Georgina Bedenham, Amy Shields and Andrew Kirk present the findings from their recent IFoA Biodiversity Working Party paper on the link between biodiversity and zoonotic diseases
Zoonotic diseases, or zoonoses, are diseases that have been transmitted from an animal source to humans in what is known as a ‘spillover’ event. Once an infectious pathogen crosses the species barrier, there is approximately a 50% chance that the spread of the disease is capable of evolving into human-to-human transmission.
Zoonotic diseases have a long history – the first instance of the bubonic plague, for example, dates as far back as the 6th century. However, emergences of infectious diseases in humans are accelerating, with more than 70% of these estimated to be zoonotic. Notable examples of recent zoonotic diseases include HIV, influenza, tuberculosis and Ebola.
COVID-19, believed to be a spillover from bats, has provided a sobering reminder of how devastating the impact of zoonotic diseases can be on society – including surges in mortality, as well as disruption to the economy and health services. The severe acute respiratory syndrome (SARS-CoV-1) disease that emerged in China in 2002, a precursor to COVID-19, led to an estimated economic cost of US$30-50bn despite causing illness in less than 10,000 people – far short of the 170m recorded COVID-19 cases to date.
Causes of zoonotic diseases
The alarming rise in spillover events can be attributed to a variety of causes – climate change, habitat loss, animal agriculture and industrial farming. Strikingly, almost half of the zoonotic diseases that have emerged since 1940 have resulted from change in land use, changes in agriculture and food production practices, or wildlife hunting. Human activity therefore emerges as the root cause for the rise in the incidences of zoonotic diseases. Despite this, human health considerations remain largely unaccounted for in activities such as land-use planning decisions.
Moreover, these drivers are inextricably linked. For example, climate change and habitat loss can lead to the migration of animal populations, facilitating the spread of diseases. An increase in temperature, for instance, is expected to extend the geographical spread of mosquito-borne diseases such as Zika virus.
The drivers of zoonotic diseases are largely the same drivers behind biodiversity loss (bit.ly/IPBES_BioPandem), as summarised in Figure 1. There is also some evidence that biodiversity loss itself facilitates the spread of zoonotic diseases, based on the theory that a greater diversity of species provides a more robust buffer against the transmission of diseases between animals and humans.
Studies suggest that the risk of pandemics is increasing rapidly, with more than five new diseases emerging in people every year – any one of which has the potential to spread and become a pandemic. It is therefore not a case of if there will be another pandemic, but when it will be.
The increased pressure on ecosystems due to human activities, such as the rising global demand for meat, will drive further biodiversity loss and increase the risk of zoonotic diseases. To mitigate this risk, it is crucial that we reduce our environmental impact via a system of global co-operation.
Initiatives such as Wildlife Conservation 20 and Preventing Pandemics at the Source have emerged post-COVID-19, seeking to prevent future pandemics and build sustainable relationships between human consumption and wildlife conservation.
Given the impact that COVID-19 has had on the global economy, the hope is that the financial industry will emerge with a greater understanding of pandemic risk and take action to mitigate it. It has been estimated that the associated costs of monitoring and preventing zoonotic disease spillover over a 10-year period represents just 2% of the estimated costs of COVID-19.
More widely, protection of biodiversity has been recognised as a priority. The recent Dasgupta Review highlights that protecting 30% of the world’s protected land and ocean areas would require an annual investment of US$140bn – equivalent to 0.16% of global GDP, and less than one-third of the global government subsidies currently supporting activities that destroy nature.
The review’s author, Partha Dasgupta, suggests that the solution to integrating biodiversity into global economics is to understand that biodiversity and economic growth are intertwined. He calls for new economic growth metrics that factor in natural resources. Doing so, he argues, would guide global economies towards an environmentally conscious measure of prosperity. Destructive practices such as land use change, intensive livestock farming and deforestation would be discouraged, helping reverse biodiversity loss as well as the prevalence of zoonotic diseases.
While there has been progress through the work of conservation organisations and education across the financial system, a redesign of the economic paradigm is arguably the fundamental next step.
What can actuaries do?
The financial industry is relatively immature in its thinking around biodiversity loss, which provides an opportunity for actuaries – who are accustomed to navigating uncertainty – to lead the way. Actuaries are well placed to improve the understanding of risks associated with biodiversity loss and zoonotic diseases. This has been exemplified by the work of the COVID-19 Actuaries Response Group and the IFoA’s COVID-19 Action Taskforce workstreams.
Over a longer time horizon, various areas of actuarial work are likely to be impacted when considering the risks associated with biodiversity and zoonotic diseases, including:
- Underwriting and pricing of insurance products to account for changes in pandemic risk
- Risk management and disclosure of nature-related risks
- Product development to cater for the demand of pandemic-related cover
- Asset management frameworks
- Management of pension schemes
- Supporting the transition to a financial system that encompasses the value of the environment.
Although it is challenging to formulate robust ways of incorporating nature-related risks into actuarial practices, it could be seen as an extension to the approach taken by the financial sector in tackling climate risks, which has gained significant traction over recent years. Given the similarity of these risks, the findings from such initiatives should be leveraged to help provide analogous insight on the impacts of future disease emergence.
More specifically, an important focus going forward will be supporting firms in their understanding of the impact of future pandemics and how prepared they are to handle these. The actuarial toolkit of risk modelling and scenario analysis means actuaries are well placed to help firms embed these risks into their risk management frameworks and understand the impacts on a wide range of stakeholders.
Whatever we decide are our next steps, let’s use the lessons learnt from COVID-19 to benefit future generations.
This article is a summary of the authors’ investigation under the IFoA Biodiversity Working Party into the link between biodiversity loss and risk of zoonotic diseases. The full paper, ‘The Importance of Biodiversity Risks: Link to Zoonotic Diseases’, is available at bit.ly/BWP_BioRisks The authors would like to extend their thanks to the paper’s co-author Umeeta Luhano.
Georgina Bedenham is an actuary in the insurance and investment team at the Government Actuary’s Department and a member of the IFoA Biodiversity Working Party
Amy Shields is a general insurance actuary at NFU Mutual and a member of the IFoA Biodiversity Working Party
Andrew Kirk is a life insurance actuary at KPMG and a member of the IFoA Biodiversity Working Party
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