March 27, 2020
As published on Chain Reaction Research: What’s the connection between deforestation, climate change, pandemics, and the financial community? The Answer: Risk.
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Amid the widespread outbreak of COVID-19, deforestation is in the spotlight as a contributor to the increase in infectious diseases. Forest loss is connected to the spread of viruses: research shows that habitat loss stemming from forest destruction has led to greater human-animal contact, which increases the chances of diseases such as COVID-19 and coronaviruses spreading to humans.
The recent outbreak highlights how forest loss is a public health risk, adding to the list of negative impacts of deforestation. Deforestation is a major factor in the climate crisis, contributing to approximately 15 percent of annual greenhouse gas emissions. It also accelerates the biodiversity crisis, displaces indigenous peoples, and limits the potential of forests as a natural carbon sink to reverse the worst effects of climate change. Deforestation is also often linked to land-grabbing, community conflicts, and human rights violations.
Investors have to contend with a wide range of risks that companies in the agricultural sector face from deforestation. These include stranded land assets, reputation, legal, market access, regulatory, operational, and financial risks. With the prospect of deforestation possibly increasing the number of viruses in the future, investors and agricultural companies will also face challenges from deforestation’s public health impact. This could lead to even greater pressure on investors and agricultural companies to curb forest loss.
Deforestation, loss of biodiversity contribute to the growth of infectious diseases
Though COVID-19 is linked to wet markets in China, where wild animals are in close quarters to each other and to humans, it is still too soon to fully understand how exactly COVID-19 came about and how transmission of this disease and others work. However, estimates show that approximately 60 percent of infectious diseases are zoonotic — which means they transfer from animals to humans — and humans are seeing new infectious diseases roughly every four months.
A number of infectious diseases have been connected to land-use changes from urbanization and deforestation. Some of these diseases include West Nile Virus, Lyme Disease, and Hemorrhagic Fever. “We know that habitat destruction can increase the likelihood of human interaction with disease causing pathogens and human infection from zoonotic diseases,” Doreen Robinson, the Chief of Wildlife at the United Nations Environment Programme (UNEP), told Chain Reaction Research (CRR). “As humans increasingly encroach on forests and other natural habitats, we are increasingly exposed to potential pathogens.” However, Robinson notes, that given how complex disease epidemiology is, it is important to avoid making a “direct link” between diseases and human-induced environmental damage.
Increased land use, deforestation may have greater effects on public health in the future as population, demand for agricultural products grow
With the global population projected to grow in the coming decades, the agricultural industry, governments, and investors will come under increased pressure to satisfy consumer demand and mitigate malnutrition. But expanding agricultural production to meet this demand may lead to negative impacts on habitats and further threaten biodiversity. Biodiversity loss increases public health risks since it is important for food and water supplies and regulating climate and diseases.
All of these factors, in turn, expose companies and their investors to reputation and financial risks, along with increased vulnerability to stranded land. “Increasing productivity on existing agricultural lands is important, particularly for the many poor farmers living off small plots of land around the world,” UNEP’s Robinson told CRR. The current pandemic reflects how “we need a massive transformation of the global food system at all levels, from production, to transportation to waste management.”