To identify protected areas, we used the World Database of Protected Areas (UNEP-WCMC and <u>IUCN 2019). Our definition of protected areas encompasses all six categories of the International</u> Union for Conservation of Nature (IUCN 2016).<sup>17</sup> We acknowledge that not all activities financed with bank loans are or could be prohibited in protected areas. For instance, protected areas cataloged under IUCN VI (protected areas with sustainable use of natural resources) are designated for low-level non-industrial use of natural resources compatible with nature conservation. Nonetheless, we decided to account for these areas as protected. Because of their conserved ecosystems and habitats, they could potentially “transition” to higher stringency levels of protection in the future.

To detect areas that could become protected in the coming years, we leverage the Systematic Conservation Planning (SPC), an initiative of the Brazilian government launched in the early 2000s and led by the Ministry of Environment.<sup>18</sup> The SPC collects and processes spatial information about species abundance, biodiversity hotspots, costs, and conservation opportunities. This information is complemented and validated through a series of participatory workshops with specialists and representatives from different sectors. This process occurs every five years and results in mapping areas of priority actions for biodiversity conservation in all major biomes and coastal and marine zones.<sup>19</sup> Actions are classified as extremely high, very high, and high.

We use spatial methods to determine priority areas that do not overlap with existing protected areas and their location in the Brazilian political-administrative divisions. Our methodology to undertake this identification closely follows Fonseca and Venticinque (2018). We first estimate biodiversity conservation gaps in Brazil as the most stringent priority areas currently not protected. In other words, these are areas with extremely high priority actions for biodiversity conservation that exclude existing protected areas. In addition, priority areas tagged as very high and high that do not overlap with protected areas are also identified. The size of these areas and their location are presented in Figure 3, along with federal unit lines. The drawing of politicaladministrative divisions was possible by blending the spatial information obtained in previous steps with information from the Brazilian Institute of Geography and Statistics (IBGE 2019).

We estimate firms’ indebtedness and geographic location by combining granular information of credit outstanding by federal unit and economic sector, with detailed non-financial information of all formal Brazilian firms. On the one hand, our credit outstanding data (as of March 2021) provides a disaggregation of the 27 Brazilian federal units and more than 1,300 subclasses categorized according to the Brazilian National Classification of Economic Activities (CNAE 2.0). On the other hand, the latest census of the Brazilian formal labor market, _Relação Anual de Informações Sociais_ <u>(RAIS 2019), provides information on 3.9 million corporate establishments</u>

> 17 IUCN categories are: (Ia) Strict Nature Reserve, (Ib) Wilderness Area, (II) National Park, (III) Natural Monument or Feature, (IV) Habitat/Species Management Area, (V) Protected Landscape/ Seascape, and (VI) Protected area with sustainable use of natural resources.

> 18 For a discussion of the SCP, see Fonseca and Venticinque (2018), Sarkar and Illoldi-Rangel (2010), and Margules <u>and Pressey (2000).</u>

> 19 See http://areasprioritarias.mma.gov.br/2-atualizacao-das-areas-prioritarias.

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