Financial markets are blind to the economic costs of biodiversity loss, leaving several countries at risk of defaulting on debt, according to new research published in Nature.
While environmental degradation is recognised as a serious financial risk, sovereign debt markets currently have no way of accounting for it, leaving US$83 trillion of assets open to mispricing. Adjusting S&P Global’s credit ratings to account for ecological damage, a team of economists led by the Universities of Sussex, Sheffield, and Heriot-Watt found that even a partial collapse for wild pollinators, marine fisheries, and tropical forests could add US$162bn to the annual interest payment on sovereign debt.
Biodiverse environments provide what economists call “ecosystem services”, valuable economic contributions like insects pollinating crops and oceans underpinning the seafood value...
