Research

Using bird-watching data matched to U.S. industrial facilities, I show that firms causally reduce bird populations and species. I use these estimates to construct a firm-level biodiversity footprint index that identifies firms with many ecologically consequential facilities relative to their size. Sorting on the footprint generates significant abnormal returns among small- and mid-cap firms from 1988 to 2024. The return premium reflects forecast errors: investors misinterpret the higher production costs of high-footprint firms as operational decline, and their pessimism corrects when earnings are announced. Although firms' facility locations are public, firms with larger biodiversity footprints provide less voluntary biodiversity information.

This study examines whether the sovereign credit market incorporates expectations of coastal flooding and sea level rise (SLR). The results indicate that medium- and long-term credit default swap spreads increase for sovereigns with a substantial portion of their population vulnerable to ex-ante coastal flooding in response to news around climate summits. Predictability tests suggest that the market asynchronously incorporates changing vulnerabilities of regions into its risk assessment with such news, consistent with theories of inattention to information. A real-options model is used to consider debt financing trade-offs associated with sovereign inaction or investment into adaptation.

We study how US equities respond to abnormal temperature variability — a localized and transitory shock with significant firm-level consequences. Sorting US firms each month by realized exposure in their operating states, we find that low-exposure firms have contemporaneously greater returns than high-exposure firms, with a return differential of 4.8% annually. Firm-level evidence supports a cash-flow channel, as elevated variability reduces revenues and profits. Consistent with these operating consequences, household spending falls in affected consumer-facing sectors, and workers supply fewer hours. These shocks attract attention as they occur, yet their cash-flow implications are difficult for investors to infer. Analyst disagreement rises and earnings surprises are more negative among high-exposure firms.