Does insurance hold the key to building resilience for urban forests?
Community leaders and insurance carriers all have a role to play in bringing forest insurance products to market.
Urban forests are comprised of all the trees growing in a city, including those in parks, on private properties, and along sidewalks.
There are more of these trees than one might imagine: The U.S. Department of Agriculture notes that more than 141 million acres of the forests in the U.S. are located in urban areas, which consist not only of parks and street trees but also landscaped boulevards, greenways, river corridors, wetlands, nature preserves, and working trees at former industrial sites.
These forests play critical roles in benefitting the local ecosystem, improving social wellbeing, and providing an array of economic services, but their survival is at risk.
Insurance may offer the solution needed to protect them.
Urban forests help ecosystems, improve social wellbeing, and provide economic services — all strong incentives to prioritize their upkeep.
Collectively, urban trees are valuable assets that offer innumerable benefits including cooling and shade, carbon sequestration, storm water drainage, wildlife habitat, and improved physical and mental health. The presence of trees can also increase property and business values and boost main street appeal.
From a health and safety perspective, tree canopy can reduce outdoor heat by 10° F or more and absorb 90% to 95% of UV rays. These factors can be particularly significant in mitigating the costs of heat waves and other weather-related events. Urban forests also have value in their ability to improve physical and mental wellbeing. A recent U.K. study concluded that 1/5 of doctor visits stem from social factors like isolation or financial worries rather than physical ailments, and that these could be reduced by 28% by spending more time in nature.
The societal benefits of urban forests include their capacity to improve the life of Low Income and Disadvantaged Communities (LIDAC), which tend to be deprived of canopy cover. Lack of air conditioning can disproportionately impact LIDACs, and individuals who suffer from health conditions may be more sensitive to heat waves. Planting trees is a cost-effective way to address these challenges.
Urban forests also provide value as habitats and sources of pollen for insects, mammals and birds. As habitats, they mitigate property damage since most animals would either die off without a place to live or would find alternative dwellings in built infrastructures, requiring evacuation or extermination.
Nonetheless, trees are subject to a multitude of perils that threaten their survival. Just like any other life form, trees’ longevity is influenced by their environment. They can be damaged due to accidents, weather events, diseases, and other man-made impacts (pests, pollutants, lack of space, land change, heat, drought, etc.).
Additionally, the fact that roots can’t always flourish in more urban environments make at-risk trees more subject to toppling.
Insurance has a unique role to play in addressing these risks.
All these challenges are manageable, given the proper resources — and that’s where insurance comes in. Pests like the Emerald Ash Borer and the Mediterranean Shot Hole Borer, storms, and extreme heat are just three examples of significant risks trees face that can be mitigated through insurance products.
Though none of these risks are insured today, the potential to do so presents an opportunity both for communities to better manage and protect their urban forests and for insurance organizations to diversify their portfolio of risks. Through creative products and solutions, insurance can be a powerful tool for driving long-term resilience; one that is financially advantageous not only to the communities served but also to their underwriters.
Community leaders and insurance carriers all have a role to play in bringing forest insurance products to market. Collectively, we can make insurance a key driver in the future resilience of urban forests everywhere.
Dominique Roudaut is the Chair for Nature at InnSure and has been Chief Underwriting, Strategy, Innovation Officer and a Venture & Operating Partner for incumbents, VCs and start-ups. Deborah Halberstadt is Special Advisor to the Commissioner on Biodiversity and Inclusive Insurance at the California Department of Insurance. This three-part series was developed in conjunction with InnSure.
Opinions expressed here are the authors’ own.
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