IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/10432.html
   My bibliography  Save this paper

Biodiversity and Finance : A Preliminary Assessment of Physical Risks for the BankingSector in Emerging Markets

Author

Listed:
  • Calice,Pietro
  • Diaz Kalan,Federico Alfonso
  • Dunz,Nepomuk Max Ferdinand
  • Miguel Liriano,Faruk

Abstract

Economic activity depends on a flourishing biodiversity and intact environment through theprovision of ecosystem services. The depletion of these services poses physical risks for the financial sector. Thispaper attempts to measure the potential exposure of the banking systems in 20 emerging markets to nature lossthrough their lending portfolio. The results show that banks in emerging markets allocate around half of their creditportfolio to firms whose business processes are highly or very highly dependent on one or more ecosystem services. Theresults also provide initial and preliminary evidence that points to a negative correlation between country incomelevel and dependency on ecosystem services. Accounting for indirect dependencies on ecosystem services via supplychains and trade could change this observed relationship, however. Furthermore, the highest dependencies on ecosystemservices across countries tend to be on climate regulation and flood and storm protection, indicating theinterconnectedness of climate change and nature loss.

Suggested Citation

  • Calice,Pietro & Diaz Kalan,Federico Alfonso & Dunz,Nepomuk Max Ferdinand & Miguel Liriano,Faruk, 2023. "Biodiversity and Finance : A Preliminary Assessment of Physical Risks for the BankingSector in Emerging Markets," Policy Research Working Paper Series 10432, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10432
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/099526305022388443/pdf/IDU0e52335a30e0f804949088f30d8c4eee5cee8.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Julien CALAS & Etienne ESPAGNE & Antoine GODIN & Julie MAURIN, 2022. "Global biodiversity scenarios: what do they tell us for Biodiversity-Related Financial Risks?," Working Paper df49be12-6355-45d6-84e3-4, Agence française de développement.
    2. Julien CALAS & Antoine GODIN & Julie MAURIN (AFD) & and Etienne ESPAGNE (World Bank), 2022. "Global biodiversity scenarios: what do they tell us for biodiversity-related socioeconomic impacts?," Working Paper 1a39419b-ef1d-4b82-a7be-d, Agence française de développement.
    3. Calice,Pietro & Miguel Liriano,Faruk, 2021. "Climate-Related and Environmental Risks for the Banking Sector in Latin America and the Caribbean : A Preliminary Assessment," Policy Research Working Paper Series 9694, The World Bank.
    4. Romain Svartzman & Etienne Espagne & Julien Gauthey & Paul Hadji-Lazaro & Mathilde Salin & Thomas Allen & Joshua Berger & Julien Calas & Antoine Godin & Antoine Vallier, 2021. "A Silent Spring for the Financial System? Exploring Biodiversity-Related Financial Risks in France," Working papers 826, Banque de France.
    5. World Bank & Bank Negara Malaysia (BNM), 2022. "An Exploration of Nature-Related Financial Risks in Malaysia," World Bank Publications - Reports 37314, The World Bank Group.
    6. David Leclère & Michael Obersteiner & Mike Barrett & Stuart H. M. Butchart & Abhishek Chaudhary & Adriana Palma & Fabrice A. J. DeClerck & Moreno Marco & Jonathan C. Doelman & Martina Dürauer & Robin , 2020. "Bending the curve of terrestrial biodiversity needs an integrated strategy," Nature, Nature, vol. 585(7826), pages 551-556, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stolbov, Mikhail & Shchepeleva, Maria & Parfenov, Daniil, 2025. "What is the relationship between biodiversity and the frequency of financial crises? Global evidence," Economics Letters, Elsevier, vol. 250(C).

