From Nice-to-Have to Critical Infrastructure: Carbon Credits as Required Tools for Adaptation
Session Description
This session looked at carbon-financed forest management as wildfire risk reduction infrastructure for insurers, banks, and utilities with assets in fire-prone landscapes. Jeffrey Brown presented wildfire cost data and case studies, including the January 2025 Palisades fire, a forest treatment analysis in Flagstaff, Arizona, and a fire management program in Australia's West Arnhem Land, before attendees split into four groups to discuss what role insurers, reinsurers, and infrastructure asset managers should play in nature-based risk reduction by 2027, and which public-private models from other sectors could translate into nature-based MRV and verification work.
Speakers
Jeffrey Brown, Founder/Chief Development Officer, Nature Focus
Watch the Session Recording
Key Takeaways
Presenter positioned proactive land management funded through carbon markets as a materially cheaper alternative to wildfire suppression and post-fire rehabilitation costs, drawing on peer-reviewed cost-avoidance data from US Forest Service treatments.
Groups identified structural barriers to insurers directly funding prevention work, including annual policy repricing cycles rather than multi-year exposure, fragmentation across many underwriters covering a single asset or region, and the risk that one insurer's investment in prevention benefits competitors who don't share the cost.
Outcome-based bonds were raised as one possible mechanism to bring insurer capital into nature-based risk reduction, tying smaller ongoing payments to measurable reductions in wildfire risk rather than only large payouts after losses occur.
The TNFD LEAP framework was suggested by more than one group as a starting point for translating nature-related risk into financial terms that insurers and asset managers already work with.
Institutional capital with long investment horizons (for example pension funds) was raised as potentially better matched to multi-decade land management and reforestation timelines than typical short-cycle insurance or carbon finance.
Groups pointed to precedents including a UK flood-focused insurance coalition and Lloyd's Lab as examples of insurer engagement with nature-based risk reduction, while noting that insurance sector innovation has historically been slow to scale due to relationship-driven underwriting practices.
One group proposed an accelerator model pairing insurers with nature tech startups and entrepreneurs to develop data products that let insurers price nature-related risk more competitively, with nature-based mitigation solutions built in as part of the same program.
A recurring point across groups was that insurers, reinsurers, and asset managers cannot be engaged in isolation; effective risk reduction requires bringing them into the same conversation as utilities, municipalities, and infrastructure asset owners operating on the same landscape.
