An innovative insurance approach to urban forest management
Climate insurance solutions would support risk reduction and recovery activities within the urban forest.
Editor’s Note: This is the third and final installment in a series about urban forests.
Trees are, as David George Haskell says in the Song of Trees, nature’s great connectors. They hold the earth together with their roots. They provide nourishment and shelter for innumerable forms of life; they provide relief from heat, reducing death and illness during heatwaves; they provide shade that lowers energy demands.
Trees sequester carbon dioxide; they intercept stormwater; and they contribute to the beauty of urban areas. Communities with more trees are more resilient and healthier.
Urban forests are planted — along streets, in front of schools and libraries, in parks, next to airports and parking lots. In California, urban forests cover about 19% of our urban land area — approximately 173 million trees. The annual value of the ecosystem services of urban trees in California has been estimated at $8.3 billion.
A recent study published by the California Department of Insurance (CDI) showed that planting 7.9 million trees in publicly owned areas of Los Angeles County with less than 50 percent tree cover could offer a benefit-to-cost ratio of between 1.5 and 1.6. This means that for every dollar spent, the potential economic return in benefits could be between $1.50 and $1.60.
Despite the benefits of urban forests, historically marginalized, frontline communities have relatively less access to them. There is a “tree equity gap.” To remedy this, California is investing significant funds into planting trees in low income and disadvantaged communities, with a goal of a 10% increase in tree canopy by 2035.
In order to thrive, urban forests must be tended and maintained. Traditionally, responsibility for urban forest maintenance has been left to residents and local communities and governments who are not trained in forest maintenance. California has a shortage of trained arborists, hindering efforts to maintain and expand urban tree cover. At the same time, climate change threatens urban forests with more severe drought, heat, pests and storms.
A call to action
Until now, insurance has not been part of the discussion. But innovative climate insurance solutions would support risk reduction and recovery activities within the urban forest.
A consortium of interested stakeholders could work together to raise funds for this effort, including local, state, and federal agencies, NGOs, commercial districts or chambers of commerce, philanthropy, and other private industry. They could raise funds to train arborists to monitor, maintain, and repair the urban forest. And they could purchase insurance to cover trees affected by extreme storms or significant pest infestation, which have been identified as some of the most consequential perils to urban forests by municipal and state arborists.
Through the workforce development component of the program, the project would create a pipeline of trained arborists. Under the guidance of knowledgeable professionals, these arborists in training would tend to the urban forests to maintain a healthy ecosystem. They would assist in long-term risk reduction activities, as well as management and repair following a catastrophic event.
The parametric insurance policy, when triggered, would provide funds to repair damage to the existing tree canopy and to plant new trees, as necessary. Triggers could include, for instance, wind speed or rainfall for storm coverage, or degree of pest infestation. To select the appropriate triggers and determine coverage needs, participating groups would be encouraged to adopt urban forest management plans and updated tree inventories.
Sound far-fetched? In fact, there is already a precedent for this in parametric insurance products that cover coral reefs in Mexico and Hawaii. There’s a reason why reefs are called the “forests of the sea,” because like our urban forests they support biodiversity and protect coastal residents from the impacts of climate change. It’s time to bring this idea onto dry land and into urban communities that stand to benefit from this innovative effort.
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.
These opinions are the author’s own.
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