Managing nature-related financial risks: A precautionary policy approach for central banks and financial supervisors

This paper considers how financial authorities should react to environmental threats beyond climate change. These include biodiversity loss, water scarcity, ocean acidification, chemical pollution and — as starkly illustrated by the Covid-19 pandemic — zoonotic disease transmission, among others. We first provide an overview of these nature-related financial risks (NRFR) and then show how the financial sector is both exposed to them and contributes to their development via its lending, and via the propagation and amplification of financial shocks. We argue that NRFR — being systemic, endogenous and subject to ‘radical uncertainty’ — cannot be sufficiently managed through ‘marketfixing’ approaches based on information disclosure and quantitative risk estimates. Instead, we propose that financial authorities utilise a ‘precautionary policy approach’, making greater use of qualitative methods of managing risk, to support a controlled regime shift towards more sustainable capital allocation. A starting point would be the identification and exclusion of clearly unsustainable activities (e.g. deforestation), the financing of which should be discouraged via micro- and macro-prudential policy tools. Monetary policy tools, such as asset purchase programmes and collateral operations, as well as central banks’ own funds, should exclude assets linked to such activities

Finance, climate-change and radical uncertainty: Towards a precautionary approach to financial policy

Climate-related financial risks (CRFR) are now recognised by central banks and supervisors as material to their financial stability mandates. But while CRFR are considered to have some unique characteristics, the emerging policy framework for dealing with them has largely focused on market-based solutions that seek to reduce perceived information gaps that prevent the accurate pricing of CRFR. These include disclosure, transparency, scenario analysis and stress testing. We argue this approach will be limited in impact because CRFR are characterised by radical uncertainty and hence ‘efficient’ price discovery is not possible. In addition, this approach tends to bias financial policy towards concern around avoiding short-term market disruption at the expense of longer-term, potentially catastrophic and irreversible climate risks. Instead, an alternative ‘precautionary’ financial policy approach is proposed that offers an intellectual framework for legitimizing more ambitious financial policy interventions in the present to better deal with these long-term risks. This framework draws on two existing concepts — the ‘precautionary principle’ and modern macroprudential policy — and justifies the full integration of CRFR into financial policy, including prudential, macroprudential and monetary policy frameworks

Climate finance and disclosure for institutional investors: why transparency is not enough

The finance sector’s response to pressures around climate change has emphasized disclosure, notably through the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). The implicit assumption—that if risks are fully revealed, finance will respond rationally and in ways aligned with the public interest—is rooted in the “efficient market hypothesis” (EMH) applied to the finance sector and its perception of climate policy. For low carbon investment, particular hopes have been placed on the role of institutional investors, given the apparent matching of their assets and liabilities with the long timescales of climate change. We both explain theoretical frameworks (grounded in the “three domains”, namely satisficing, optimizing, and transforming) and use empirical evidence (from a survey of institutional investors), to show that the EMH is unsupported by either theory or evidence: it follows that transparency alone will be an inadequate response. To some extent, transparency can address behavioural biases (first domain characteristics), and improving pricing and market efficiency (second domain); however, the strategic (third domain) limitations of EMH are more serious. We argue that whilst transparency can help, on its own it is a very long way from an adequate response to the challenges of ‘aligning institutional climate finance’

Genetic diversity of vaccine candidate antigens in Plasmodium falciparum isolates from the Amazon basin of Peru

<p>Abstract</p> <p>Background</p> <p>Several of the intended <it>Plasmodium falciparum </it>vaccine candidate antigens are highly polymorphic and could render a vaccine ineffective if their antigenic sites were not represented in the vaccine. In this study, characterization of genetic variability was performed in major B and T-cell epitopes within vaccine candidate antigens in isolates of <it>P. falciparum </it>from Peru.</p> <p>Methods</p> <p>DNA sequencing analysis was completed on 139 isolates of <it>P. falciparum </it>collected from endemic areas of the Amazon basin in Loreto, Peru from years 1998 to 2006. Genetic diversity was determined in immunological important regions in circumsporozoite protein (CSP), merozoite surface protein-1 (MSP-1), apical membrane antigen-1 (AMA-1), liver stage antigen-1 (LSA-1) and thrombospondin-related anonymous protein (TRAP). Alleles identified by DNA sequencing were aligned with the vaccine strain 3D7 and DNA polymorphism analysis and FST study-year pairwise comparisons were done using the DnaSP software. Multilocus analysis (MLA) was performed and average of expected heterozygosity was calculated for each loci and haplotype over time.</p> <p>Results</p> <p>Three different alleles for CSP, seven for MSP-1 Block 2, one for MSP-1 Block 17, three for AMA-1 and for LSA-1 each and one for TRAP were identified. There were 24 different haplotypes in 125 infections with complete locus typing for each gene.</p> <p>Conclusion</p> <p>Characterization of the genetic diversity in <it>Plasmodium </it>isolates from the Amazon Region of Peru showed that <it>P. falciparum </it>T and B cell epitopes in these antigens have polymorphisms more similar to India than to Africa. These findings are helpful in the formulation of a vaccine considering restricted repertoire populations.</p

