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The real effects of protecting biodiversity
Journal article

The real effects of protecting biodiversity

Abstract

Protected areas are a central instrument in biodiversity conservation. However, their broader implications for corporate behavior and financial performance remain underexplored. This study examines how proximity to newly designated protected areas shapes establishment-level environmental, operational, and financial outcomes from 1990 to 2021. We find that nearby establishments significantly reduce toxic emissions, driven not by cleaner technologies but by production cutbacks and workforce contraction. Exploratory evidence suggests that heightened regulatory oversight may be one channel that constrains operations and is associated with lower profitability and market value. These results underscore the environmental benefits of conservation but also reveal the material costs imposed on affected firms. As global conservation initiatives expand, our findings show that biodiversity-related regulatory exposure constitutes a material financial risk that should be incorporated into policy design, corporate strategy, and capital allocation decisions.

Authors

Akbari A; Ng L; Pham MD; Yu J

Journal

Review of Finance, Vol. 30, No. 1, pp. 193–230

Publication Date

January 1, 2026

DOI

10.1093/rof/rfaf055

ISSN

1572-3097
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