IDEAS home Printed from https://ideas.repec.org/p/aez/wpaper/2023-02.html
   My bibliography  Save this paper

Biodiversity-related Financial Risks - why it matters and how can we measure them?

Author

Listed:
  • Elene Nikuradze

    (Sustainable Finance Division, National Bank of Georgia)

  • Salome Tvalodze

    (Head of Sustainable Finance Division, National Bank of Georgia)

Abstract

The potential consequences of biodiversity and ecosystem services loss can have a significant impact on the stability of economies and financial systems. The following research paper contributes to a growing body of literature that seeks to analyze the connections between biodiversity loss and financial stability. The study focuses on the assessment of biodiversity-related financial risks (BRFR) in Georgia and provides quantitative estimates of the dependencies and impacts of the financial system on biodiversity and ecosystem services. The findings reveal that around 46 percent of Georgian commercial banks' lending portfolio to legal entities could be exposed to biodiversity-related physical risk, being moderately or highly/very highly dependent on one or more ecosystem services. Additionally, around 54 percent of Georgian banks’ business lending portfolio could be exposed to sectors that strongly impact ecosystem services and, thus, may face a high transition risk.

Suggested Citation

  • Elene Nikuradze & Salome Tvalodze, 2023. "Biodiversity-related Financial Risks - why it matters and how can we measure them?," NBG Working Papers 02/2023, National Bank of Georgia.
    • Handle: RePEc:aez:wpaper:2023-02
    as

