Abstract:
States, international organisations, financial institutions and businesses are increasingly seeking to mobilise large financial flows to fund ecosystem restoration. (UNEP, 2022). This paper asks what these new financial flows mean for the macroeconomy, and how macroeconomic feedback effects should be taken into account when contemplating nature finance programmes. I augment DEFINE-GOV (Dafermos and Nikolaidi, 2023), a simplified version of ecological stock-flow-consistent model DEFINE (Dafermos et al., 2016), with a simple land module. Land is classified as either a source of greenhouse gas emissions or a sink for greenhouse gases. Agricultural, urban and industrial land is assumed to be a source of greenhouse gas emissions and trees and other natural vegetation are assumed to be a sink of greenhouse gas emissions. Growth in GDP leads land to be converted from sink to source. Spending on nature projects leads lands to be converted from source to sink.
Citation:
Youngman, T. (2025) 'Does nature finance pose macroeconomic risks? Analysis using a stock-flow consistent model with land', pp1045-1049, in Pansera, M., & Vázquez Santos, C. (2024). ESEE-Degrowth 2024. Science, Technology, and Innovation beyond growth: Cultivating collective creativity for a sustainable future. Universidad de vigo. https://doi.org/10.35869/esee-degrowth2024