artemisinin, extracted from Artemisia annua, a key antimalarial agent.
• Paclitaxel, vincristine and vinblastine, important anticancer drugs derived from plants.

Biodiversity also influences health indirectly by contributing to ecosystem services such as water purification, disease regulation and climate moderation.

Industry

Beyond food and medicine, biodiversity plays a vital economic role in industrial sectors. Many industries rely on natural materials including wood, plant fibres such as cotton, and animal-derived products. These resources support manufacturing, construction, textiles and numerous other economic activities. The dependence of livelihoods on biodiversity extends across both rural and urban environments.
Industries draw upon biodiversity for:

• raw materials used in manufacturing,
• renewable resources essential for construction and textiles,
• natural products employed in cosmetics, chemicals and biotechnology.