a case in point is the mar menor, the largest salt - water lagoon in europe, on the south - eastern coast of spain, in the region of murcia. the mar menor is also a major tourist hotspot, with 7, 500 beds in the surrounding area and annual visitor numbers historically exceeding the 200, 000 - mark. however, since the 1960s the mar menor ecosystem has come under increasing strain with the growth of agriculture and tourism. this ecological degradation is primarily the result of the expansion of the agricultural sector and agri - food industry in the vicinity of the lagoon, particularly since the shift from dry - farming to irrigated crops ( now accounting for more than 80 % of the total area ). this deteriorated environment, combined with frequent climate change - related flooding and extreme temperatures in the region ( as high as 47°c in august 2021 ), has been a key factor behind the changes in the nitrogen and phosphorus nutrient cycles, leading to eutrophication ( i. e. an increase in biomass in a body of water ), and the widespread growth of algal blooms in particular. this massive expansion of algae ( dubbed the “ green soup ” ) meant that light can no longer reach the bottom of the lagoon. the plants on the lake bed die off, leading to an increase in decomposition caused by bacteria, which use up the available oxygen, thus killing the fish. a banco de espana paper by lamas et al. ( 2023 ) 15 shows that property prices in the surrounding areas took a sizeable hit once the locals realised the scale of the environmental damage in the mar menor. this realisation, which dawned some time after the actual 13 see the 2023 repo rt o n climate change risks o f the spanish macro prudential autho rity ( amcesfi ). t his analysis is carried o ut by po o ling data fro m the natio nal flo o dplain mapping system, develo ped by the ministry fo r eco lo gical transitio n and demographic challenge ( miteco ), the land registry and the banco de espana ’ s central credit register. 14 there is no evidence to sho w that the lo an - to - value ( ltv ) ratio is higher in areas at greater risk o f flo oding. 15 “ impact o f climate risk materializatio n and eco lo gical deterio ratio n on house prices

. high levels and concentrations of debt the majority of bank lending is to the household sector – at 58 percent – and secured against housing assets. household sector indebtedness represents the new zealand financial system ’ s single largest vulnerability. 9 the insurance sector has around $ 70 billion in total assets, equivalent to 25 percent of gdp. the unlicensed sector is made up of the government - owned accident compensation corporation ( acc ), the earthquake commission ( eqc ) and the southern response earthquake services – a government owned insurer resulting from the government bail - out of ami following the canterbury earthquakes – as well as some small private insurers. nzx ’ s market capitalisation is around $ 135 billion, while the total value of the domestic bond market is around $ 131 billion ( excluding government debt ). the fund management sector has around $ 125 billion of assets ( both domestic and offshore ) under management. the non - bank lending institutions ( nbli ) sector provides around a third of consumer lending to new zealanders but it remains small relative to the rest of the financial system. mortgage lending from nbli is around 3 percent of the total across the financial system. of the nbli, 25 are licensed non - bank deposit takers ( nbdts ) – financial firms that accept deposits but are not registered banks – with total assets worth $ 2. 5 billion. other lenders that do not take deposits, and therefore are neither banks nor nbdts, have total assets of $ 9. 7 billion. the reserve bank operates the exchange settlement account system ( esas ), which settles all interbank payments, and nzclear, which settles trades of securities. two thirds of systemic banking crises around the world have been preceded by a housing boom and bust. 10 highly indebted households are vulnerable to shocks, such as higher interest rates or unemployment, that reduce their debt servicing capacity. this can lead to households cutting their consumption, selling their house or, if the shock is severe enough, defaulting on their loans. household indebtedness has increased dramatically in new zealand in the last 30 years. in 1988, the average household owed around $ 16, 000 in debt and had an income of around $ 35, 000 – a debt - to - income ratio of 46 percent. by the end of 2017, this ratio had risen to 168 percent, following a ten - fold increase in average household debt to nearly $ 160, 000, while average incomes had only