Biodiversity, Governance, and Municipal Bonds

Yanghua Shi
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Yanghua Shi: International University of Japan

No EMS_2026_09, Working Papers from Research Institute, International University of Japan

Abstract: The paper shows that biodiversity-related regulatory changes significantly impact municipal bond yields. The paper also finds that certain local factors exacerbate this eect. The analysis exploits a series of statewide regulatory changes that alter the management of unowned cats, an invasive species widely associated with biodiversity loss. The study employs a state-border discontinuity approach, comparing municipal bond yields issued by counties aected by these statewide laws to those issued by nearby counties not subject to such laws. This paper provides one of the first empirical analyses of biodiversity-related regulatory shocks in financial markets. In doing so, it underscores the economic significance of biodiversity-related legislative measures and advances finance research that incorporates biodiversity.

Keywords: Biodiversity; Invasive Species; Municipal Bonds; Regulatory Shocks (search for similar items in EconPapers)
JEL-codes: G10 G12 Q5 Q57 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2026-06
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