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Quantifying firm-level risks from nature deterioration

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  • Ricardo Crisóstomo

Abstract

We estimate the loss of value that companies might suffer from nature overexplotation. 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 Risks Scores that summarises the risk that companies face due to the decline of nature and its services.

Suggested Citation

  • Ricardo Crisóstomo, 2025. "Quantifying firm-level risks from nature deterioration," CNMV Working Papers CNMV Working Papers no. 9, CNMV- Spanish Securities Markets Commission - Research and Statistics Department.
    • Handle: RePEc:cnv:wpaper:dt_90en
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    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

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