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Research summary: This study examines whether the stock and bond prices of firms engaging in corporate social responsibility (CSR) can benefit from insurance-like effects during occurrences of negative events. Our results suggest that in the face of negative events, engagement in CSR on a continuous, long-term basis provides insurance-like effects on both the stock and bond prices of firms. Nevertheless, the effects are found to quickly disappear following the occurrence of a second, or subsequent, negative event. Although our results clearly indicate that firms need to allocate some of their available resources to long-term strategic CSR activities, managers must also realize that in a crisis communication, they will probably be able to use their CSR claims on one occasion only. Managerial summary: The purpose of this article is to examine whether firms engaging in corporate social responsibility (CSR) can benefit from insurance-like effects during occurrences of negative events. We find that on the occurrence of a negative event, long-term CSR engagement does have insurance-like effects. We also find that these insurance-like effects may quickly disappear following the occurrence of a second negative event. Managers of firms with a long history of CSR activities need to realize that in a crisis communication, they can probably use their claims of adherence to CSR only once.

Research Summary To examine whether firms use corporate social responsibility (CSR) to insure against stock price risk, we exploit an exogenous shock in stock price risk associated with Regulation SHO whereby the SEC randomly selected pilot firms for which the uptick restriction on short sales no longer applied. A difference‐in‐differences test reveals that pilot firms increased CSR more than nonpilot firms and that in particular they reduced CSR concerns and increased CSR that impacts stakeholders involved in direct resource exchange. We also find that pilot firm CSR reduced short positions against them and that the effect is stronger for CSR concerns and CSR that impacts directly connected stakeholders. Overall, we document a causal effect of stock price risk on managerial incentives to invest in CSR for risk management. Managerial Summary Corporate social responsibility has many purported benefits, one of which is that it can insure against the adverse stock price effects of negative events. But do managers purposefully use CSR in this way and do such investments provide intended insurance‐like benefits? By taking advantage of a natural experiment where a randomly selected set of pilot firms were exposed to elevated short‐sale risk unleashed by the SEC regulation, we find evidence that they do. Once the SEC initiated the regulatory change, firms that faced greater risk increased CSR more than firms that did not. In addition, increased CSR lowered short interests in pilot firms' stocks and this reduction is attributable to the insurance‐like effect of CSR rather than simply prevention of adverse events. A video is available at https://youtu.be/zajeSbhlwhc

Climate change and biodiversity loss are expected to simultaneously affect ecosystems, however research on how each driver mediates the effect of the other has been limited in scope. The multiple stressor framework emphasizes non-additive effects, but biodiversity may also buffer the effects of climate change, and climate change may alter which mechanisms underlie biodiversity–function relationships. Here, we performed an experiment using tank bromeliad ecosystems to test the various ways that rainfall changes and litter diversity may jointly determine ecological processes. Litter diversity and rainfall changes interactively affected multiple functions, but how depends on the process measured. High litter diversity buffered the effects of altered rainfall on detritivore communities, evidence of insurance against impacts of climate change. Altered rainfall affected the mechanisms by which litter diversity influenced decomposition, reducing the importance of complementary attributes of species (complementarity effects), and resulting in an increasing dependence on the maintenance of specific species (dominance effects). Finally, altered rainfall conditions prevented litter diversity from fueling methanogenesis, because such changes in rainfall reduced microbial activity by 58%. Together, these results demonstrate that the effects of climate change and biodiversity loss on ecosystems cannot be understood in isolation and interactions between these stressors can be multifaceted.

In many estuarine areas around the world, the safety of human societies depends on the functioning of embankments (dikes) that provide protection against river floods and storm tides. Vegetation on land-side slopes protects these embankments from erosion by heavy rains or overtopping waves. We carried out a field experiment to investigate the effect of plant species diversity on soil loss through erosion on a simulated dike. The experiment included four diversity treatments (1, 2, 4, and 8 species). In the third year of the experiment, we measured net annual soil loss by measuring erosion losses every 2 weeks. We show that loss of plant species diversity reduces erosion resistance on these slopes: net annual soil loss increased twofold when diversity declines fourfold. The different plant species had strongly diverging effects on soil erosion, both in the single-species and in the multi-species plots. Analysis of the dynamics of the individual species revealed that the main mechanism explaining the strong effects of plant species diversity on soil erosion is the com pensation or insurance effect, that is, the capacity of diverse communities to supply species to take over the functions of species that went extinct as a consequence of fluctuating environmental conditions. We conclude that the protection and restoration of diverse plant communities on embankments and other vegetated slopes are essential to minimize soil erosion, and can contribute to greater safety in the most densely populated areas of the world.

Climate change alters ecosystems and their functioning, but biodiversity can buffer such changes. Previous syntheses suggest that biodiversity confers insurance; however, it is not clear whether this effect extends to climatic stressors. Here, we analyze 342 measures of the effects of biodiversity on stability in order to compare the response to climatic versus nonclimatic stressors. In general, the stabilizing effect of biodiversity is weaker for climatic than for nonclimatic stressors. We suggest that this reflects species pools being compiled at a small spatial scale for experiments testing climatic stressors. Some bias in the representation of biomes and stability metrics in biodiversity–climate studies may also distort the perceived effect of biodiversity on stability. We recommend that in future studies, researchers increase the spatial scale of experiments, manipulate multiple facets of biodiversity, simulate climate change in more realistic ways, and focus on underrepresented combinations of biomes and climatic stressors.

