Avoiding Nature’s Minsky Moment: How NatureFinTech is turning ecosystem integrity into investable capital

More than half of global economic output depends on nature - from fertile soils and clean water to climate regulation and biodiversity. Yet these foundations of prosperity remain largely invisible in financial decision-making. A new peer-reviewed study warns that this disconnect is building systemic risk into the global economy, creating the conditions for what the authors call a “Nature’s Minsky Moment”: a sudden and disruptive repricing of assets once hidden ecological dependencies become impossible to ignore.

The article, “Nature’s Minsky Moment, NatureFinTech and the world’s next asset class,” published in TRCN, reviews existing approaches to nature finance and explains why carbon-centric and project-based instruments alone cannot close the estimated USD 700 - 800 billion annual global nature funding gap. Instead, the authors argue for a structural shift - treating nature as critical infrastructure that underpins economic stability, rather than as a voluntary or peripheral concern.

“Ecosystem degradation is no longer just an environmental issue - it is increasingly being recognized a macro-financial risk,” said lead author Martin Stuchtey, professor at the University of Innsbruck. “As with the financial crisis of 2008, risks can accumulate for years until markets are forced into abrupt repricing. In the case of nature, that correction could affect value chains, insurance markets, real estate values, and sovereign risk simultaneously.”

A central obstacle to financing nature at scale has long been the lack of reliable, decision-grade data that can be used in financial contracts, valuation, and risk assessment. The study highlights how recent advances in Earth observation, ecological modelling, and artificial intelligence are now closing this gap. These innovations are giving rise to a new field known as NatureFinTech - digital technologies that translate ecosystem condition into auditable, comparable metrics suitable for capital allocation, enabling continuous, high-resolution monitoring of ecosystem performance at the level of individual land parcels.

A key example discussed in the paper is the Ecosystem Integrity Index (EII), a composite metric aligned with international ecological frameworks that integrates functional, structural, and compositional aspects of ecosystem health into a single, comparable score. Implemented at global scale and modulated with local data, the EII enables ecosystem condition to be tracked with auditability comparable to financial assets.

“Once ecosystem integrity becomes measurable in a robust and scalable way, it can be embedded into economic and financial decision-making,” said co-author Benedict Witte. “Metrics such as the EII make it possible to link capital flows directly to verified ecological outcomes, rather than proxies or promises.”

Building on these measurement capabilities, the study introduces Nature Equity as an emerging asset class. Nature Equity instruments allocate capital to the improvement and long-term stewardship of natural capital. Rather than functioning as one-time compensation mechanisms - as known from the carbon markets, Nature Equity is designed as an infrastructure-like investment, linking long-term capital to the ongoing condition and resilience of ecosystems as verified through continuous, outcome-based measurement - across multiple dimensions including biodiversity, soil, carbon and water.

While challenges remain - including valuation methods, regulation, and market maturity - the authors argue that financing nature as infrastructure could reduce systemic risk, stabilize ecosystem-dependent cash flows, and support more resilient economic systems.

“If ecosystem integrity continues to be ignored in capital allocation, the likelihood of a disorderly correction will only grow,” Stuchtey said. “Recognizing and financing nature as critical infrastructure offers a credible pathway to avoid that outcome.”