Preserving Biodiversity in Australia: How Actuaries Can Help

The Department of Climate Change, Energy, Environment and Water (DCCEEW) administers the Environmental Protection and Biodiversity Conservation Act (EPBC Act)^[1].  The Act refers to living things, habitats and places that need protecting and includes lists of threatened species and ecological communities. As noted in the Institute Green Paper “Mind the Gap – The Australian Actuaries Intergenerational Equity Index”^[2], The EPBC Act tracks extinct and threatened species in Australia. Since 2000, the number of species recorded on this list has increased 21% (from 1,563 species to 1,890).

The EPBC Act legislates the requirement for a review of the state of the Australian environment every 5 years. The 2021 review (SoE 2021)^[3] assessed the condition of the natural environment across 12 themes: including biodiversity.

Key findings of SoE 2021

• While our understanding of the state and direction of threatened terrestrial and marine species has improved significantly, monitoring of overall biodiversity remains very poor.
• Most indicators of the state and trend of biodiversity of plants and animals show decline, while the number of threatened terrestrial and marine species has increased..
• Ecological communities are given less attention and investment than threatened species, so much less is known about their condition.
• Pressures on biodiversity have increased in the last 5 years. Habitat loss and degradation and invasive species result in significant impact on biodiversity across most of Australia.
• Climate change and extreme weather has become increasingly and adversely impactful on biodiversity in Australia.
• The protected area system has increased with the addition of Indigenous Protected Areas (IPAs). But many threatened species and ecosystems still do not meet minimum targets in protected areas.
• Indigenous rights, knowledge and values are increasingly recognised in conservation management, but much more needs to be done.
• The EPBC Act does not effectively deliver improved biodiversity outcomes or arrest biodiversity decline or facilitate management of pressures or environment restoration.
• There have been some successful recovery efforts with threatened species persisting or increasing. Predator-free refuges have been crucial is securing some of the most threatened mammal species.

Some of the more specific SOE21 findings include:

• Australia and surrounding waters support nearly 600,000 native species^[4]. Around 85% of Australia’s plant species are only found in Australia along with about 50% of the world’s marsupial species. New species are found regularly, for example in 2020, 763 new species were named including 297 insects, 166 fungi, 77 plants, 57 spiders and 21 vertebrates.
• In June 2021 the EPBC Act listed 533 animal and 1,385 plant species as threatened. The following chart shows how threatened species have increased over the last decade, by threat category. The EPBC list includes 105 species that are extinct or extinct in the wild which are not shown in the chart.

  

Animals

• 10% of endemic species of terrestrial mammals have become extinct over the last 200 years with approximately 21% now threatened. Most mammal extinctions have resulted from introduced species, especially the feral cat and European red fox.
• Threatened mammal populations have increased significantly where there has been baiting or exclusion of predators or ecological fire management.
• The National Environmental Science Program Threatened Bird Index indicated significant falls in numbers of threatened bird species where data is available. The relative abundance of threatened birds has fallen by more than 60% on average between 1985 and 2017.
• Many reptile species are in decline with the first known Australian reptile extinction in the wild occurring in the past 10 years. The EPBC Act lists 67 species as threatened with 10 critically endangered.
• Of 243 species, 18.5% of frog species are either extinct or threatened. An invasive fungal disease, chytridiomycosis has been devastating for many frog species.
• Currently, 62 fish species are listed under The EPBC Act, 38 being freshwater fish. A recent study of 22 most at-risk Australian freshwater fish species found that 20 species had a higher than 50% risk of extinction in the next 20 years. Most are not listed in the EPBC Act.

Plants

• There are around 21,000 plant species in Australia, many being endemic. The importance of plants to the Indigenous people is notable. Evidence of charred plant food remains dated between 65,000 and 53,000 years ago, indicates the indigenous use of plant foods, including those needing processing.
• Plants comprise 73% of all threatened species with 1,385 plant species listed under the EPBC Act, including 37 extinct species. The dominant pressure on plants is habitat destruction. Fire risk is also present. Weed and pest control along with translocation have had a positive impact.
• Orchids are the most threatened species of flowering plants in Australia with about 10% of around 1,800 species listed as threatened.

Fungi and microorganisms

• The level of knowledge about nonvascular flora (algae, liverworts, mosses), fungi and lichens is very limited. 36 Australian fungi species are included on a global red list with 1 critically endangered and 4 endangered.

How might the actuarial skillset contribute to solving these challenges?

One way actuaries can contribute to the betterment of biodiversity and nature is through supporting biodiversity and nature markets. Currently, Australia’s economic system does not fully reflect the value of protecting biodiversity for the benefit of current and future generations. Markets (such as the Nature Repair Market^[5], which will open in 2025) provide a way to value and encourage private investment in biodiversity conservation activities.

New and innovative markets for biodiversity and ecosystem services can generate strategic investments and collaborative partnerships, encourage economic planning at all levels to account for the cost of environmental damage and provide incentives for actions that protect or enhance the environment^[6].

Actuaries can play a role in supporting and developing these markets, and/or assisting with pricing, reserving and valuation for existing schemes.

For more ideas on how actuaries can get involved in addressing nature and biodiversity risk, see Taskforce for Nature-Related Financial Disclosures: What Actuaries Need to Know. 

References

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