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University of Miami, USA

Nature as a Defense from Disasters: Natural Capital and Municipal Bond Yields



This paper quantifies the value of natural capital for weather disaster mitigation and the impact of protected areas on local economies. Specifically, I investigate how shocks to local natural capital affect municipal bond markets. Using 313 natural capital loss events and extreme weather events, I show that counties with protected areas face lower natural disaster damages and lower cost of debt. The additional damages from natural disasters are estimated at between $9 and $23 million. Moreover, the additional cost of debt related to the loss of natural capital can be as high as $620,000 for an average bond. Lastly, the results show one of the social costs related to the loss of natural capital: population migration. Overall, this paper provides evidence supporting nature conservation and highlights the important role of nature as a shield from natural disasters.


I am Claudio Rizzi and I am a fourth-year Ph.D. student in finance at the University of Miami, Miami Herbert Business School. My research focuses on the interdisciplinary connection between environmental sustainability, climate change, and finance. Specifically, I focus on the asset pricing implications of nature conservation and natural capital’s importance for local economies, as well as the relationship between nature and executives’ environmental preferences.

Claudio Rizzi

Claudio Rizzi

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