Institute
louis
Bachelor
louis
Bachelor
In the Face of the Ecological Emergency, a Research Chair Develops Innovative Tools to Place Nature at the Heart of Economic Decision-Making
The Banque de France, in partnership with École polytechnique, ENSAE Paris, the International Research Centre on Environment and Development (CIRED), Paris School of Economics (PSE), and the Foundation for Biodiversity Research (FRB), announces the launch of the Research Chair “Modelling Economic and Financial Risks Related to Nature”, hosted by the Fondation du Risque.
This research initiative aims to provide public and economic decision-makers with macroeconomic and financial models that incorporate the risks associated with nature degradation, thereby supporting informed decision-making by both public and private stakeholders. In the medium term, the objective is to integrate these tools into international discussions and frameworks, including those of the Network for Greening the Financial System (NGFS), the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), and the Intergovernmental Panel on Climate Change (IPCC).
According to the World Economic Forum, more than half of global GDP is directly dependent on nature. The European Central Bank estimates that 72% of non-financial companies in the euro area are highly dependent on at least one ecosystem service. Yet the macroeconomic models used by central banks do not currently adequately incorporate these dependencies or the risks associated with the degradation of natural capital.
This creates a significant blind spot: decision-makers currently lack the tools needed to anticipate the macroeconomic and financial impacts of ecosystem degradation, including effects on growth, inflation, employment, and financial stability.
The Chair will develop analytical tools linking nature, economics, and finance, structured around three research areas:
Modelling short- and medium-term economic and financial risks:
Developing tools to measure current and near-term impacts in order to inform public and private decision-making.
Modelling long-term economic and financial risks:
Anticipating how ecosystem degradation will affect economic sectors, growth, and employment over the coming decades.
Developing databases:
Documenting companies’ dependencies on nature and characterising the links between the state of nature and the productivity of economic sectors.
A specific focus will be placed on water stress, including both water scarcity (droughts) and declining water quality (pollution). These two trends directly affect production conditions in key sectors such as agriculture, energy, and certain water-intensive industries.
The Chair brings together six French academic and institutional partners with complementary expertise:
Banque de France:
The institution responsible for monetary policy and financial stability, and the initiator of the Chair.
École polytechnique:
Expertise in economics, applied mathematics, and systemic risk analysis.
ENSAE Paris:
A leading institution in applied mathematics for economics and finance, as well as in data science.
International Research Centre on Environment and Development (CIRED):
A leading research centre on interactions between economics and the environment, climate, energy, and biodiversity.
Paris School of Economics (PSE):
A leading institution in public and environmental economics.
Foundation for Biodiversity Research (FRB):
A key organisation supporting biodiversity research, acting as an interface between science, public decision-makers, and economic stakeholders.
Fondation du Risque:
A key organisation supporting research and education in the field of risk management in France, hosting numerous research Chairs since 2007.
“The heatwave we are experiencing reminds us how strongly our economies depend on natural balances. Improving our ability to measure risks related to water, biodiversity, and ecosystems is now essential to inform both public and private decisions. This is the ambition of this Chair,” explains Gauthier Vermandel, Chair holder and Senior Researcher at École polytechnique.
To successfully carry out this project, the Chair requires additional funding of at least €2 million.
By supporting the Chair, sponsors will benefit in particular from forward-looking analyses on the ecosystem services on which their activities depend, direct involvement in research activities (for example through PhD funding or participation in seminars), as well as institutional visibility through events and publications.
