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Quantifying firm-level risks from nature deterioration

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  • Ricardo Cris'ostomo

Abstract

We estimate the loss of value that companies might suffer from nature overexploitation. 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 Risk Score that summarizes the risk that companies face due to the decline of nature and its services.

Suggested Citation

  • Ricardo Cris'ostomo, 2025. "Quantifying firm-level risks from nature deterioration," Papers 2501.14391, arXiv.org, revised Feb 2025.
    • Handle: RePEc:arx:papers:2501.14391
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