Higher cost of finance exacerbates a climate investment trap in developing economies

Finance is vital for the green energy transition, but access to low cost finance is uneven as the cost of capital differs substantially between regions. This study shows how modelled decarbonisation pathways for developing economies are disproportionately impacted by different weighted average cost of capital (WACC) assumptions. For example, representing regionally-specific WACC values indicates 35% lower green electricity production in Africa for a cost-optimal 2 °C pathway than when regional considerations are ignored. Moreover, policy interventions lowering WACC values for low-carbon and high-carbon technologies by 2050 would allow Africa to reach net-zero emissions approximately 10 years earlier than when the cost of capital reduction is not considered. A climate investment trap arises for developing economies when climate-related investments remain chronically insufficient. Current finance frameworks present barriers to these finance flows and radical changes are needed so that capital is more equitably distributed

The role of glacier mice in the invertebrate colonisation of glacial surfaces: the moss balls of the Falljökull, Iceland

Glacier surfaces have a surprisingly complex ecology. Cryoconite holes contain diverse invertebrate communities while other invertebrates, such as Collembola often graze on algae and windblown dead organic on the glacier surface. Glacier mice (ovoid unattached moss balls) occur on some glaciers worldwide. Studies of these glacier mice have concentrated on their occurrence and mode of formation. There are no reports of the invertebrate communities. But, such glacier mice may provide a suitable favourable habitat and refuge for a variety of invertebrate groups to colonise the glacier surface. Here we describe the invertebrate fauna of the glacier mice (moss balls) of the Falljökull, Iceland. The glacier mice were composed of Racomitrium sp. and varied in size from 8.0 to 10.0 cm in length. All glacier mice studied contained invertebrates. Two species of Collembola were present. Pseudisotoma sensibilis (Tullberg, 1876) was numerically dominant with between 12 and 73 individuals per glacier mouse while Desoria olivacea (Tullberg, 1871) occurred but in far lower numbers. Tardigrada and Nematoda had mean densities of approximately 200 and 1,000 respectively. No Acari, Arachnida or Enchytraeidae were observed which may be related to the difficulty these groups have in colonizing the glacier mice. We suggest that glacier mice provide an unusual environmentally ameliorated microhabitat for an invertebrate community dwelling on a glacial surface. The glacier mice thereby enable an invertebrate fauna to colonise an otherwise largely inhospitable location with implications for carbon flow in the system

Identifying the determinants of premature mortality in Russia: overcoming a methodological challenge

<p>Abstract</p> <p>Background</p> <p>It is thought that excessive alcohol consumption is related to the high mortality among working age men in Russia. Moreover it has been suggested that alcohol is a key proximate driver of the very sharp fluctuations in mortality seen in this group since the mid-1980s. Designing an individual-level study suitable to address the potential acute effects of alcohol consumption on mortality in Russia has posed a challenge to epidemiologists, especially because of the need to identify factors that could underlie the rapid changes up and down in mortality rates that have been such a distinctive feature of the Russian mortality crisis. In order to address this study question which focuses on exposures acting shortly before sudden death, a cohort would be unfeasibly large and would suffer from recruitment bias.</p> <p>Methods</p> <p>Although the situation in Russia is unusual, with a very high death rate characterised by many sudden and apparently unexpected deaths in young men, the methodological problem is common to research on any cause of death where many deaths are sudden.</p> <p>Results</p> <p>We describe the development of an innovative approach that has overcome some of these challenges: a case-control study employing proxy informants and external data sources to collect information about proximate determinants of mortality.</p> <p>Conclusion</p> <p>This offers a set of principles that can be adopted by epidemiologists studying sudden and unexpected deaths in other settings.</p

