OTTAWA—Ask Bryan Gilvesy how to fight climate change, and he’ll tell you about seven acres of native Ontario tall grass.
It’s a modest patch of land on his cattle ranch outside Tillsonburg, where the resurrected flora is left to inhale carbon dioxide—the most prolific greenhouse gas in our atmosphere—and house endangered birds and badgers. The deep roots of the grass also fortify the soil and make it more absorbent, so when the hard rain comes, the ground can hold more water before it floods.
But the best thing about the grass, the promise Gilvesy thinks it represents, is this: he gets paid to restore and maintain it.
“We’re trying to get farmers in the mindspace that their farm produces more than just the food and fibre that they’re traditionally used to,” said Gilvesy, who is now chief executive officer of ALUS Canada, the organization that started paying him to promote and preserve natural features on his ranch in 2006.
“They can produce something that is of value to the greater community and to all Canadians,” he said.
With record-breaking floods ravaging communities in three provinces this spring, and annual wildfires already blazing through forests of the West, federal scientists predict the changing climate will wreak more extreme weather across Canada in the coming decades. For many, including cities like Victoria, B.C. that have considered launching lawsuits against heavy emitters to pay for necessary infrastructure upgrades, the challenge of how to adapt to the emerging realities of a warming world is only growing more urgent.
In that vein, groups like ALUS in Canada and elsewhere around the world are part of a nascent effort to restore and preserve natural buffers to the damages of more frequent and severe weather. But instead of old fashioned, government-led conservation, these groups — including environmental not-for-profits, insurance companies, and some governments — are trying something new: they want to uncover hidden incentives for the private sector to pay for the restoration and protection of what they call “natural infrastructure” or “natural capital.”
ALUS’s existing programs are funded by donations from individuals, governments and corporations. The idea is to pay farmers to plant trees and native grasses or to restore wetlands on their properties, in part to build up resilience to increasingly severe floods and rain storms. The organization’s payouts have restored about 23,600 acres in six provinces. Payments are based on land value and are about $150 per acre of restored land in Ontario, Gilvesy said.
But ALUS is now looking for ways to fund the restoration of these natural features through investments rather than donations.
“Our organization spends a lot of time trying to unearth the emerging marketplace,” said Gilvesy.
“We’re trying to find value for all manner of natural capital.”
Lara Ellis, ALUS’s vice-president of policy and partnerships, said one option being considered is an “environmental impact bond,” which could be sold to charities, insurance companies and governments to fund the restoration of natural barriers to floods and disasters. Investors would be paid back later with the savings that accumulate over time from the protection that new forests, wetlands, and other natural features afford to infrastructure and private property.
Such a scheme could be used in places like Manitoba, where a major highway regularly floods, and the government doesn’t want to always be on the hook to pay for disaster relief, said Ellis. The key is to figure out who has a financial stake in protecting and restoring these natural barriers to disasters.
“You have to figure out who is going to benefit from the risk reduction, and then model the instrument around that interest,” she said.
At recent summit of Group of Seven environment ministers in France, Canada’s Catherine McKenna championed the Ocean Risk and Action Resilience Alliance, a push to “leverage” private sector money to protect coastal features like coral reefs and mangrove forests that are natural barriers to rising waters and storm surges.
“We need to finance the protection of more nature in different ways, especially for developing countries who do not have the money,” McKenna told reporters on a conference call from France on May 6.
“And so, using insurance, insuring coral reefs, mangroves, (creates) the right incentives for countries to invest in more nature,” she said.
An example of harnessing private money to protect nature can be found off Mexico’s Yucatan Peninsula. In 2018, an association of hotels in Cancun partnered with Washington-based environmental firm The Nature Conservancy and the local state government to buy an insurance policy for a 60-kilometre stretch of the Mesoamerican coral reef in the Caribbean Sea.
The policy involves payments to a local insurance company, which has a reinsurance policy with the global corporation Swiss Re to protect the reef. When high winds or anything else damages the reef, Swiss Re pays for its rapid repair — within 24 or 48 hours, Nikhil de Victoria Lobo, the company’s head of public sector solutions in the Americas, told the Star.
“We’ve long understood that natural infrastructure is directly linked to reduce or mitigating the impacts of some natural disasters,” he said, describing the reef insurance as a “pilot project” for Swiss Re.
“I think the fact that we’ve done this proves that its executable,” he said. “By kicking this off, there are more people that will invest in the science and quantifying the benefits.”
While no similar insurance schemes have been used in Canada, there is interest from policy-makers. Craig Stewart, vice-president of federal affairs with the Insurance Bureau of Canada, said he is slated to present on the topic to the House of Commons environment committee June 3, and will address the Canadian council of environment ministers later in the month.
One potential Canadian target for an insurance scheme like the reef off Mexico is the area outside Windsor, Ont., said Stewart. He could envision the municipality partnering with an insurer to create a fund to pay farmers to restore wetlands on their properties, which would reduce the risk of flooding in the city to the south because the wetlands act as natural reservoirs.
Like Swiss Re in Mexico, such an arrangement would make sense for an insurance company, because payouts for flood damage would be lower if floods are less severe. That would also lead to lower premiums for people who pay flood insurance in the region, he said.
“Having natural infrastructure protect you is like having a fire station near your house,” Stewart said.
“It’s going to prevent community damage, lower the risks for the community in general, and therefore insurers save, and they can pass those savings on to their customers.”
For Gilvesy, the insurance schemes are like a “canary in the coal mine,” in that they are pointing a way to identify whose private interests could be wrangled to fund the restoration and protection of these natural buffers against the rising consequences of climate change. As his organization continues to explore this new field, he said the general direction fits with his ethos as a rancher, someone who for 40 years has tried to be a responsible steward of the land.
“We don’t have enough natural capital on the landscape — so, natural infrastructure to help protect us as the climate has these wilder swings,” he said.
“This is a way that it can happen.”
Alex Ballingall is an Ottawa-based reporter covering national politics. Follow him on Twitter: @aballinga