IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2501.14391.html

Quantifying firm-level risks from nature deterioration

Author

Listed:
  • Ricardo Crisostomo

Abstract

We estimate the loss of value that companies might suffer from nature overexploitation. We find that global equities shed 26.8% in a scenario of unabated nature decline, while the worst-performing firms lose ~75% of their value. Our risk framework considers five environmental hazards: biodiversity loss, land degradation, climate change, human population and nature capital. We also introduce two metrics to assess nature-related risks: a Country Degradation Index that tracks the damage caused by environmental hazards in specific territories, including nonlinear dynamics and tipping points; and a Nature Risk Score that summarizes the risk that companies face due to the decline of nature and its services.

Suggested Citation

  • Ricardo Crisostomo, 2025. "Quantifying firm-level risks from nature deterioration," Papers 2501.14391, arXiv.org, revised Apr 2025.
    • Handle: RePEc:arx:papers:2501.14391
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2501.14391
    File Function: Latest version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Acheampong, Alex O. & Opoku, Eric Evans Osei, 2023. "Environmental degradation and economic growth: Investigating linkages and potential pathways," Energy Economics, Elsevier, vol. 123(C).
    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. Felician A. Kitole & Jennifer K. Sesabo & Olufunmilola F. Adesiyan & A. O. Ige & Temitope O. Ojo & Chijioke U. Emenike & Nolwazi Z. Khumalo & Hazem S. Kassem & Khalid M. Elhindi, 2024. "Greening the Growth: A Comprehensive Analysis of Globalization, Economic Performance, and Environmental Degradation in Tanzania," Sustainability, MDPI, vol. 16(24), pages 1-19, December.
    2. Kola Benson Ajeigbe & Fortune Ganda, 2024. "Leveraging Food Security and Environmental Sustainability in Achieving Sustainable Development Goals: Evidence from a Global Perspective," Sustainability, MDPI, vol. 16(18), pages 1-22, September.
    3. Raihan, Asif & Ridwan, Mohammad & Rahman, Syed Masiur & Sarker, Tapan & Atasoy, Filiz Guneysu & Islam, Samanta & Kakon, Mifthaul Arefine & Akter, Runa, 2025. "Balancing growth and sustainability: The role of women's empowerment, innovation, and green transitions," Innovation and Green Development, Elsevier, vol. 4(6).
    4. Mona Yaghoubi & Reza Yaghoubi, 2024. "The Ups and Downs of Oil Prices: Asymmetric Impacts of Oil Price Volatility on Corporate Environmental Responsibility," Working Papers in Economics 24/11, University of Canterbury, Department of Economics and Finance.
    5. Shang Chen & Ziyi Wang & Danica Du & Qiang Kong, 2025. "How Does Green-Infrastructure Investment Empower Urban Sustainable Development?—Mechanisms and Empirical Tests," Sustainability, MDPI, vol. 17(13), pages 1-44, June.
    6. Sabine O’Hara, 2025. "Living in the Age of Market Economics: An Analysis of Formal and Informal Institutions and Global Climate Change," World, MDPI, vol. 6(1), pages 1-22, March.
    7. Paola D’Orazio & Dorothea Schäfer & Andreas Stephan, 2024. "Macro-financial policy at the crossroad: addressing climate change, biodiversity loss, and environmental degradation - introduction to the special issue," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 14(1), pages 1-11, March.
    8. Marra, Alessandro & Colantonio, Emiliano & Cucculelli, Marco & Nissi, Eugenia, 2024. "The ‘complex’ transition: Energy intensity and CO2 emissions amidst technological and structural shifts. Evidence from OECD countries," Energy Economics, Elsevier, vol. 136(C).
    9. Nurjanana Nurjanana & Dio Caisar Darma & Suparjo Suparjo & Andriawan Kustiawan & Wasono Wasono, 2025. "Two-Way Causality Between Economic Growth and Environmental Quality: Scale in the New Capital of Indonesia," Sustainability, MDPI, vol. 17(4), pages 1-22, February.
    10. Nie, Peng & Zhong, Juncheng & Ren, Zhengliang & Huang, Jinglei, 2024. "Sustainable financing solutions for the growth of resource-driven economies in the digital economy age," Resources Policy, Elsevier, vol. 98(C).
    11. Ali Nawaz Khan, 2024. "Unexpected Ally: Can Social Exclusion Boost Quality of Life Through Green Choices?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 175(1), pages 295-315, October.
    12. Anwar Hussain & Firdos Khan & Olayan Albalawi, 2024. "Modeling and Monitoring CO 2 Emissions in G20 Countries: A Comparative Analysis of Multiple Statistical Models," Sustainability, MDPI, vol. 16(14), pages 1-17, July.
    13. Ma, Yuan & Wang, Haiying, 2025. "The interaction effect of green advertising appeal and monetary resource perception on consumers’ green purchase intention," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 118(C).
    14. Kim, Dong-Hyeon & Lin, Shu-Chin, 2024. "Inflation and wealth inequality," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 893-907.
    15. Rasheed, Muhammad Qamar & Yuhuan, Zhao & Haseeb, Abdul & Ahmed, Zahoor & Saud, Shah, 2024. "Asymmetric relationship between competitive industrial performance, renewable energy, industrialization, and carbon footprint: Does artificial intelligence matter for environmental sustainability?," Applied Energy, Elsevier, vol. 367(C).
    16. Tiwari, Aviral Kumar & Trinh, Hai Hong & Vo, Diem Thi Hong & Sharma, Gagan Deep, 2025. "How do economies decarbonize growth under finance-energy inequality? Global evidence," Energy Economics, Elsevier, vol. 142(C).
    17. Emmanuel Baffour Gyau & Yaya Li & Michael Appiah, 2025. "Global digital transformation: discovering the impact of digitalization on income inequality in OECD countries, the moderating role of globalization," Economic Change and Restructuring, Springer, vol. 58(1), pages 1-37, February.
    18. Islam, Sohidul & Roshid, Md. Mustaqim & Chandra Bhowmik, Reday & Dhar, Bablu Kumar & Raihan, Asif & Karim, Rejaul, 2025. "Policy pathways for renewable energy, health, and sustainability in sub-saharan Africa: An empirical assessment of energy access and life expectancy," Energy Policy, Elsevier, vol. 206(C).
    19. Periklis Kyriakos & Evangelos Hristoforou & George V. Belessiotis, 2024. "Graphitic Carbon Nitride (g-C 3 N 4 ) in Photocatalytic Hydrogen Production: Critical Overview and Recent Advances," Energies, MDPI, vol. 17(13), pages 1-35, June.
    20. Advani, Bhavya & Pradhan, Ashis Kumar & Mohindra, Vinita & Sreenu, Nenavath, 2024. "Demystifying the nexus between Forest cover and happiness: A study of global economies," Forest Policy and Economics, Elsevier, vol. 167(C).

    More about this item

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

    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:arx:papers:2501.14391. 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: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    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.