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Emerging Risks and Opportunities in Natural Infrastructure Finance: The Growing Role of Biodiversity in Investment and Insurance

Natural infrastructure—that is, ecosystems providing essential services such as water filtration, climate regulation, and pollination—is increasingly recognized as a critical factor in global economic stability. A weak but growing signal is the quantification of biodiversity loss and ecosystem-service decline as material economic risks within mainstream financial and insurance sectors. This emerging integration of natural capital into risk models and capital allocation could disrupt industries from banking and insurance to agriculture and urban planning, shaping how societies value and invest in nature’s assets over the next two decades.

What’s Changing?

Recent advances highlight the financialization of biodiversity and ecosystem services. The Swiss Re Institute has developed methods to incorporate ecosystem-service decline into underwriting and macroeconomic risk frameworks, signaling a new frontier in risk evaluation that treats biodiversity loss as a tangible credit risk factor (Forbes, 2025). This innovation means insurance companies may soon adjust premiums or deny coverage based on regional ecosystem health, potentially affecting sectors dependent on natural systems.

At the same time, multi-billion dollar wildlife trade combined with habitat loss introduces escalating risks to species and ecosystems with cascading economic ramifications (IAS Baba, 2025). Unregulated exploitation adds uncertainty to resource-based industries, from pharmaceuticals to luxury goods, that rely on biodiversity.

Moreover, nature-positive agricultural practices like tree beekeeping are gaining traction as essential in stabilizing pollinator populations and supporting wildflowers amid rising urbanization and deforestation (Farmonaut, 2026). Such methods could influence supply chains in food, cosmetics, and bio-based products by embedding ecosystem services in production processes.

The Forest Declaration Assessment coalition tracks global pledge progress on eliminating deforestation and restoring degraded lands. It aims to mobilize restoration efforts on 350 million hectares by 2030 (Forest Declaration, 2025). However, current evidence shows deforestation and fires threaten forest carbon sinks, as seen in the Amazon’s potential shift to a net carbon source driven by drought and heat extremes (Mail & Guardian, 2025). These ecological tipping points could cause abrupt changes in carbon markets, investment portfolios, and regulatory frameworks.

Marine biodiversity, where nearly 30% of species face extinction risks due to habitat loss, represents another front where natural infrastructure collapse might unsettle fisheries, coastal economies, and global food security (Fishing & Fish, 2025).

Why is This Important?

The financial sector’s recognition of natural infrastructure risks introduces new vulnerabilities and opportunities for a wide range of industries, as ecosystem degradation directly undermines the natural capital underpinning production and consumption patterns. Currently, such risks may be overlooked or undervalued in company valuations, credit ratings, and insurance products, creating hidden exposures.

As Swiss Re demonstrates by integrating biodiversity into underwriting, ecosystems no longer remain externalities; their decline could affect balance sheets and capital flows. This shift implies that investors and corporations that fail to account for these risks may face increased costs or restrictions tomorrow, while proactive actors might benefit from emerging “nature-positive” financing and insurance products.

Business models relying on stable ecosystem functions—agriculture, fisheries, tourism, pharmaceuticals—may need to innovate or face disruptions as natural assets decline or regulations tighten. For example, tree beekeeping as a restorative practice may evolve from niche to mainstream, influencing how supply chains embed ecological resilience. Similarly, failure to meet reforestation commitments or to prevent forest carbon source transitions could destabilize carbon offset markets essential for corporate net-zero strategies.

Furthermore, these changes intersect with social and governance trends: supply chain disclosures on biodiversity, consumer preferences for sustainable sourcing, and regulatory developments around environmental financial risks are likely to accelerate. This creates a multilayered shift where corporate sustainability becomes simultaneously a financial imperative and a competitive advantage.

Implications

The emerging integration of natural infrastructure into financial risk assessment may lead to:

  • Risk reassessment and capital reallocation: Lenders, insurers, and investors could increasingly screen for biodiversity-dependent risks, reallocating capital away from ecologically harmful activities toward sustainable and restorative initiatives.
  • Innovations in natural capital markets: New instruments valuing ecosystem services, such as biodiversity credits or ecosystem-service bonds, may gain prominence, reshaping how businesses invest in and capitalize on nature.
  • Supply chain transformation: Industries reliant on natural inputs will be pressured to adopt sustainable practices like pollinator-friendly agriculture, forest protection, and habitat restoration to maintain operational continuity and compliance.
  • Regulatory evolution: Governments and multinational bodies may introduce stricter disclosure requirements and financial regulations incorporating biodiversity and ecosystem risk metrics to safeguard economic stability.
  • Systemic risk consideration: Ecosystem tipping points—such as the Amazon’s potential carbon source shift—may be recognized as systemic risks, prompting scenario planning, stress testing, and contingency strategies across sectors.

Given these dynamics, businesses, governments, and financial institutions could prioritize:

  • Embedding natural capital considerations into strategic decision-making and financial disclosures.
  • Investing in data and modeling capabilities that quantify ecosystem-service dependencies and risks.
  • Developing partnerships across sectors to support ecosystem restoration and climate resilience.
  • Advocating for policies that align financial incentives with nature-positive outcomes.

Questions

  • How can your organization integrate biodiversity and ecosystem-service risks into existing risk management and investment frameworks?
  • What data gaps and modeling capabilities are needed to assess exposure to natural infrastructure decline accurately?
  • Which natural capital restoration initiatives or “nature-positive” practices could enhance resilience in your supply chains or investments?
  • How might emerging regulations around environmental financial disclosures affect your compliance and reporting processes?
  • Could your sector face systemic risks from ecosystem tipping points, and how is strategic planning addressing these possibilities?

Keywords

natural infrastructure; biodiversity risk; ecosystem services; financial risk modeling; natural capital markets; supply chain resilience; ecosystem tipping points

Bibliography

Briefing Created: 15/11/2025
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