FINANCE • G. ANDREW KAROLYI


HAROLD BIERMAN, JR. DISTINGUISHED PROFESSOR OF MANAGEMENT CHARLES FIELD KNIGHT DEAN


Samuel Curtis Johnson Graduate School of Management


Cornell SC Johnson College of Business Cornell University


Biodiversity finance: A call for research into financing nature Financial Management, 52, 2, Summer 2023 LINK TO PAPER LINK TO VIDEOS


Co-authors • G. Andrew Karolyi Harold Bierman, Jr. Distinguished Professor of Management,


Samuel Curtis Johnson Graduate School of Management, Charles Field Knight Dean, Cornell SC Johnson College of Business, Cornell University


• John Tobin-de la Puente Professor of Practice, Charles H. Dyson School of


Applied Economics and Management, Cornell SC Johnson College of Business, Cornell University


Summary


Nature and its services are crucial to the global economy. According to a 2022 joint report of the UN Environment Programme and the World Economic Forum, more than half of the world’s GDP (about $40 trillion) is moderately or highly dependent on nature and its services. Extinctions of wild mammals, plants, marine environments and millions of species at risk of extinction represent potentially a significant economic risk. As this loss accelerates, biodiversity conservation will supersede climate change risk mitigation and adaption as the next grand challenge for sustainable finance.


JOHN TOBIN-DE LA PUENTE PROFESSOR OF PRACTICE Charles H. Dyson School


of Applied Economics and Management Cornell SC Johnson College of Business Cornell University


Yet there are no studies in the top tier journals in finance that have framed the risks related to biodiversity loss, how those risks might be priced, or how the private financing flows need to be intermediated. In this paper, Karolyi and Tobin lay out one framework and outline important open research questions for financial economists to pursue. “Biodiversity loss and climate change represent twin environmental crises of our era,” they argue, “and the collective choices we make in addressing them could result in profoundly disparate outcomes for our economy and our planet. Tere is, however, one crucial difference between climate change and biodiversity loss: while carbon dioxide can be removed from the atmosphere with currently available - although, in some cases, expensive - technology, extinction is forever.”


TO IMPACT CONTENTS


RESEARCH WITH IMPACT: CORNELL SC JOHNSON COLLEGE OF BUSINESS • 2023 EDITION


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