Global Environmental Policy Seminar, “The Fiscal Impact of Biodiversity Loss and a Pathway for Conservation Finance.”

Global Environmental Policy Seminar
The Fiscal Impact of Biodiversity Loss and a Pathway for Conservation Finance
The 2023 Global Biodiversity Framework seeks to leverage private finance to achieve conservation goals. This requires conservation investments to generate returns for private investors. Here, we investigate one mechanism by examining how changes in natural assets impact municipal bond yields and create opportunities for investors. We estimate how the sudden loss of bats that provide pest control services is priced into rural counties’ bonds. Bat population losses reduce agricultural land tax revenues, driving up bond spreads in affected counties by 11.5 basis points, a 27% increase. From this result, if conservation investors purchase bonds with a principal value of $1 million and restore bats, the expected spread reduction increases bond prices by $14,124. This payoff can potentially cover conservation costs without new government actions.
Biography:
Dr. Eli Fenichel is the Knobloch Family Professor of Natural Resource Economics at Yale University, http://environment.yale.edu/profile/eli-fenichel. Prof. Fenichel conducts quantitative research that connects economics, natural science, epidemiology, and sustainable development, with a focus on intertemporal allocation and tradeoffs. Specific areas of research focus include natural capital valuation and accounting, particularly in connection to national accounts and sustainable development metrics; nature finance; human behavioral change in response to epidemic risk and how that shapes risk itself; and bioeconomic modeling. Dr. Fenichel teaches graduate level courses in applied math, mathematical modeling, natural resource economics, and the economics of sustainable development. From June 2021 through January 2023, he served in the Biden-Harris Administration’s Office of Science and Technology Policy as the Assistant Director for Natural Resource Economics and Accounting. He served other policy advisory roles as well including to the BEA, United Nations, World Bank, Asian Development Bank, and the High-level Panel for the Sustainable Ocean Economy.

*Environmental Social Sciences Seminars are in person only*