Proposed project: The risks to UK forests from pests, disease and droughts are poorly understood as historical data is of limited use. This brings risk management and mitigation challenges for forest carbon projects, timber production and insurance. The original PURE project developed a model to assess the future risk from pests and diseases (P&D) for forest carbon projects under the UK's Woodland Carbon Code. In this project, we build this PURE work (NERC/PA 13-021), NERC research (NE/I022183/1, NE-J019720-1, NE/I019405/1), and well-established collaborations (see e.g. Forest-Risk Network) to: (a) embed our PURE P&D risk work within operational-decision making under the Woodland Carbon Code (WCC) (b) expand the operational use of this work from forest carbon to forest timber and (c) develop new insurance products. This process will then be replicated to adapt and operationalise a drought risk assessment model (Petr et al. 2014), which produces information inadequate for WCC and insurance purposes. The science from both models will then inform the development of best practice/guidance and decision support tools to meet the needs of the WCC, timber industry, insurance sector as well as the wider private and public forest sectors. The PURE Associate's risk management expertise (originally acquired in investment banking and developed and applied to natural hazard risks to forest finance projects through the NERC and PURE projects listed above) will be partnered with that of stakeholders from the Forestry Commission, Forest Research and ForestRe (an insurance organisation designing insurance and reinsurance products) to deliver these outcomes. The work is needed due to the critical importance of forests to the UK and the urgent need to reduce the threat from P&D and drought. Action is needed now due to the long timescales inherent in forest management. Woodland and forest cover about 13% of the total land area of Great Britain (Forestry Commission, 2013). The primary wood processing and forestry sectors contribute £1.92bn in Gross Value Added to the economy and generate employment for over 39,000 (Forestry Commission, 2013). The wider social and environmental benefits of woodlands are worth around £1.5bn annually (Willis et al., 2003). Forests provide important wildlife habitat and host 130 of the 400 species in the UK's 1994 Biodiversity Action Plan. They also play an important role in mitigation of, and adaptation to, climate change e.g. carbon sequestration (Read et al., 2009). However, UK forests face significant threats from natural hazards such as wind, fire, pests, diseases (P&D) and drought. Whilst the risks from wind and fire are relatively well-understood - the future risks from P&D and drought are poorly understood and insurance is rarely provided primarily due to a lack of appropriate information. Historical data can provide some indication of the future risks to forests from fire and wind, but are less useful for predicting losses from P&D as new P&D can arise; existing ones can jump species; and vectors, such as shipping and imported saplings, can bring new P&D to a country at any time. Similarly, historical data are of little use to determine the risk of planting tree species in regions at the limit of the trees' climatic tolerances. This increases their vulnerability to drought. This lack of adequate risk measurement constrains risk management for forest carbon projects and mitigation by insurance. The project outputs will include a revised P&D model and a revised drought risk assessment, which will produce this missing information. The results will be used to support operationalisation into better risk management procedures under the WCC; development of new insurance products; and the revision of decision support tools for forest managers to support adaptive management against these risks. The results will be communicated and disseminated to the wider forest sector.

This frontier and interdisciplinary project contributes to addressing a critical knowledge gap between forest-loss risks and investor confidence in Amazonian forest assets. The project represents a novel collaboration between University of Edinburgh (Patenaude), Forest Research (Gardiner, Perks) and ForestRe (Cottle), and draws on expertise in forest science, insurance, risk assessment, modelling and earth observation. The proposed study area is in southern Brazil. The key focus will be on managing wind risk for institutional investment in carbon afforestation, across 3 Forest Management Types (FMTs): commercial biomass management, community managed woodfuel forestry & Amazonian natural forest. The potential economic impact of this exercise are considerable, as this type of research contributes to delivering a more stable and 'conventional' investment environment for forestry, enabling it to become mainstream. For insurers such as ForestRe, this should assist in bringing forestry from the margins of business to a business line as common as aviation, motor, or life and pensions.

Our vision: To impel climate change mitigation action by motivating private investments in sustainably managed forest ecosystem services. Our contribution: To address a critical KE gap between expertise on the mapping, modelling and quantification of the risk of forest carbon loss, and investor's confidence in forest investments (including in REDD+). Our focus: To address 4 categories of risks (i) Climatic (ii) Fire (iii) Anthropogenic and (iv) Regulatory. Our aim: To stimulate the exploitation of UK's world-class knowledge base -NERC and elsewhere - in forest loss and risk mapping by the UK knowledge brokers and financial institutions. Our impacts: To deliver, as a consequence of this work, a more accurate and holistic understanding of the real risk represented by forest propositions around the world; a more stable and mainstream investment environment for forestry and; to bring forestry from the margins of business, to a business line as common as aviation, motor or life and pensions. We request funding for a period of 12 months to support the creation of a ForestRisks-for-Finance Network. Partners, including WillisRE Ltd., ForestRe Ltd., Ecometrica Ltd, Acclimatise Ltd. The Edinburgh Centre on Climate Change, and Forest Research will contribute more than £55,000 in-cash and in-kind to this KE initiative. A PDRA will be appointed to effectively bring together the NERC funded and UK research community (on forest-loss risks) as well as to proactively engage with potential users (Brokers & End users). This initiative stems from (a) recommendations made at the NERC-funded Long Finance symposia on "Forestry and Finance: Where's the data" (London, July 2010 and Sept 2010), to which the PI (Patenaude) was an invited panellist and (b) the wider KE activities led by Richard Max-Lino (NERC Knowledge and Innovation Manager, Financial Services) and the Long Finance initiative (http://www.zyen.com/long-finance.html).

We are losing forests at a rate of circa one football pitch every 3 seconds. Urgent and large scale financing is required to prevent further deforestation and forest degradation. Yet, securing sufficient and long-term investments in carbon-related forest assets is a challenge, partly because of the liability of reversals and because the risks associated with such investments are perceived as either high or unknown. Better information on risks of forest loss are needed. We therefore propose a knowledge exchange forest-specific risk-toolbox for adoption by the investment community. Five Demonstrator Case Studies will be used to illustrate how NERC science can be converted and used in meaningful ways by the financial sector interested in forest assets. The five case studies are structured along key investment themes reflecting current and forecasted demand for forest investments (Timber, Afforestation/ Reforestation, REDD+, Voluntary Carbon Market and Forest Bonds). We propose to leverage the ongoing NERC KE network 'Forest-Finance risk network: towards stable investment environments' (thereafter referred to as Network -NE/IO22183/1). Key deliverables to this ongoing work include a database of experts and tools for the assessment of risks of forest loss. Early findings highlight that while significant expertise and datasets in the UK are available, the financial community requires demonstration for their potential use (Davies & Patenaude, in press). We request NERC funding for a period of 12 months to support the following three activities: the development of the forest specific risk toolbox to be adopted by the forest investment community; the identification of missing risk assessment opportunities and tools; and the dissemination of the demonstrator case studies illustrating how NERC data and research can be converted into a form that can be readily used. The continuous support from our existing (as well as new) partners (including Willis RE Ltd., ForestRe Ltd., the Global Canopy Programme, Verified Carbon Standard Ltd, Enviromarkets Ltd. Ecometrica Ltd, Bosques Amazonicas Ltd., Acclimatise Ltd., The Edinburgh Centre on Climate Change, and the Forest Research) is a clear demonstration of the need for this KE activity. Combined, they will contribute more than £100,000 in-cash and in-kind to this KE initiative. Our Knowledge Translator will effectively develop the toolbox, bring together the case studies and proactively engage with the users.