Building Blocks for Central Banks to Develop Nature Scenarios

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.