Nature and Biodiversity Loss: A Research Agenda for Financial Economics

The authors outline a research agenda to deepen understanding of the economic and financial consequences of nature and biodiversity loss, emphasizing that ecosystem degradation and climate change are intertwined through a “Twin-Crises Multiplier.” They introduce a model in which ecosystem services are direct inputs to economic production, and their loss amplifies both environmental and financial instability. The paper calls for systematic research on how biodiversity decline influences aggregate output, firm productivity, and asset pricing, and proposes frameworks to measure firms’ physical and transition risks linked to nature loss. It also highlights emerging financial instruments such as biodiversity-linked bonds, conservation credits, and debt-for-nature swaps as tools to finance ecosystem protection, urging closer collaboration among economists, ecologists, and policymakers to better integrate nature-related risks into financial decision-making.