Building Blocks for Central Banks to Develop Nature Scenarios

Elena Almeida, Chiara Colesanti Senni and Nepomuk Dunz | 27 January 2023
Monetary, Policy Briefs | Tags: Central Banks, Climate Risk, Environment, Financial Stability

This policy brief was published by INSPIRE (The International Network for Sustainable Financial Policy Insights, Research and Exchanges), as part of the Sustainable Central Banking Toolbox paper series.

Models and scenarios are increasingly being adopted by central banks and financial supervisors as a tool to support the assessment of climate risks, but existing scenarios currently do not sufficiently incorporate broader environmental risks, such as nature-related risks, into such assessments.

This paper aims to improve the understanding of the current generation of models and scenarios on nature–economy interactions in light of their applicability for analysing nature-related financial risks. It discusses key criteria that methodologies for assessing nature-related risks should satisfy if they are to provide useful guidance for the financial sector and highlights areas where further research is needed.

Read the full policy brief Building blocks for central banks to develop nature scenarios.

Elena Almeida

is a Policy Analyst at the Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science.

Chiara Colesanti Senni

is a Postdoctoral Researcher at the University of Zurich. She is also a Visiting Fellow at the Grantham Research Institute at LSE and an Affiliated Researcher at the Oxford Sustainable Finance Group. Her research focuses on environmental economics, macro-financial economics and sustainable finance. She was previously a Fellow with CEP where she focused on the integration of environmental risks in monetary policy. She is also co-founder of the Sustainable Macro research network. Chiara did her PhD in Resource Economics at ETH Zurich. During this time she focused on the transition to a low-carbon economy, including the possibility for central banks to adopt emission-based interest rates in their lending facilities. She holds a MSc in Economics from the University of Bologna, as well as a BA in Economic Development from the University of Florence.

Nepomuk Dunz

is a Financial Sector Economist at the World Bank.

Building Blocks for Central Banks to Develop Nature Scenarios

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