Environmental risks and biodiversity tipping points

Environmental risks and biodiversity tipping points Esin Yilmaz Caglar, Mary Goldman, and Nick Spencer of the IFoA’s Biodiversity Working Party explore the findings of a report on global tipping points and the implications for actuaries

We have been witnessing extraordinary, abrupt, and potentially irreversible changes in the world around us. In an era of environmental unpredictability, the Global Tipping Points Report, led by Professor Tim Lenton from the University of Exeter’s Global Systems Institute, offers a crucial lens through which we must view our world. The report was the product of an extensive work bringing together the support of more than 200 researchers from 90 organisations in 26 countries.

This blog draws from our new paper that summarises the key messages from the Global Systems Institute report.

Read our full paper

Key messages

The following summarises the key messages from the report.

Climate change and nature loss could soon cause ‘tipping points’ where large parts of the natural world would be unable to maintain their current state, leading to abrupt or irreversible changes, or both.

The effects of tipping points will be transmitted and amplified throughout our globalised world with impacts that could cascade to threaten the breakdown of economic, social, and political systems, triggering destructive tipping points in societies experiencing stresses beyond their ability to cope.

Stopping these threats is possible but requires urgent coordinated global action to trigger ‘positive tipping points’. These can accelerate a transformation towards sustainability. One positive tipping point can trigger others and create a domino effect of change.

Biodiversity tipping points in the biosphere

More than 25 Earth system tipping points have been identified from evidence of past changes, observational records, and computer models, 16 of which are in the biosphere.

The Earth’s biosphere describes the sum of all global ecosystems. Humans are also an integral part of the biosphere. Together they form joint ‘social-ecological systems’ where both interact as a single complex adaptive system.

Evidence exists for tipping points in a variety of ecosystems, some of which is summarised below.

Amazon dieback

The Amazon rainforest has most evidence for potential tipping points. Analysis based on early warning signals indicates that over 75% of the Amazon has lost resilience since the early 2000s.

It is estimated that Amazon dieback would lead to economic damages of between 957 and 3,589 billion US dollars (net present value as of 2018) over 30 years. The main cause is changes in the provision of ecosystem services. (See: Impacts of biosphere tipping points)

Southern boreal forest dieback

This refers to a dieback of southern boreal forests in the northern hemisphere that leads to an almost treeless state (to steppe/prairie). It has already been identified as a potential tipping element in the climate system.

Marine oxygenation

Coastal hypoxia occurs when dissolved oxygen in water diminishes below levels detrimental to marine life. Examples of severe hypoxia are ‘dead zones’ in the Gulf of Mexico, central Baltic, Kattegat, Black Sea, and East China Sea.

A glimmer of hope: positive tipping points

Amidst these alarming tipping points, there lies a beacon of optimism. Positive tipping points offer the prospect that coordinated, strategic interventions can lead to large and rapid beneficial results that mitigate existential climate risk. These then could set off a chain reaction leading to a more sustainable future.

Currently it’s hard to find positive tipping points in nature. But there is an array of positive social and technological tipping points that could accelerate us towards sustainable pathways, reducing – and hopefully then reversing – the risks of us reaching these biosphere tipping points.

For example, if the development and adoption of agro-ecological or ‘regenerative’ farming practices along with innovation of precision agriculture pass a positive tipping point, this could restore soil health and increase agrobiodiversity and ecosystem service provision by reducing chemical inputs via increased nutrient recycling and precision application. Together with the widespread adoption of sustainable diets and the reduction of food loss and waste, the sustainable use of land can work in synergy with one another to reduce greenhouse gas emissions, meet sustainable development goal targets for food security and sustainable livelihoods, and protect nature including critically vulnerable carbon sinks and biodiversity hotspots. These represent both potential positive tipping points and the potential positive reinforcement between positive tipping points.

Why are tipping points important and why should actuaries care?

The global climate and sustainability risk assessment processes have so far tended to focus on the most likely outcomes of specific pathways, rather than evaluating these higher-risk outcomes.

This is poor societal risk management, and it is leaving society ill-equipped for the potential impacts of what lies ahead. Especially if it leads society to lower levels of mitigating actions increasing the chances of these tipping points occurring. While climate and biodiversity tipping points are often portrayed as ‘high-impact, low-likelihood events’, some are rapidly becoming ‘high-impact, high-likelihood events’. (See: Global Tipping Points Report)

For actuaries, the financial implications of these tipping points can be profound and will impact the areas actuaries operate. Those include general insurance, life and health insurance, pensions, investments, banking, and others. Actuaries should be aware of tipping points and start to reflect on how these may influence their long-term economic projections, scenarios, and stress tests.

Moreover, society urgently needs improved assessments of the impacts of Earth and social system tipping points. Actuaries’ risk assessment and management skills are valuable additions to other disciplines to support the measurement of the impacts of tipping points.

This supports the public interest by helping the decision-makers engage in mitigating these risks. The recent paper ‘Climate Scorpion – the sting is in the tail’ published by IFoA with the University of Exeter, introduces the ‘planetary solvency’ concept. This is a global and holistic approach to risk management that would leverage financial services risk management techniques to assess and communicate risks more effectively to policymakers, supporting long-term policy decisions.

We will be producing future papers to support the integration of biodiversity risks into actuarial projections and scenarios.


We would like to thank reviewers Aled Jones, Georgina Bedenham, Sandy Trust, and Alan Reed for contributing to this blog.

Disclaimer: The views expressed in this publication are those of invited contributors and not necessarily those of the Institute and Faculty of Actuaries. This paper expresses the views of the individual authors and not necessarily those of their employers.

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