IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwsre/sre-disc-2021_08.html
   My bibliography  Save this paper

Financialisation of Nature

Author

Listed:
  • Tone Smith

Abstract

The ‘financialisation of nature’ is related to a shift in environmental governance—from regulation to marked-based approaches—involving strong state support to facilitate the establishment of ‘innovative financial instruments’ and markets related to nature. Although innovative finance got a bad reputation after the 2008 financial crisis, they are strongly encouraged in the environmental policy domain and supported by actors such as UNEP or the CBD. This paper explains the theoretical underpinning and the process of establishing such financial instruments, focusing in particular on offsetting and related ideas such as ‘net-zero’ calculations and ‘nature-based solutions’. It explains how natural entities are converted into abstract units of equivalence to allow the establishment of schemes for tradable ‘nature credits’ (supposedly) compensating damage across time and space. The financialisation of nature is then analysed and critiqued with respect to its lack of environmental effectiveness, its problematic socio-economic consequences and its impact on human-nature relationships. Instead of dealing with the environmental problems at hand, the conversion of nature into financial assets simply turns nature into objects of investment and speculation, while simultaneously creating a potential for financial bubbles.

Suggested Citation

  • Tone Smith, 2021. "Financialisation of Nature," SRE-Disc sre-disc-2021_08, Institute for Multilevel Governance and Development, Department of Socioeconomics, Vienna University of Economics and Business.
    • Handle: RePEc:wiw:wiwsre:sre-disc-2021_08
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/sre-disc/sre-disc-2021_08.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David Harvey, 2011. "Roepke Lecture in Economic Geography—Crises, Geographic Disruptions and the Uneven Development of Political Responses," Economic Geography, Taylor & Francis Journals, vol. 87(1), pages 1-22, January.
    2. Alexandre Kossoy & Philippe Ambrosi, "undated". "State and Trends of the Carbon Market 2010," World Bank Publications - Reports 13401, The World Bank Group.
    3. David Harvey, 2011. "Roepke Lecture in Economic Geography—Crises, Geographic Disruptions and the Uneven Development of Political Responses," Economic Geography, Clark University, vol. 87(1), pages 1-22, January.
    4. Paul J. Crutzen, 2002. "Geology of mankind," Nature, Nature, vol. 415(6867), pages 23-23, January.
    5. World Bank, "undated". "State and Trends of Carbon Pricing 2020 [Situación y tendencias de la fijación del precio al carbono 2020]," World Bank Publications - Reports 33809, The World Bank Group.
    Full references (including those not matched with items on IDEAS)

