Rainforests: the Earth’s green lung

Authors: Markus Müller - Chief Investment Officer ESG & Global Head of Chief Investment Office, Daniel Sacco - CESGA Investment Officer EMEA, Afif Chowdhury - CESGA Investment Officer EMEA

What they are

Rainforests are an essential ecosystem for the Earth - some of them have existed in their present form for at least 70 million years.

Rainforests are generally structured in four layers: an emergent layer with tall trees that can grow up to 60 meters high, a canopy layer that shades the forest floor, and an understory and forest floor with a diverse array of plant and animal species.

Every continent, with the exception of Antarctica, supports rainforests. The largest are located along the Congo and Amazon rivers.

Dense rainforest ecosystems can also be found in regions of Australia and Southeast Asia. Even the cool evergreen woods of Northern Europe and the Pacific Northwest of North America can be considered a type of rainforest - the so called temperate rainforests.¹

Rainforests are an essential part of the natural world and are critical for all life on earth.

How rainforests help us 

Climate management

About 20% of the oxygen we breathe is produced by rainforests, which also store a significant amount of carbon dioxide. Additionally, rainforests absorb enormous amounts of solar radiation, contributing to the regulation of global temperatures.1 The Amazon also produces a large amount of water and influences air mass circulation, affecting rain patterns in Latin America and surrounding regions.² Cutting trees down therefore threatens many fundamental ecosystem services which directly affect millions of people. Trees not only absorb carbon dioxide from the atmosphere, they also store carbon in their roots, leaves, and trunk (for example, an estimated 48 billion tons of carbon is stored in the Amazon rainforest alone).³

Biodiversity

Rainforests are home to more than half of the world’s plant and animal species. As many as 1,500 flowering plants, 750 tree species, 400 bird species, and 150 butterfly species can be found in a 10 km² patch.¹ Encompassing an area of 6.7 million km² (twice the size of India), the Amazon ecosystem is unsurpassed in scale and complexity ⁴ : it accomodates around 40% of the Earth's remaining rainforest, 25% of its terrestrial biodiversity and more fish species than in any other river system, including endemic and endangered flora and fauna.⁵       

Rural livelihoods

Rainforests support rural populations and economies by providing goods as an important source of harvest and creating jobs for populations with few alternative off-farm employment options.⁶ One study estimates that the mean value of the provision of habitat for species, carbon sequestration, water regulation, recreation and ecotourism is worth over USD400mn a year to the local populations of the Brazilian Amazon ecosystem alone.⁷

Threats to rainforests

For all their magnitude and remoteness, rainforests are fragile but invaluable ecosystems. Significant damage is done to them every day.

Deforestation

Deforestation is among the biggest threats to rainforests. Since 1947, the overall area of tropical rainforests has likely decreased by more than half, to about 6.2 - 7.8 million km².¹ Scientists warn that the loss of 20-25% of the rainforest could imply a “point of no return” for the Amazon. Given the current pace of destruction, this could happen in no more than 20 years.² 

Climate change 

Climate change is hurting rainforests. Natural cycles are being altered, upsetting a delicate balance at local, regional and even global levels.² If current climate trends continue, the Amazon rainforest could experience a serious decrease in rainfall, leading to widespread forest dieback and changes in the ecosystem that could potentially convert parts of the Amazon rainforest into a type of dry savanna.⁸ 

Poaching and illegal trade in wildlife

Poaching and illegal trade in wildlife pose a significant threat to rainforest biodiversity. Wildlife trafficking is supported by a large consumer market: it is estimated that 38 million animals (excluding fish and invertebrates) are captured every year in Brazil alone.⁹

Mining and oil drilling

Mining and oil drilling are also significant threats to rainforests, particularly in the Amazon and Congo basins. They can lead to habitat destruction, soil erosion, and pollution, among other environmental problems.

“About 20% of the oxygen we breathe is produced by rainforests, which also store a significant amount of carbon dioxide.”