Spatial financeWhere capital meets hazard, exposure and transition
Spatial statistics and geostatistics for climate and nature financial risk
Spatial statistics links hazards and ecosystems to the locations of assets and collateral. On this platform it supports physical and nature risk screening, aggregation of location-specific risk to portfolios and treatment of spatial uncertainty.
What spatial statistics and geostatistics does here.
Spatial statistics and geostatistics analyse data that vary across space, accounting for spatial dependence. They estimate values at unsampled locations and test for spatial patterns. In climate and hazards, biodiversity and nature and capital markets and investment, spatial statistics produce continuous hazard and exposure surfaces with uncertainty. They reveal geographic clustering of risks and vulnerabilities across sectors. The canonical description is on the STEM Commons.
Geolocating exposures
Addresses and asset records are geocoded and matched to hazard and ecosystem layers, with match rates and positional error reported.
Aggregating location risk
Site-level risks are aggregated to portfolio level with spatial correlation, so concentration in one region is visible.
Resolution sensitivity
Results are compared across hazard map resolutions to show how the spatial scale chosen changes exposure estimates.
03Spatial finance
Assets on the grid, and the portfolio they make.
Where a portfolio's assets sit, and how much of its value is most exposed. Hypothetical assets, not an assessment.
Sixteen assets at real towns, and the share of portfolio value in the most exposed places.Hypothetical assets and design scores, not advice.
04Data
What the method consumes.
Datasets and records used by spatial statistics and geostatistics on this platform, with the role each plays and the label its values carry. Sources are listed in the source register.
Data
Role
Label
Hazard maps
Physical exposure
MODELLED
Asset location records
Exposure geography
REPORTED
Biodiversity layers
Nature sensitivity
Published statistics
05Monitor
Spatial model.
The screen a team would use to follow this method: its measures, states and decisions. Names are examples and values are illustrative.
Spatial model: the screen's structure, terms and states for Climate and nature financial risk.Example names and illustrative values; a design, not a record or a live system.
06Validation
How results are checked.
Predictions are tested using spatial cross-validation that respects dependence. Uncertainty maps are compared with independent observations.
Check
How it is done
Geocoding accuracy
Match rates and errors are reported
Spatial correlation
Aggregation accounts for correlated losses
Scale effects
Results are tested across resolutions
Results depend on the scale and zoning of analysis. Sparse or clustered sampling limits prediction in unsampled areas.
07Scenario model
Transition and physical risk on a portfolio.
Three scenario families after the NGFS framework move a sector portfolio through carbon costs and warming damages; the transmission view follows the losses to lenders, investors, public finances and households. Scenario: named assumptions about the future, not a forecast. The map on this page shows Southeast Asia; the model itself is not tied to a place.
Controls
Carbon price at the horizon, orderly path
200 per tCO2
Delay before a disorderly transition
50% of horizon
Cost passed to customers
50%
Warming today above pre-industrial
1.30°C
Warming per decade, current policies
0.25°C
Damage coefficient
0.24% per °C²
Years ahead
25 years
Readouts
Worst scenario at the horizon
−33.6% of value
Numbers, methods and sources
Year
Orderly transition (% value)
Delayed, disorderly transition (% value)
Current policies (% value)
0
−0.38
−0.38
−0.38
3
−2.87
−0.53
−0.67
6
−5.36
−0.68
−0.97
9
−7.84
−0.84
−1.27
12
−10.33
−0.99
−1.57
15
−12.82
−7.12
−1.87
18
−15.31
−15.05
−2.17
21
−17.80
−23.00
−2.48
24
−20.29
−30.94
−2.79
Methods
Climate scenario families NGFS (2023), Climate Scenarios for central banks and supervisors, Phase IV
Climate stress test of the financial system Battiston and others (2017), Nature Climate Change 7
Damage function Nordhaus (2017), Revisiting the social cost of carbon, PNAS 114
Transmission channels BCBS (2021), Climate-related risk drivers and their transmission channels
Uncertainty fan (parameter Monte Carlo) Spiegelhalter, Pearson and Short (2011), Visualising uncertainty about the future, Science 333
One-at-a-time sensitivity (tornado) Saltelli and others (2008), Global Sensitivity Analysis: The Primer, Wiley
Data
The model runs on the teaching values set by the controls. To calibrate it for a place, read it against these admitted layers and series, which this page's map can draw:
Urban extents Natural Earth
Seaports Natural Earth
Past year, daily temperature (ERA5 via Open-Meteo) Open-Meteo.com (CC BY 4.0), Copernicus ERA5 (C3S/ECMWF) · register open-meteo.public-pages
Surface air temperature, daytime (AIRS) NASA AIRS · register nasa.gibs.context-live-layers
Transition and physical risk on a portfolio. Illustrative teaching model: it runs on the values set by the controls, not on measured data. Methods: Climate scenario families (NGFS (2023), Climate Scenarios for central banks and supervisors, Phase IV); Climate stress test of the financial system (Battiston and others (2017), Nature Climate Change 7); Damage function (Nordhaus (2017), Revisiting the social cost of carbon, PNAS 114).
