Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283460 
Year of Publication: 
2023
Series/Report no.: 
ECB Occasional Paper No. 333
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
The loss of biodiversity and the degradation of natural ecosystems pose a significant threat to the broader economy and financial stability that central banks and financial supervisors cannot ignore. To gain further insights into the implications of nature and ecosystem service degradation for financial stability, this study assesses the dependencies of euro area non-financial corporations and banks on different ecosystem services. The study then develops a method to capture banks' credit portfolio sensitivity to possible future changes in the provision of ecosystem services. Our results show that 75% of all corporate loan exposures in the euro area have a strong dependency on at least one ecosystem service. We also find that loan portfolios may be significantly affected if nature degradation continues its current trend, with greater vulnerabilities concentrated in certain regions and economic sectors.
Subjects: 
biodiversity loss
nature degradation
input-output table
ENCORE,materiality score
economy
impact
nexus
JEL: 
C55
G21
G38
Q5
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-6232-2
Document Type: 
Research Report

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