Jess Cornaggia, Yu-Hsuan (Jennifer) Liang, Peter Iliev, and Qiang Wang
Review of Finance, Volume 30, Issue 1, January 2026, Pages 391–421, https://doi.org/10.1093/rof/rfaf051
The article Biodiversity and Local Asset Values investigates the relationship between biodiversity and real estate prices in the United States, providing the first national-scale benchmark of how ecological conditions are capitalized into local asset values. Drawing on more than fifty-eight million property transactions between 2000 and 2021, the authors connect transaction prices with biodiversity data from the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and regional species richness measures from NatureServe. The study demonstrates that biodiversity depletion and the remaining stock of biodiversity affect property values differently. At the level of individual properties, biodiversity loss is associated with higher prices. As natural habitats and species are depleted, land becomes available for development, and this process increases the value of real estate. In effect, biodiversity is monetized through its conversion into usable land, producing a premium for property owners in developed areas. Yet at the same time, the study reveals that biodiversity in the broader region has the opposite effect. County-level species richness is strongly linked with higher property values, suggesting that homebuyers regard diverse ecosystems as amenities that enhance quality of life. Whether the species are endangered or common, their presence adds to the appeal of nearby properties. This effect is particularly pronounced for luxury real estate, where buyers are more likely to pay for the intangible benefits of proximity to ecological richness.
The analysis also highlights the role of habitat fragmentation. Properties located near areas where biodiversity is unevenly depleted tend to have higher values, indicating that proximity to intact habitats, even in a fragmented landscape, is prized. However, the strength of this relationship diminishes with distance, with biodiversity close to the property being more valuable than biodiversity further away. The findings emphasize how spatial scale shapes the way biodiversity is perceived and priced in the market.
Perhaps most striking is the evidence that preferences have shifted over time. Early in the 2000s, biodiversity loss was consistently linked to higher property values, reflecting the strong premium attached to development. By the end of the study period, however, the effect had weakened considerably, and species loss no longer provided a statistically significant increase in value. In contrast, the premium associated with regional biodiversity grew stronger over the same period, suggesting that buyers have become more aware of and more interested in ecological amenities. This shift is further supported by data from Google Trends: when public attention to biodiversity is high, the positive link between species richness and property values is strongest.
The authors propose a simple conceptual framework to explain these patterns. Households derive utility not only from the housing itself but also from the surrounding ecological environment. Local biodiversity can be sacrificed in the process of building, raising property values through development, while regional biodiversity functions as a non-rival amenity, increasing desirability and prices. Over time, as preferences evolve, the balance between these forces shifts, with the value of conserving biodiversity becoming more prominent.
The findings underscore the economic relevance of biodiversity as natural capital, with tangible value alongside its ecological importance. They demonstrate that biodiversity is increasingly recognized as natural capital, with tangible economic as well as ecological value. For policymakers and investors, this means that conservation strategies may align more closely with financial incentives than in the past. For land-use planners, it underscores the need to balance development with the preservation of ecological amenities. By documenting how biodiversity is priced into real estate markets, the article contributes to a growing literature at the intersection of finance, sustainability, and environmental economics, while also pointing to a cultural and economic shift in how society values the natural world.