Assembled from the Nexus Standards area profile Climate risk standards: the shocks it names, the systems and sectors that carry the loss, the controls that dampen it and the data that observe it. Pick an initiating shock and step through the cascade to see which exposures it reaches and where losses could concentrate. The Map view places the run on an example geography with open data. Every weight is a stated assumption. An exercise, not a forecast, a valuation, a rating or investment advice. To model a place of your own choosing, open the full System Builder.
Where exposure in spatial statistics and geostatistics for climate and nature financial risk travels.
The sectors that carry exposure in spatial statistics and geostatistics for climate and nature financial risk and how a loss in one passes to the others, across portfolios and public finances.
Select corners · hover lines6 / 15 relations
Signature
Biodiversity and its partners
Biodiversity gives pollination and soils to food (0.6), watershed regulation to water (0.5) and zoonotic spillover and medicines to health (0.4).
W · E · I · F · H · B
Sectors
4 of 6
Relations
6 of 15
Coupling
0.46 share of total
Strongest relations in play
Food → Biodiversity · land conversion0.6
Water → Food · irrigation0.8
Water → Biodiversity · environmental flows0.6
Food → Health · nutrition0.7
Teaching values for a typical city-region, not measurements for any place. Coupling is the summed strength of the relations in play, as a share of all fifteen.
The exposure, loss, scenario and capital views a risk officer, supervisor or ministry of finance would ask for, with the frameworks they report against. Structures follow supervisory and actuarial practice. Values are illustrative: never prices, ratings or advice.
Scenario pathways
How spatial statistics and geostatistics for climate and nature financial risk could be stressed under the scenario families central banks and supervisors use.
Scenario family
Transition risk
Physical risk
What a stress test asks
Orderly
Early, gradual policy
Lower
Can the book absorb a steady repricing?
Disorderly
Late, abrupt policy
Lower to medium
What breaks under a sudden repricing and credit migration?
Hot house world
Limited policy
High and rising
Where do physical losses concentrate in collateral and insurance?
Scenario families as defined by the NGFS; the curves are an illustrative combined pressure index, not NGFS variables or forecasts.
NGFS climate scenarios · Network for Greening the Financial SystemIFRS S2 Climate-related Disclosures · ISSBTCFD recommendations · Financial Stability Board TCFDPrinciples for the effective management of climate-related financial risks · Basel Committee on Banking Supervision
14Questions
Questions and answers.
What are the limits of spatial statistics and geostatistics in this field?
Results depend on the scale and zoning of analysis. Sparse or clustered sampling limits prediction in unsampled areas.
How are results checked?
Predictions are tested using spatial cross-validation that respects dependence. Uncertainty maps are compared with independent observations.
Are the values on this page real?
The data names, roles and checks are real descriptions of practice. The canvas shows a design of the method's use, not a run; no result is reported here.
Reports is the Consortium's quarterly publication. What you know about this subject can become evidence, a case or a correction in the next edition, credited to you and published under CC BY 4.0 where it is your own work.
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