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The Implicit Costs of Biodiversity Conservation: Evidence From Corporate Investment Distortion in China

Yihui Chen et al.

Financial Management2026https://doi.org/10.1111/fima.70035article
AJG 3ABDC A*
Weight
0.50

Abstract

We examine the implicit costs of biodiversity conservation by exploiting China's Green Shield Action (GSA). Using a difference‐in‐differences approach, we find that firms in affected cities reduce investment rates by two percentage points, a 33.11% decline relative to the mean. This effect is driven by heightened local fiscal pressure—leading to tighter tax enforcement and subsidy cuts—and increased operational uncertainty. The impact is more pronounced for firms with irreversible capital, high competition, or elevated risk. Furthermore, subsidiary‐siting analysis shows this decline is not offset by compensatory investment in other regions, indicating a substantive contraction in aggregate investment capacity rather than mere reallocation. A back‐of‐the‐envelope calculation estimates a cumulative aggregate investment loss of 4.378 billion RMB. Our findings highlight a significant trade‐off between ecological goals and indirect economic costs, offering critical insights for global biodiversity frameworks and sustainable development.

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https://doi.org/https://doi.org/10.1111/fima.70035

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@article{yihui2026,
  title        = {{The Implicit Costs of Biodiversity Conservation: Evidence From Corporate Investment Distortion in China}},
  author       = {Yihui Chen et al.},
  journal      = {Financial Management},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/fima.70035},
}

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The Implicit Costs of Biodiversity Conservation: Evidence From Corporate Investment Distortion in China

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.