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A “Silent Spring” for the Financial System? Exploring Biodiversity-Related Financial Risks in France

Romain Svartzman, Espagne Etienne,, Gauthey Julien,, Hadji-Lazaro Paul,, Salin Mathilde,, Thomas Allen, Berger Joshua,, Calas Julien,, Antoine Godin () and Vallier Antoine

Working papers from Banque de France

Abstract: This paper contributes to an emerging literature aimed at uncovering the linkages between biodiversity loss and financial instability, by exploring biodiversity-related financial risks (BRFR) in France. We first build on previous studies and propose an analytical framework to understand BRFR, emphasizing the complexity involved and the limited substitutability of natural capital. We then provide quantitative estimates of dependencies and impacts of the French financial system on biodiversity. We find that 42% of the value of securities held by French financial institutions comes from issuers that are highly or very highly dependent on one or more ecosystem services. We also find that the accumulated terrestrial biodiversity footprint of these securities is comparable to the loss of at least 130,000 km² of “pristine” nature, which corresponds to the complete artificialization of 24% of the area of metropolitan France. Finally, we suggest avenues for future research through which these estimates could feed into future assessments of physical and transition risks.

Keywords: Biodiversity; Financial stability; Environmental risks; Scenario analysis; Financial markets and the macroeconomy; Valuation of ecosystem services. (search for similar items in EconPapers)
JEL-codes: C67 D81 E44 G32 Q51 Q57 (search for similar items in EconPapers)
Pages: 95 pages
Date: 2021
New Economics Papers: this item is included in nep-env, nep-hme, nep-isf and nep-mac
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Handle: RePEc:bfr:banfra:826