Nature loss will cut UK GDP by 5% without action from private sector, say experts

The degradation of nature in the UK will lop nearly 5% off the country’s GDP if the private sector does not make a greater effort to halt the decline, experts have warned.

Conversely, investing in nature can produce economic returns for companies in a range of sectors, from manufacturing and construction to food, according to a report from the Green Finance Institute (GFI) and WWF.

But many businesses are failing to reform or are unaware of the impact of their actions on nature and the climate. The WWF economist Vassilis Gkoumas said: “A real plan to save UK nature must bring the private sector with it. Many businesses want greater clarity around how they can contribute to the transition. Now we need more to come forward.”

One solution is for companies to develop so-called nature-positive transition pathways (NPPs) under which they agree to meet certain targets on environmental improvement, with government help. The report found that these could play a big role in helping the UK reach its net zero targets, and national targets on nature and the environment, such as halting the decline of species abundance by 2030.

Steve Reed, the environment secretary, said getting private sector companies to invest in improving nature was an essential part of the government’s programme for economic growth. He said a new national plan for nature and the environment, expected to be published this autumn, would set out how NPPs and other measures could achieve economic growth, as well as improving health and wellbeing.

“Thriving nature is the foundation of everything this government wants to achieve,” he said. “We are working with industry leaders to drive private investment, including through the development of NPPs. These will enable UK businesses to harness the economic opportunities that come from restoring and protecting our natural environment to deliver strong and sustained economic growth, which is this government’s number one mission.”

The GFI and WWF report, titled “Business investment in nature: supporting UK economic resilience and growth”, found 40 examples of where NPPs have worked and 28 companies that have signed up to using them.

Wates Group, a construction and property development company, is attempting to increase wildlife on its sites and developments by 20%, and is examining its supply chain to find ways of improving environmental protections while stipulating that environmental impacts must be considered in commercial decisions.

Cressida Curtis, the group sustainability director at Wates, said: “The built environment has a huge impact on nature – both through construction sites and the supply chain, which extracts around half the world’s natural materials. That means that if we shift how we operate to adopt regenerative practices, we can make a huge positive difference.”

Soil degradation alone costs about £1.4bn annually to the UK economy, the report found. Velcourt, one of the UK’s largest farm management companies, has begun using high-resolution soil mapping combined with satellite imagery and weather data, to improve its yields.

Food production is also under threat – one in 20 dairy farms stopped production in 2023, largely owing to the impact of inflation. But investing in nature-positive practices can stem the decline: the report found that First Milk, a cooperative of 700 regenerative dairy farmers, provided a price premium to farmers implementing regenerative practices, amounting to about £5,200 for each member in 2023, or about 7% of the average income of a dairy farm. These practices reduced water consumption by 5.5% and energy consumption by 6%, while sales increased by 38% to £456m.

The report’s authors found dozens of other private sector examples of how NPPs and practices that conserve natural resources could yield economic benefits as well as meet government targets.

Charlie Dixon, an associate director at the GFI, an advisory and commercial group part-funded by government, said ministers should now provide clearer guidelines to encourage more companies to follow suit. “The empirical evidence is clear that business investment in nature is a powerful engine for economic growth,” he said. “UK businesses are keen to contribute to the delivery of the UK’s nature targets, but need better guidance and coordination in order to do so.”

The report, which forecast that the degradation of nature would knock 4.7% off UK GDP within the current decade, builds on previous findings by the GFI that the degradation of nature would result in losses of 12% of GDP in the 2030s.