    Download full text from publisher

    File URL: https://nbg.gov.ge/fm/wp/nbg-wp-2023-02.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Georgina M. Mace & Mike Barrett & Neil D. Burgess & Sarah E. Cornell & Robin Freeman & Monique Grooten & Andy Purvis, 2018. "Aiming higher to bend the curve of biodiversity loss," Nature Sustainability, Nature, vol. 1(9), pages 448-451, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. T. B. White & S. O. Petrovan & L. A. Bennun & T. Butterworth & A. P. Christie & H. Downey & S. B. Hunter & B. R. Jobson & S. O. S. E. zu Ermgassen & W. J. Sutherland, 2023. "Principles for using evidence to improve biodiversity impact mitigation by business," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4719-4733, November.
    2. Lam Thi Mai Huynh & Jie Su & Quanli Wang & Lindsay C. Stringer & Adam D. Switzer & Alexandros Gasparatos, 2024. "Meta-analysis indicates better climate adaptation and mitigation performance of hybrid engineering-natural coastal defence measures," Nature Communications, Nature, vol. 15(1), pages 1-16, December.
    3. Gyan Charitha de Silva & Eugenie Christine Regan & Edward Henry Beattie Pollard & Prue Frances Elizabeth Addison, 2019. "The evolution of corporate no net loss and net positive impact biodiversity commitments: Understanding appetite and addressing challenges," Business Strategy and the Environment, Wiley Blackwell, vol. 28(7), pages 1481-1495, November.
    4. Millard, Joe, 2023. "Coining one currency for nature," OSF Preprints j7phu, Center for Open Science.
    5. repec:osf:socarx:gjps6_v1 is not listed on IDEAS
    6. Prue F.E. Addison & P. J. Stephenson & Joseph W. Bull & Giulia Carbone & Mark Burgman & Michael J. Burgass & Leah R. Gerber & Pippa Howard & Nadine McCormick & Louise McRae & Kim E. Reuter & Malcolm S, 2020. "Bringing sustainability to life: A framework to guide biodiversity indicator development for business performance management," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3303-3313, December.
    7. repec:osf:osfxxx:cu8rj_v1 is not listed on IDEAS
    8. Mariusz D. Boćkowski & Christopher M. Raymond & Tobias Plieninger & Małgorzata Grodzińska-Jurczak, 2024. "Towards forward-looking nature governance to meet conservation goals of Natura 2000 sites in the European Union: experts’ perspectives," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(2), pages 3215-3241, February.
    9. Froidevaux, Jérémy S.P. & Le Viol, Isabelle & Barré, Kévin & Bas, Yves & Kerbiriou, Christian, 2025. "A modeling framework for biodiversity assessment in renewable energy development: A case study on European bats and wind turbines," Renewable and Sustainable Energy Reviews, Elsevier, vol. 211(C).
    10. Hadji-Lazaro, Paul & Salin, Mathilde & Svartzman, Romain & Espagne, Etienne & Gauthey, Julien & Berger, Joshua & Calas, Julien & Godin, Antoine & Vallier, Antoine, 2024. "Biodiversity loss and financial stability as a new frontier for central banks: An exploration for France," Ecological Economics, Elsevier, vol. 223(C).
    11. Booth, Hollie & Mourato, Susana & Milner-Gulland, E.J., 2022. "Investigating acceptance of marine tourism levies, to cover the opportunity costs of conservation for coastal communities," Ecological Economics, Elsevier, vol. 201(C).
    12. Jianqiao Zhao & Yue Cao & Le Yu & Xiaoxuan Liu & Yichuan Shi & Xiaoping Liu & Rui Yang & Peng Gong, 2021. "Identifying Potential Cropland Losses When Conserving 30% and 50% Earth with Different Approaches and Spatial Scales," Land, MDPI, vol. 10(7), pages 1-15, July.
    13. repec:osf:osfxxx:j7phu_v1 is not listed on IDEAS
    14. Milner-Gulland, E.J. & Addison, Prue & Arlidge, William & Baker, Julia & Booth, Hollie & Brooks, Thomas & Bull, Joseph & Burgass, Michael & Ekstrom, Jonathan & Ermgassen, Sophus zu, 2020. "Four Steps for the Earth: mainstreaming the post-2020 Global Biodiversity Framework," SocArXiv gjps6, Center for Open Science.
    15. S J Cooke & S Michaels & E A Nyboer & L Schiller & D B R Littlechild & D E L Hanna & C D Robichaud & A Murdoch & D Roche & P Soroye & J C Vermaire & V M Nguyen & N Young & J F Provencher & P A Smith &, 2022. "Reconceptualizing conservation," PLOS Sustainability and Transformation, Public Library of Science, vol. 1(5), pages 1-16, May.
    16. Lina Zhao & Jinya Li & Russell L. Barrett & Bing Liu & Haihua Hu & Limin Lu & Zhiduan Chen, 2024. "Spatial heterogeneity of extinction risk for flowering plants in China," Nature Communications, Nature, vol. 15(1), pages 1-12, December.
    17. Pablo Garcia, 2024. "Optimal timing of environmental policy under partial information," BCL working papers 180, Central Bank of Luxembourg.
    18. Thomas B. White & Leonardo R. Viana & Geneviève Campbell & Claire Elverum & Leon A. Bennun, 2021. "Using technology to improve the management of development impacts on biodiversity," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3502-3516, December.
    19. Christopher Dickens & Matthew McCartney & David Tickner & Ian J. Harrison & Pablo Pacheco & Brown Ndhlovu, 2020. "Evaluating the Global State of Ecosystems and Natural Resources: Within and Beyond the SDGs," Sustainability, MDPI, vol. 12(18), pages 1-22, September.
    20. Azuero-Pedraza, Cindy G. & Thomas, Valerie M., 2024. "Incorporating biodiversity impacts in land use decisions," Ecological Modelling, Elsevier, vol. 497(C).
    21. Perera, A.Chathurika S. & Davies, Peter J. & Graham, Petra L., 2024. "A global review of urban blue-green planning tools," Land Use Policy, Elsevier, vol. 140(C).
    22. Luxton, Sarah & Smith, Greg & Williams, Kristen & Ferrier, Simon & Bond, Anthelia & Prober, Suzanne, 2023. "An introduction to financial opportunities, ecological concepts, and risks underpinning aspirations for a nature-positive economy," OSF Preprints cu8rj, Center for Open Science.
    23. Daniel J. Ingram & Graden Z. L. Froese & Daire Carroll & Paul C. Bürkner & Fiona Maisels & Ajonina S. Abugiche & Sophie Allebone-Webb & Andrew Balmford & Daniel Cornelis & Marc Dethier & Edmond Dounia, 2025. "Regional patterns of wild animal hunting in African tropical forests," Nature Sustainability, Nature, vol. 8(2), pages 202-214, February.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aez:wpaper:2023-02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Giorgi Tsutskiridze (email available below). General contact details of provider: https://edirc.repec.org/data/ngbgvge.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.