The economic and financial stability repercussions of nature degradation for the Netherlands: Exploring scenarios with transition shocks
There is scientific consensus that nature and its vital contributions to prosperity are deteriorating worldwide. Against this background, measures are being taken to halt and reverse nature degradation at global, regional, and national levels. Importantly, the UN Global Biodiversity Framework of December 2022, the implementation of the EU Green Deal and European Biodiversity Strategy, and the current nitrogen discussion in the Netherlands bring nature-related risks at the forefront.
This study is a first exploration of the potential economic and financial stability impacts of a set of tail-event scenarios that reflect strong measures taken suddenly in response to nature degradation. We consider four transition risk scenarios, for which we find varying degrees of materiality. We do not focus on physical risk scenarios, with the exception of a scenario of pollination decline, due to methodological limitations. This study is a first, methodological contribution to the analysis of the impact of nature degradation on economic developments and financial stability. To draw policy conclusions from this analysis would require further work.
The economic and financial stability repercussions of nature degradation for the Netherlands: Exploring scenarios with transition shocks
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