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The EU economy’s dependency on nature

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Abstract

While the importance of nature for economic production is undisputed, nature’s contribution is still underrepresented in economic modelling. Following previous studies, this work produces a “high-level” estimate of the dependencies of all EU economic sectors on ecosystem services by applying the ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) framework to an input-output model. Depending on the version of ENCORE used and on some other assumptions, between 19% and 36% of the EU economy’s gross value added (GVA) is found to be highly dependent on ecosystem services. International extensions of the analysis show that the economies of EU and China appear to be more dependent on nature than that of the United States. The analysis also reveals that the entire economy is vulnerable to nature degradation, as all sectors are interlinked through supply and customer connections, potentially leading to cascading effects along value chains.

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  • Hirschbuehl, Dominik & Neuville, Aude & Petracco Giudici, Marco & Sanchez Arjona, Irene, 2025. "The EU economy’s dependency on nature," JRC Working Papers in Economics and Finance 2025-04, Joint Research Centre, European Commission.
    • Handle: RePEc:jrs:wpaper:202504
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC140304
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    Keywords

    Natural capital; nature degradation;

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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