The Financial Risks of Biodiversity Loss and Ecosystem Degradation

Abstract

The degradation of biodiversity and ecosystem services are manifesting itself as a severe risk. However, they are under recognised by the financial systems and economic stability studies. This paper highlights the risk of nature loss, climate change and financial risks in the purview of Economics and development. The paper mentions how natural capital underpins macroeconomic productivity, the impact of ecosystem disruption on financial institutions and the challenges in assessing nature-related risks. Key global frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) and the Kunming-Montreal Global Biodiversity Framework are discussed for their role in recognising the importance of biodiversity and ecosystem services. The study underscores the urgent need to factor the nature related risk in addition to the traditional risk for risk management frameworks. Giving due weightage to nature-related financial risks is critical for achieving climate goals and preserving long-term economic resilience and global financial stability.