Resilience projects become finance-ready by doing the early work of proving who benefits, quantifying the value of avoided losses, and building the partnerships that make private capital possible.
Insurance markets don't become uninsurable overnight. The transition from insurable to uninsurable is the final stage of a sequence that can take years or decades to play out.
Insurance markets don't become uninsurable overnight. But the transition from insurable to uninsurable is the final stage of a sequence that can take years or decades to play out.
Resilience projects become finance-ready by doing the early work of proving who benefits, quantifying the value of avoided losses, and building the partnerships that make private capital possible.
Most capital planning starts with a budget and works forward: figure out what's available, then decide what to fund. A recent article in a blog series by CA FWD and Insurance for Good makes the case that resilience finance runs in the opposite direction: “Capital follows motivated beneficiaries and robust data.”
The closest analog is preventative healthcare, where the earlier the intervention, the better. Success is a problem caught and mitigated before it can become a problem: a disease identified and cured before it could become symptomatic, or in the case of Blue Forest’s Yuba Forest Resilience Bond, a wildfire that didn't happen.
Shalini Vajjhala and Caroline George from PRE Collective, who authored the CA FWD article, propose a predevelopment process that asks projects to think through who would lose money if nothing changes, and to use data and modeling to make the clearest possible case that the intervention has financial value.
This is the approach Blue Forest Conservation, a nonprofit conservation finance organization, applied with the Yuba River project, a collaboration of nine organizations focused on protecting 275,000 forested acres in the North Yuba River watershed in Northern California.
The Forest Resilience Bond secures upfront capital from private and philanthropic investors for forest restoration. Then, beneficiaries like utilities and public agencies reimburse investors. The project is preventative: using forest restoration to reduce fire risk and address the negative impacts fire has on water use, water quality, and flood risk. Because the primary dividend is an avoided catastrophe, the model hinges on rigorously quantifying the economic value of a disaster that never happens.
During the predevelopment window, Blue Forest partnered with the World Resources Institute to develop the economic analysis that would make the project’s benefits legible to investors and potential payors like the Yuba Water Agency. They also partnered with academic researchers at UC Merced and Stanford to develop environmental modeling and analysis. On the back of that analysis, they received an early-stage grant from the Rockefeller Foundation’s Zero Gap Portfolio, which specifically sought commercially viable projects.
Then, Blue Forest made its case to potential beneficiaries, like the Yuba Water Agency. Their analysis demonstrated that a healthy watershed protected the water supply and reduced fire and flood risk. With the additional hydropower revenue, the financial value the project would deliver to the Yuba Water Agency exceeded its cost-share contribution.
This predevelopment work moved them into the “finance ready” quadrant of the chart above: They had clear data and modeling demonstrating the project’s benefits, and they identified motivated payors who would benefit from the project.
Blue Forest translated ecological outcomes into terms that utilities and investors could act on. The final project included $4 million in upfront investor commitments from four lenders, alongside more than $4.3 million in funding paid by beneficiaries to investors. Private capital enabled the project to be completed six years earlier than it would have under public funding alone. Blue Forest is now developing projects with eight national forests across the West.
Funding follows proof that prevention creates value. Resilience projects become finance-ready by doing the early work of proving who benefits, quantifying the value of avoided losses, and building the partnerships that make private capital possible. Those initial investments in data and collaboration create the conditions for private capital to move.
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Warmer oceans mean that more tropical cyclones strengthen quickly, a process called rapid intensification.
Source: Climate Central.
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The Epicenter helps decision makers understand climate risks and discover viable resilience solutions. The Epicenter is an affiliated publication of The Resiliency Company, a 501(c)3 nonprofit dedicated to inspiring and empowering humanity to adapt to the accelerating challenges of the next 100+ years.
Insurance markets don't become uninsurable overnight. The transition from insurable to uninsurable is the final stage of a sequence that can take years or decades to play out.
Insurance markets don't become uninsurable overnight. But the transition from insurable to uninsurable is the final stage of a sequence that can take years or decades to play out.
The economic losses from disasters that are not covered by insurance continue to grow, but resilience projects are generating measurable positive returns.
If today’s funding landscape resembles disconnected wells, then climate resilience requires something closer to a watershed—where resources are intentionally pooled, directed, and circulated across geographies, sectors, and time horizons.