Drinking in transition: trends in alcohol consumption in Russia 1994-2004

BACKGROUND: Heavy alcohol consumption is widespread in Russia, but studying changes in drinking during the transition from Communism has been hampered previously by the lack of frequent data. This paper uses 1-2 yearly panel data, comparing consumption trends with the rapid concurrent changes in economic variables (notably around the "Rouble crisis", shortly preceding the 1998 survey round), and mortality. METHODS: Data were from 9 rounds (1994-2004) of the 38-centre Russia Longitudinal Monitoring Survey. Respondents aged over 18 were included (>7,000 per round). Trends were measured in alcohol frequency, quantity per occasion (by beverage type) and 2 measures of potentially hazardous consumption: (i) frequent, heavy spirit drinking (≥80 g per occasion of vodka or samogon and >weekly) (ii) consuming samogon (cheap home-distilled spirit). Trends in consumption, mean household income and national mortality rates (in the same and subsequent 2 years) were compared. Finally, in a subsample of individual male respondents present in both the 1996 and 1998 rounds (before and after the financial crash), determinants of changes in harmful consumption were studied using logistic regression. RESULTS: Frequent, heavy spirit drinking (>80 g each time, ≥weekly) was widespread amongst men (12-17%) throughout, especially in the middle aged and less educated; with the exception of a significant, temporary drop to 10% in 1998. From 1996-2000, samogon drinking more than doubled, from 6% to 16% of males; despite a decline, levels were significantly higher in 2004 than 1996 in both sexes. Amongst women, frequent heavy spirit drinking rose non-significantly to more than 1% during the study. Heavy frequent male drinking and mortality in the same year were correlated in lower educated males, but not in women. Individual logistic regression in a male subsample showed that between 1996 and1998, those who lost their employment were more likely to cease frequent, heavy drinking; however, men who commenced drinking samogon in 1998 were more likely to be rural residents, materially poor, very heavy drinkers or pessimistic about their finances. These changes were unexplained by losses to follow-up. CONCLUSIONS: Sudden economic decline in late 1990s Russia was associated with a sharp, temporary fall in heavy drinking, and a gradual and persistent increase in home distilled spirit consumption, with the latter more common amongst disadvantaged groups. The correlation between heavy drinking and national mortality in lower educated men is interesting, but the timing of RLMS surveys late in the calendar year, and the absence of any correlation between drinking and the subsequent year's mortality, makes these data hard to interpret. Potential study limitations include difficulty in measuring multiple beverages consumed per occasion, and not specifically recording "surrogate" (non-beverage) alcohols

Why all the fuss about 2D semiconductors?

Graphene is no longer alone; a family of atomically thin 2D semiconductors has emerged. Optoelectronics and photonics applications are in their experimental infancy but the future holds much promise.Comment: Commentary article, 1 figure, 1 tabl

Comparison of artemether-lumefantrine and chloroquine with and without primaquine for the treatment of Plasmodium vivax infection in Ethiopia: A randomized controlled trial

Background: Recent efforts in malaria control have resulted in great gains in reducing the burden of Plasmodium falciparum, but P. vivax has been more refractory. Its ability to form dormant liver stages confounds control and elimination efforts. To compare the efficacy and safety of primaquine regimens for radical cure, we undertook a randomized controlled trial in Ethiopia. Methods and findings: Patients with normal glucose-6-phosphate dehydrogenase status with symptomatic P. vivax mono-infection were enrolled and randomly assigned to receive either chloroquine (CQ) or artemether-lumefantrine (AL), alone or in combination with 14 d of semi-supervised primaquine (PQ) (3.5 mg/kg total). A total of 398 patients (n = 104 in the CQ arm, n = 100 in the AL arm, n = 102 in the CQ+PQ arm, and n = 92 in the AL+PQ arm) were followed for 1 y, and recurrent episodes were treated with the same treatment allocated at enrolment. The primary endpoints were the risk of P. vivax recurrence at day 28 and at day 42. The risk of recurrent P. vivax infection at day 28 was 4.0% (95% CI 1.5%–10.4%) after CQ treatment and 0% (95% CI 0%–4.0%) after CQ+PQ. The corresponding risks were 12.0% (95% CI 6.8%–20.6%) following AL alone and 2.3% (95% CI 0.6%–9.0%) following AL+PQ. On day 42, the risk was 18.7% (95% CI 12.2%–28.0%) after CQ, 1.2% (95% CI 0.2%–8.0%) after CQ+PQ, 29.9% (95% CI 21.6%–40.5%) after AL, and 5.9% (95% CI 2.4%–13.5%) after AL+PQ (overall p < 0.001). In those not prescribed PQ, the risk of recurrence by day 42 appeared greater following AL treatment than CQ treatment (HR = 1.8 [95% CI 1.0–3.2]; p = 0.059). At the end of follow-up, the incidence rate of P. vivax was 2.2 episodes/person-year for patients treated with CQ compared to 0.4 for patients treated with CQ+PQ (rate ratio: 5.1 [95% CI 2.9–9.1]; p < 0.001) and 2.3 episodes/person-year for AL compared to 0.5 for AL+PQ (rate ratio: 6.4 [95% CI 3.6–11.3]; p < 0.001). There was no difference in the occurrence of adverse events between treatment arms. The main limitations of the study were the early termination of the trial and the omission of haemoglobin measurement after day 42, resulting in an inability to estimate the cumulative risk of anaemia. Conclusions: Despite evidence of CQ-resistant P. vivax, the risk of recurrence in this study was greater following treatment with AL unless it was combined with a supervised course of PQ. PQ combined with either CQ or AL was well tolerated and reduced recurrence of vivax malaria by 5-fold at 1 y