That's the finding of a new study from LSE's Grantham Research Institute — the first to empirically link biodiversity loss to higher government borrowing costs. The numbers across 53 countries over 20 years:
- Countries with more biodiversity loss pay 40–75 basis points more on their government bonds
- For the most vulnerable countries, the penalty is up to 3× higher
- The effect is comparable in size to climate-change risk
Why should the financial sector care?
Government bonds are the foundation of the financial system. Pension funds, insurers, and central banks hold them in massive quantities. When borrowing costs go up for governments, it gets more expensive for everyone in that economy to borrow — businesses, households, everyone.
And here's the uncomfortable part: the hardest-hit countries are often the ones protecting the world's most critical ecosystems. When they can't afford to invest in conservation, it becomes everyone's problem through trade, food prices, and financial markets.
Nature risk isn't just an environmental issue. It's a financial stability issue. Time for credit rating agencies, central banks, and asset owners to treat it that way.
Source: Wollenweber, Wang & Ranger, Kicking away the green ladder: the asymmetric sovereign risk from nature degradation, LSE Grantham Research Institute, 2026.