Insurance effects of biodiversity can stabilize the functioning of multispecies ecosystems against environmental variability when differential species' responses lead to asynchronous population dynamics. When responses are not perfectly positively correlated, declines in some populations are compensated by increases in others, smoothing variability in ecosystem productivity. This variance reduction effect of biodiversity is analogous to the risk-spreading benefits of diverse investment portfolios in financial markets. We use data from the BIODEPTH network of grassland biodiversity experiments to perform a general test for stabilizing effects of plant diversity on the temporal variability of individual species, functional groups, and aggregate communities. We tested three potential mechanisms: reduction of temporal variability through population asynchrony; enhancement of long-term average performance through positive selection effects; and increases in the temporal mean due to overyielding. Our results support a stabilizing effect of diversity on the temporal variability of grassland aboveground annual net primary production through two mechanisms. Two-species communities with greater population asynchrony were more stable in their average production over time due to compensatory fluctuations. Overyielding also stabilized productivity by increasing levels of average biomass production relative to temporal variability. However, there was no evidence for a performance-enhancing effect on the temporal mean through positive selection effects. In combination with previous work, our results suggest that stabilizing effects of diversity on community productivity through population asynchrony and overyielding appear to be general in grassland ecosystems.

There is a great interest in ecology in understanding the role of soil microbial diversity for plant productivity and coexistence. Recent research has shown increases in species richness of mutualistic soil fungi, the arbuscular mycorrhizal fungi (AMF), to be related to increases in aboveground productivity of plant communities. However, the impact of AMF richness on plant-–plant interactions has not been determined. Moreover, it is unknown whether species-rich AMF communities can act as insurance to maintain productivity in a fluctuating environment (e.g., upon changing soil conditions). We tested the impact of four different AMF taxa and of AMF diversity (no AMF, single AMF taxa, and all four together) on competitive interactions between the legume Trifolium pratense and the grass Lolium multiflorum grown under two different soil conditions of low and high sand content. We hypothesized that more diverse mutualistic interactions (e.g., when four AMF taxa are present) can ease competitive effects between plants, increase plant growth, and maintain plant productivity across different soil environments. We used quantitative PCR to verify that AMF taxa inoculated at the beginning of the experiment were still present at the end. The presence of AMF reduced the competitive inequality between the two plant species by reducing the growth suppression of the legume by the grass. High AMF richness enhanced the combined biomass production of the two plant species and the yield of the legume, particularly in the more productive soil with low sand content. In the less productive (high sand content) soil, the single most effective AMF had an equally beneficial effect on plant productivity as the mixture of four AMF. Since contributions of single AMF to plant productivity varied between both soils, higher AMF richness would be required to maintain plant productivity in heterogeneous environments. Overall this work shows that AMF diversity promotes plant productivity and that AMF diversity can act as insurance to sustain plant productivity under changing environmental conditions.

In temperate lakes, eutrophication and warm temperatures can promote cyanobacteria blooms that reduce water quality and impair food-chain support. Although parasitic chytrids of phytoplankton might compete with zooplankton, they also indirectly support zooplankton populations through the “mycoloop”, which helps move energy and essential dietary molecules from inedible phytoplankton to zooplankton. Here, we consider how the mycoloop might fit into the biodiversity–ecosystem functioning (BEF) framework. BEF considers how more diverse communities can benefit ecosystem functions like zooplankton production. Chytrids are themselves part of pelagic food webs and they directly contribute to zooplankton diets through spore production and by increasing host edibility. The additional way that chytrids might support BEF is if they engage in “kill-the-winner” dynamics. In contrast to grazers, which result in “eat-the-edible” dynamics, kill-the-winner dynamics can occur for host-specific infectious diseases that control the abundance of dominant (in this case inedible) hosts and thus limit the competitive exclusion of poorer (in this case edible) competitors. Thus, if phytoplankton diversity provides functions, and chytrids support algal diversity, chytrids could indirectly favour edible phytoplankton. All three mechanisms are linked to diversity and therefore provide some “insurance” for zooplankton production against the impacts of eutrophication and warming. In our perspective piece, we explore evidence for the chytrid insurance hypothesis, identify exceptions and knowledge gaps, and outline future research directions.

Changes in the distribution of rainfall and the occurrence of extreme rain events will alter the size and persistence of aquatic ecosystems. Such alterations may affect the structure of local aquatic communities in terms of species composition, and by altering species interactions. In many aquatic ecosystems, leaf litter sustains detrital food webs and could regulate the responses of communities to changes in rainfall. Few empirical studies have focused on how rainfall changes will affect aquatic communities and none have evaluated if basal resource diversity can increase resistance to such rainfall effects. In this study, we used water-holding terrestrial bromeliads, a tropical aquatic ecosystem, to test how predicted rainfall changes and litter diversity may affect community composition and trophic interactions. We used structural equation modeling to investigate the combined effects of rainfall changes and litter diversity on trophic interactions. We demonstrated that changes in rainfall disrupted trophic relationships, even though there were only minor direct effects on species abundance, richness, and community composition. Litter diversity was not able to reduce the impact of changes in rainfall on trophic interactions. We suggest that changes in rainfall can alter the way in which species interact with each other, decreasing the linkages among trophic groups. Such reductions in biotic interactions under climate change will have critical consequences for the functioning of tropical aquatic ecosystems.