The paper shows that legislative changes that are harmful to local biodiversity significantly impact municipal bond markets and are associated with an increase in municipal bond yields. The paper also finds that certain local factors exacerbate this effect. The analysis is based on a series of statewide regulatory shocks that conservation biologists consider to be detrimental to biodiversity conservation. These regulatory changes result in laws that hinder effective population management of unowned cats—a well-known invasive species that contributes to biodiversity loss. The study employs a state-border discontinuity approach, comparing municipal bond yields issued by counties affected by these statewide laws to those issued by nearby counties not subject to such laws. This is the first paper to examine biodiversity-related regulatory shocks within finance. In doing so, it underscores the economic significance of biodiversity-related legislative measures and advances finance research that incorporates biodiversity.