We shouldn’t just be insuring buildings, we need to insure our wetlands

In 2018, severe weather events cost Canada $1.9-billion in insured damage, according to the Catastrophe Indices and Quantification. Most people think that the greatest risks of weather events is to buildings and infrastructure. It’s not. The greatest risk is to our natural resources, and yet who is protecting these? Take the case of wetlands. The Insurance Bureau of Canada insists that “urgent action” is needed to preserve wetlands to mitigate flood risk. A 250 square metre piece of land in the town of Oakville, Ont., stores so much storm water that it saves the city $1.24-million to $1.44-million annually. This piece of land channels storm water in heavy rains, to avoid overwhelming the sewer systems and flooding the city. Bees are another example. Through their pollinating services, GenomeCanada estimates that bees contribute more than $4.6-billion to the Canadian economy each year. Without bees, we lose the resilience of our plants. Green space is also known to improve mental and physical health. A recent study demonstrated that adults living in neighbourhoods covered with 30 per cent more tree canopy have 31 per cent lower odds of developing psychological distress. Despite the critical importance of our natural resources, the attention given and capital available to fund this “green infrastructure” keeps shrinking. In 2018, Canada’s federal government earmarked $1.3-billion over the next five years to expand protected areas and help endangered and threatened species. Although this amount appears significant, it is only a tiny fraction of the capital needed to build resilient landscapes and communities. Investing in green infrastructure presents an enormous economic opportunity for Canada. According to the Canadian Expert Panel on Sustainable Finance, the financial sector wants to support green infrastructure. In fact, we are seeing an increasing number of Canadian banks stepping up with green bonds, including TD Bank, Scotiabank, and HSBC. But, where is government? Our elected government officials seem to believe that businesses need to exploit green infrastructure to be efficient. Ontario Premier Doug Ford’s government offers developers the opportunity to “buy” green infrastructure and pay for biodiversity loss. His government is putting the very basis of life and community resilience up for sale. It is offering business a price to buy out of the “onerous” Endangered Species Act protections, with the idea that money would compensate for the biodiversity loss. This government does not seem to fully understand the purpose of green infrastructure. Not only will it increase the likelihood of flooding in Toronto, it will cost Canada, Ontario, and its taxpayers, in the long run. Solutions exist and it is time for the government to support them. First, the narrative has to change. Nature and profits go hand in hand. Green infrastructure needs to support physical infrastructure. Regulations need to protect them both. Although safeguarding ecosystems can appear costly, everyone, including businesses, benefit from this protection. Second, conservation finance, or the use of private capital to protect and restore ecosystems, needs the government support. Such instruments include conservation impact bonds, such as the one currently developed by Carolinian Canada for Southwestern Ontario. Those bonds state that once private investors provide the upfront capital, cross-sector partners start working on delivering the healthy landscape portfolio the partners involved in the bond previously agreed upon. As progress is made, a third-party evaluator assesses the outcomes to determine whether community outcome partners will contribute funds and how much investors will make in returns. The result is a self-sustaining cycle of improved natural infrastructure achieved through the fruitful co-operation between economic actors, non-profit organizations, conservationists, and Indigenous communities. The government could help such initiatives through public-private partnerships and/or by offering incentive systems that encourage private actors to invest in such products. Building a strong Canadian sustainable finance industry is key to the success of the country’s transition, and it is today that such investments must be made. Tomorrow will be too late. Diane-Laure Arjaliès is an assistant professor at Western University’s Ivey Business School and an expert in sustainable finance. She is a member of the United Nations Global Compact Expert Network and of the Academic Network Advisory Committee of the Principles for Responsible Investing. The Hill Times

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We shouldn’t just be insuring buildings, we need to insure our wetlands

Nature and profits go hand in hand. Green infrastructure needs to support physical infrastructure. Regulations need to protect them both.

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