Earth Today | Business case for biodiversity

CONSIDER THE view from Champers Restaurant in Barbados, the Kingston Harbour at dusk from Gloria’s in Port Royal, Jamaica, or the sweep of Shirley Heights in Antigua. It’s easy to mistake what you are seeing for scenery. But, what if it were more? What if it were capital?

That distinction matters because for Caribbean investors, nature is not scenery, it is an underpriced asset class and, now, a source of financial risk.

The region sits atop one of the most extraordinary concentrations of natural wealth on Earth, with the Caribbean Islands Biodiversity Hotspot harbouring a reported seven per cent of the planet’s coral reef ecosystems and more than 11,000 plant species. More than 70 per cent do not exist anywhere else on Earth.

They are the foundation of industries worth billions and the basis of every serious conversation about long-term economic resilience in this region. That is precisely why dedicated financing mechanisms exist: to protect them at scale. The Caribbean Biodiversity Fund is one such mechanism, having awarded more than USD43 million in grants to conservation trust funds and civil society organisations regionwide.

Consider tourism, the sector every Caribbean government relies on. Research by The Nature Conservancy found that reef-associated tourism alone generates more than USD7.9 billion annually, drawing more than 11 million visitors and accounting for some 10 per cent of the region’s GDP. The Dominican Republic and Puerto Rico each attract more than a billion dollars per year in visitor spending linked directly to coral reefs. When reefs degrade, the asset generating that revenue degrades with them.

For investors, this is fundamentally a risk story. Hotels, coastal real estate and tourism infrastructure across the Caribbean are directly exposed to biodiversity loss. As reefs degrade and beaches erode, asset values fall, replacement costs escalate, insurance premiums rise, and revenue streams become volatile. In financial terms, unmanaged nature loss is a balance sheet risk.

Mangroves, coral reefs, and seagrass beds across Barbados, Grenada, and St Vincent and the Grenadines together deliver an estimated USD800 million per year in ecosystem services covering fisheries productivity, coastal storm protection, water filtration, and carbon sequestration, according to the Journal of Sustainability Research, 2023. The World Resources Institute notes that coral reefs alone protect approximately 21% of the Caribbean’s coastline.

These benefits rarely appear in financial statements, but their loss is immediate and costly in the form of beach replenishment programmes costing millions per mile and water treatment infrastructure costing tens of millions per location.

The fisheries sector makes the stakes concrete. Caribbean fisheries support the livelihoods of an estimated 200,000 fisherfolk and contribute some USD400 million plus annually to regional economies. When reefs collapse, catches fall. When mangroves disappear, juvenile fish lose their nursery. Caribbean fisheries are among the most vulnerable in the world to climate change, and the costs of inaction are projected to mount each year.

The investment case is this: investing in nature protection and restoration delivers measurable economic returns, reduces long-term risk, and safeguards the assets Caribbean economies depend on. New financial instruments are emerging that allow investors to generate returns while strengthening natural capital, from blue bonds and reef insurance to sustainable tourism and ecosystem restoration. The question is no longer whether nature has value; it is whether Caribbean capital will move fast enough to capture it.

Contributed by Barrington Lewis, chief finance officer, Caribbean Biodiversity Fund.