Biodiversity, macroeconomics and sovereign risk

This study explores the links between biodiversity, macroeconomics and sovereign risk, with a focus on emerging and developing countries (EDCs). As a starting point, it details the channels identified in the literature through which biodiversity can affect the macroeconomy and sovereign risk.
Despite the inherent difficulties in analyzing biodiversity risks, and an evolving scientific backdrop, research has served to highlight the strong and manifold links between our economic activities and biodiversity. The increasing pressure that these activities exert on our natural capital results in an erosion of the ecosystem services on which they depend. There are thus tangible macroeconomic risks related to biodiversity loss (physical risk) and the introduction of conservation policies (transition risk). In terms of sovereign risk, these effects can have a material impact on the “traditional” risk pillars (for example, the economy, public finances and external accounts).