    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. Michael Bentlage & Matthias Dorner & Alain Thierstein, 2015. "The knowledge economy and the economic crisis in Germany. Regional development, structural change and labor market regions," ERSA conference papers ersa15p978, European Regional Science Association.
    2. Dariusz Wójcik, 2013. "The Dark Side of NY–LON: Financial Centres and the Global Financial Crisis," Urban Studies, Urban Studies Journal Limited, vol. 50(13), pages 2736-2752, October.
    3. Stephan Bosch & Matthias Schmidt, 2019. "Auswirkungen neuer Energiesysteme auf die wirtschaftliche Entwicklung – Möglichkeiten eines grünen Kapitalismus [Economic development within renewable energy systems – Opportunities for green capit," Sustainability Nexus Forum, Springer, vol. 27(2), pages 95-111, June.
    4. Rehner, Johannes & Rodríguez, Sebastián, 2021. "Cities built on copper – The impact of mining exports, wages and financial liquidity on urban economies in Chile," Resources Policy, Elsevier, vol. 70(C).
    5. Seth Schindler, 2016. "Detroit after bankruptcy: A case of degrowth machine politics," Urban Studies, Urban Studies Journal Limited, vol. 53(4), pages 818-836, March.
    6. Marco Eimermann & Urban Lindgren & Linda Lundmark, 2021. "Nuancing Holistic Simplicity in Sweden: A Statistical Exploration of Consumption, Age and Gender," Sustainability, MDPI, vol. 13(15), pages 1-16, July.
    7. E Melanie DuPuis, 2021. "Learning from emancipation: The Port Royal Experiment and transition theory," Environment and Planning A, , vol. 53(6), pages 1507-1524, September.
    8. Bosch, Stephan & Schmidt, Matthias, 2019. "Is the post-fossil era necessarily post-capitalistic? – The robustness and capabilities of green capitalism," Ecological Economics, Elsevier, vol. 161(C), pages 270-279.
    9. Claudia Kettner-Marx & Daniela Kletzan-Slamanig & Angela Köppl, 2012. "The EU Emission Trading Scheme. National Allocation Patterns and Trading Flows," WIFO Studies, WIFO, number 44139.
    10. Andrea Baranzini & Stefano Carattini & Linda Tesauro, 2021. "Designing Effective and Acceptable Road Pricing Schemes: Evidence from the Geneva Congestion Charge," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(3), pages 417-482, July.
    11. Gbenga Ibikunle & Andros Gregoriou & Naresh R. Pandit, 2013. "Price Discovery and Trading after Hours: New Evidence from the World's Largest Carbon Exchange," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 20(3), pages 421-445, November.
    12. Jiaxing Cui & Xuesong Kong & Jing Chen & Jianwei Sun & Yuanyuan Zhu, 2021. "Spatially Explicit Evaluation and Driving Factor Identification of Land Use Conflict in Yangtze River Economic Belt," Land, MDPI, vol. 10(1), pages 1-24, January.
    13. Tommaso Luzzati & Angela Parenti & Tommaso Rughi, 2017. "Spatial error regressions for testing the Cancer-EKC," Discussion Papers 2017/218, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    14. Andreas Bjurström & Merritt Polk, 2011. "Climate change and interdisciplinarity: a co-citation analysis of IPCC Third Assessment Report," Scientometrics, Springer;Akadémiai Kiadó, vol. 87(3), pages 525-550, June.
    15. Katja S. Halbritter & Markus Ohndorf, 2012. "Optimal liability apportionment in programmatic credit-based emissions trading," Climate Policy, Taylor & Francis Journals, vol. 12(4), pages 440-452, July.
    16. Liotta,Charlotte & Avner,Paolo & Viguié,Vincent & Selod,Harris & Hallegatte,Stephane, 2022. "Climate Policy and Inequality in Urban Areas : Beyond Incomes," Policy Research Working Paper Series 10185, The World Bank.
    17. J. Park & T. P. Seager & P. S. C. Rao & M. Convertino & I. Linkov, 2013. "Integrating Risk and Resilience Approaches to Catastrophe Management in Engineering Systems," Risk Analysis, John Wiley & Sons, vol. 33(3), pages 356-367, March.
    18. Yannic Rehm & Lucas Chancel, 2022. "Measuring the Carbon Content of Wealth Evidence from France and Germany," PSE Working Papers halshs-03828939, HAL.
    19. Quemin, Simon & Trotignon, Raphaël, 2021. "Emissions trading with rolling horizons," Journal of Economic Dynamics and Control, Elsevier, vol. 125(C).
    20. Rannou, Yves & Boutabba, Mohamed Amine & Barneto, Pascal, 2021. "Are Green Bond and Carbon Markets in Europe complements or substitutes? Insights from the activity of power firms," Energy Economics, Elsevier, vol. 104(C).

    More about this item

    Keywords

    environmental governance; innovative financial instruments; natural capital; offsetting; biodiversity banking; mitigation hierarchy; net zero; nature-based solutions; restoration of nature;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

    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:wiw:wiwsre:sre-disc-2021_08. 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: Gunther Maier (email available below). General contact details of provider: http://www.wu-wien.ac.at/mlgd/ .

    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.