This study investigates whether biodiversity loss is internalized through market pricing or government intervention. Empirical results reveal that emissions from toxic facilities increase lead concentrations and decrease vertebrate populations within a 12-kilometer radius of a plant. The US equity market undervalues this biodiversity loss as firms emitting pollutants near biodiverse regions attract no additional risk premium and face economically small effects from regulatory action. A moral hazard issue likely drives these observations; firms located near ecologically sensitive areas underreport their environmental impacts both in financial disclosures and to government oversight bodies.
