A young sprouting plant is seen being placed in soil
Articles & stories

Soil biodiversity: A hidden investment opportunity

Biodiversity – the essential natural support system for life on earth and the foundation of our economy – is a key topic for investors. But a focus on above-ground species and ecosystems overlooks the relevance and impact potential of soil-based biodiversity.

What is biodiversity and why does it matter?

In 1992, the United Nations defined biodiversity as the variability of living organisms and the ecological complexes that they are part of. A healthy biodiversity maintains ecosystems which, in turn, clean the water, purify the air, maintain the soil, regulate the climate, recycle nutrients and provide food.

The financial risks associated with biodiversity and nature loss are significant, with more than half of the world’s total GDP moderately or highly dependent on nature and its services. The Economics of Ecosystems and Biodiversity (TEEB) initiative estimates that global sustainable business opportunities from investing in natural resources could be worth USD 2 trillion to USD 6 trillion by 2050.

Soil is a key biodiversity and investment theme

Issues around land use, climate change, the food system and biodiversity are often reviewed in isolation, but they are heavily interlinked. Similarly, biodiversity analysis tends to focus on animals or above-ground organisms, but soil biodiversity is equally important. Soil biota (consisting of a wide variety of organisms, including fungi, bacteria, earthworms, spiders, ants and nematodes) fulfil functions that are key to ensuring the world’s natural capital, agricultural and food systems are sustainable.

When it comes to soil-based biodiversity, much remains unknown. For example, studies suggest that 90%-95% of soil biota are yet to be identified. As more data becomes available – and the importance of healthy soil biodiversity for the wider economy is better understood – it is an area likely to see increased levels of investor engagement.

Soil plays an important role in climate change

Biodiversity can help mitigate climate change, with nature absorbing more than 50% of anthropogenic CO2 emissions through photosynthesis and carbon storage in biomass and organic material, as well as through CO2 dissolution in the oceans. As global temperatures increase, the ability of land and sea to sequester carbon declines dramatically.

Soil plays a significant part in emission reduction, with the average amount of carbon stored in the first 100cm of soil more than the amount stored in the atmosphere and terrestrial vegetation combined1.

c1500

Carbon stored in the first 100cm of soil (in gigatons)

c800

Carbon stored in the atmosphere (in gigatons)

c500

Carbon stored in terrestrial vegetation (in gigatons)

Maintaining or increasing levels of soil-based carbon storage improves soil fertility and productivity, aids water storage and the supply of clean water, and maintains biodiversity in a broad sense.

How to improve soil biodiversity

A thousand years ago, woodlands, semi-natural land and wild barren land made up more than 90% of the world’s surface. Today, land used for agriculture makes up 50% of total habitable land. To improve soil quality and soil biodiversity, we must establish more sustainable agricultural policies and practices – for example, agroecology, organic farming, regenerative agriculture, mixed farming, conservation agriculture and agroforestry. These practices not only help to improve biodiversity, they help to increase carbon storage, too.

Agricultural intensification has contributed to a loss of landscape heterogeneity and biodiversity

The impact potential of improved soil biodiversity

The “4 per 1,000” initiative, launched by the French government during COP21 in 2015, aims to increase carbon storage in the top 30 to 40 centimeters of soil by 0.4% per year. According to the International Union for Conservation of Nature (IUCN), this could:

  • capture 1 gigaton of carbon/year over the next 30 years;
  • avoid social costs of around USD 600 billion/year through climate change mitigation between 2020-2050;
  • boost production of maize, wheat and rice by 23%-42% between 2020-2050, an annual incremental value of at least USD 135 billion;
  • store an additional 37 billion cubic meters of water in soils, reducing global irrigation demand by 4% and saving over USD 40 billion/year in costs;
  • increase the resilience of farming communities in the face of climate change, reducing the reliance on chemical fertilizers and offsetting the demand for further land conversion.