    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. 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).
    2. Mathilde Salin & Katie Kedward & Nepomuk Dunz, 2024. "Assessing Integrated Assessment Models for Building Global Nature-Economy Scenarios," Working papers 959, Banque de France.
    3. Cherief, Amina & Sekine, Takaya & Stagnol, Lauren, 2025. "A novel nature-based risk index: Application to acute risks and their financial materiality on corporate bonds," Ecological Economics, Elsevier, vol. 228(C).
    4. Julien CALAS & Antoine GODIN & Paul Hadji-Lazaro & Pamela SEKESE & Andrew SKOWNO, 2023. "Socioeconomic and spatially-explicit assessment of Nature-related risks: the case of South Africa," Working Paper 199e7bd0-7dfd-4a54-bc1d-9, Agence française de développement.
    5. Law, Elizabeth A. & Macchi, Leandro & Baumann, Matthias & Decarre, Julieta & Gavier-Pizarro, Gregorio & Levers, Christian & Mastrangelo, Matías E. & Murray, Francisco & Müller, Daniel & Piquer-Rodrígu, 2021. "Fading opportunities for mitigating agriculture-environment trade-offs in a south American deforestation hotspot," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 262.
    6. Hutchinson, Mark C. & Lucey, Brian, 2024. "A bibliometric and systemic literature review of biodiversity finance," Finance Research Letters, Elsevier, vol. 64(C).
    7. 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.
    8. Nie,Ou & Regelink,Martijn Gert Jan & Wang,Dieter, 2023. "Banking Sector Risk in the Aftermath of Climate Change and Environmental-RelatedNatural Disasters," Policy Research Working Paper Series 10326, The World Bank.
    9. Julien CALAS & Antoine GODIN & Julie MAURIN (AFD) & and Etienne ESPAGNE (World Bank), 2022. "Global biodiversity scenarios: what do they tell us for biodiversity-related socioeconomic impacts?," Working Paper 1a39419b-ef1d-4b82-a7be-d, Agence française de développement.
    10. Kobayashi, Yuta & Sato, Masayuki & Uchida, Kei & Mori, Akira S., 2025. "Misalignment between ecologically rapid and economically optimal forest restoration designs," Forest Policy and Economics, Elsevier, vol. 172(C).
    11. Weerasena, Lakmali & Shier, Douglas & Tonkyn, David & McFeaters, Mark & Collins, Christopher, 2023. "A sequential approach to reserve design with compactness and contiguity considerations," Ecological Modelling, Elsevier, vol. 478(C).
    12. Chia‐Chi Lee & Shih‐Yun Kuo & Huang‐Hsiung Hsu & Tung‐Li Mo & En‐Yu Chang & Kuan‐Chun Huang, 2023. "How does the research community contribute to corporate climate‐related risk disclosures? The gap between ideals and reality," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(2), pages 927-940, March.
    13. Jing Yang & Lei Gao & Qi Liu & Zhaoxia Guo, 2024. "Assessing environmental impacts of response strategies for sustainable food system transformation," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(3), pages 2435-2453, June.
    14. Rob Roggema, 2024. "Let the Trees ‘Talk’: Giving Voice to Nature through an Immersive Experience," World, MDPI, vol. 5(2), pages 1-12, May.
    15. Jules Pretty & Dennis Garrity & Hemant Kumar Badola & Mike Barrett & Cornelia Butler Flora & Catherine Cameron & Natasha Grist & Leanne Hepburn & Heather Hilburn & Amy Isham & Erik Jacobi & Rattan Lal, 2025. "How the Concept of “Regenerative Good Growth” Could Help Increase Public and Policy Engagement and Speed Transitions to Net Zero and Nature Recovery," Sustainability, MDPI, vol. 17(3), pages 1-29, January.
    16. Sebastien Gallet & Antje Hendricks & Julja Prodani, 2024. "The ecosystem service degradation sensitivity indicator (EDSI): A new framework for understanding the financial risk repercussions of nature degradation," Working Papers 814, DNB.
    17. Michaela Dolk & Dimitrios Laliotis & Sujan Lamichhane, 2024. "From Extreme Events to Extreme Seasons," World Bank Publications - Reports 41037, The World Bank Group.
    18. Monde Rapiya & Wayne Truter & Abel Ramoelo, 2024. "The Integration of Land Restoration and Biodiversity Conservation Practices in Sustainable Food Systems of Africa: A Systematic Review," Sustainability, MDPI, vol. 16(20), pages 1-22, October.
    19. E J Milner-Gulland, 2024. "Now is the time for conservationists to stand up for social justice," PLOS Biology, Public Library of Science, vol. 22(6), pages 1-4, June.
    20. repec:ags:aaea22:335902 is not listed on IDEAS
    21. repec:osf:socarx:ugqx2_v1 is not listed on IDEAS
    22. repec:osf:osfxxx:vk2hq_v1 is not listed on IDEAS
    23. Lukas Mahlich & Christopher Jung & Rüdiger Schaldach, 2022. "The Biodiversity Footprint of German Soy-Imports in Brazil," Sustainability, MDPI, vol. 14(23), pages 1-14, December.

    More about this item

    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:wbk:wbrwps:10432. 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: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.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.