Tracing economic dependence and pressure on nature through global supply chains: priorities for nature finance and conservation screening
This paper presents a global screening framework that integrates economic dependencies on nature and associated environmental pressures across multi-tiered supply chains to guide financial institutions and policymakers in prioritizing ecological due diligence and nature-related risk management.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
Every economy, from the smallest village market to the largest global corporation, runs on a foundation that is not built of steel or silicon, but of living systems. Nature provides the raw materials for our food, the water for our industries, and the stable climate that allows cities to function. This reliance is known as dependence. At the same time, the very act of producing goods and services often places a burden on the natural world, such as clearing land for crops or polluting rivers with industrial runoff. This burden is known as pressure. For decades, financial institutions and governments have struggled to see the full picture of these relationships. They often looked at how much a business relies on nature in isolation, or how much harm a specific factory causes, without connecting the dots to the long, invisible chains of suppliers that stretch across the globe. Without understanding where these dependencies and pressures truly originate, it is impossible to know which parts of the economy are most vulnerable to ecological collapse or which activities are most damaging to the planet.
A new study by Thomas van Huyssteen at the Vrije Universiteit Amsterdam offers a clearer way to map these hidden connections. The researcher built a global screening tool that traces economic activity through six layers of supply chains, looking at 189 different economies and 163 types of industries. Instead of trying to measure the exact amount of biodiversity lost or the precise financial cost of a disaster, the study focuses on identifying where the risks and dependencies are concentrated. It links economic activities to their reliance on ecosystem services, such as pollination or water filtration, and to their association with environmental pressures, such as greenhouse gas emissions or land use. By following the money and materials backward from a final product to its earliest sources, the study reveals a complex web of relationships that are often invisible to direct observation.
The most striking finding is that while a country's reliance on nature and its pressure on nature often go hand in hand, they do not always happen in the same place. The study found that for many nations, a significant portion of the pressure they exert on the environment comes from abroad. On average, nearly half of the environmental pressure associated with a country's economy originates in foreign supply chains. For some highly trade-dependent nations, this foreign share is even higher, reaching over 90 percent in some cases. Conversely, the reliance on nature's services is also often outsourced, though slightly less so, with about 28 percent of the dependency signal coming from outside the country's borders. This means that a country might appear to be acting sustainably within its own borders while its consumption habits are driving deforestation or water scarcity thousands of miles away.
The research also highlights that these relationships change as you look deeper into the supply chain. When examining only the direct operations of a company or a country, the picture looks mostly domestic. However, as the analysis moves further back through the tiers of suppliers—looking at the companies that supply the suppliers, and so on—the domestic share shrinks dramatically. In some economies, the portion of the supply chain that is entirely domestic drops from over 90 percent at the first level of suppliers to less than 5 percent by the sixth level. This reveals that the true footprint of an economy is far more global and dispersed than direct operations suggest. The study identifies that wealthier, more open economies tend to have a larger share of their nature-related risks and dependencies located in other countries, while less wealthy, agriculture-heavy economies often retain more of these signals within their own borders.
Crucially, the study distinguishes between two different types of high-risk profiles. Some countries are dominated by high pressure, meaning their economic activities are strongly linked to damaging the environment. Others are dominated by high dependence, meaning their economies are critically reliant on ecosystem services that could be disrupted. A third group faces both high pressure and high dependence simultaneously. The study identifies forty economies that fall into this "high-high" category, including nations like Ethiopia, Burundi, and Niger, where the economy is deeply intertwined with nature in both positive and negative ways. Other nations, such as India and the Dominican Republic, show a profile where pressure is the dominant concern, while countries like Moldova and Egypt show a profile where dependence is the primary issue.
This work is not a final verdict on which countries are "good" or "bad" for nature, nor does it calculate the exact financial loss a bank might face. Instead, it serves as a powerful first step, a screening tool that tells institutions where to look next. It provides a map that shows which countries and supply chain layers warrant deeper investigation. By combining data on where nature is used and where it is pressured, the study allows policymakers and investors to move beyond guesswork. They can now target their efforts, directing conservation funds to the right places and asking the right questions about supply chain transparency. The study concludes that understanding the geography of these invisible chains is essential. Without knowing where the pressure and dependence actually lie, efforts to protect nature or manage financial risk will remain incomplete, missing the very connections that hold the global economy together.
Drowning in papers in your field?
Get daily digests of the most novel papers matching your research keywords — with technical summaries, in your language.