Nature Dependence, Economic Value, and Extinction Risk: Evidence from Biotech Innovations

Policymakers and investors increasingly recognize that firms’ dependence on nature can create financial risks and opportunities. While recent evidence shows that investors demand compensation for risks associated with nature dependence and biodiversity loss (Coqueret et al., 2025; Garel et al., 2024), survey results reveal that only few companies expect these risks to affect firm value (Gjerde et al., 2025). Although all firms rely on nature, the channels through which nature dependence affects cash flows remain poorly understood (TNFD, 2023). We study these channels in biotechnology, a setting where production is directly linked to living organisms. Biotechnology allows firms to capitalize on nature and monetize science across many sectors, but most biotech companies remain unprofitable outside a few pharmaceutical outliers (Pisano, 2006; Ernst & Young, 2024). Rapid biodiversity loss further complicates this proposition, as technologies based on vulnerable biological inputs may face premature write-downs and become stranded assets.

We assess the economic value of nature dependence in biotech innovations and examine how extinction risk affects firm value. First, we identify biotech patents as those involving the application of science to living organisms and document 65,798 biotech patents granted by the U.S. Patent and Trademark Office to publicly traded U.S. firms between 1980 and 2019, with patenting activity spanning industries and categories. Second, we quantify the incremental value of biotech among granted patents. Our most conservative estimate indicates that biotech patents are $639,000 (2024 dollars) more valuable than non-biotech patents. This higher value is reflected at the firm level, with firms that own more biotech patents being more valuable and profitable, consistent with the monetization appeal of biotech. Third, exploiting variation in the timing of species-level extinction risk recognition in the International Union for Conservation of Nature’s Red List, we find that operationally or financially constrained firms have lower valuation and cash flows. These constraints limit the scope of adaptive strategies, creating barriers to transition away from biodiversity risk. Collectively, our findings show that while biotech provides companies a pathway to capitalize on nature and monetize science, biodiversity risk can significantly affect firm value if there are barriers to transition.