The public should not shoulder private climate risk.
Climate change and sea level rise threaten the built environment and force clean-up costs onto the public dime. Yet, we currently privatize profit from development while socializing the costs of clean-up.
The public's knee-jerk reaction is to halt development, but fixing the risk imbalance offers a better solution that doesn't lead to premature urban stagnation.
Photo credit: The Miami Herald
CRBs fix the imbalance to protect the public and keep the private sector working
Climate Restoration Bonds (CRBs) let the private sector build and profit today but guarantee that the costs of clean-up will be met so the public is held harmless. Developers and subsequent property buyers can post a surety bond or pay into a restoration fund that will cover the clean-up and site restoration costs. Spread over time, the costs are low and affordable, but the money will be there when needed, even if the owner walks away or declares bankruptcy.
Redevelopment promotes the dynamic economy that maintains our tax base and pays for the services we depend on. As long the public doesn't get stuck with the costs of clean-up, everybody stands to benefit.
Win-win for the public and private sectors
Working models in the UK and EU
The UK requires a restoration bond be in place prior to opening a mineral extraction site or a major construction project. Financing has been provided through private surety bonds or escrow accounts. Public-private contracts in the EU have required private insurance to assure cleanup in the event of bankruptcy. more info
Photo credit: "Abandoned quarry" by AstridWestvang; Creative Commons