Wildfires accounted for 38 per cent of all insured natural hazard losses globally
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independent.co.uk
Study finds 2025 was costliest year on record for wildfires | The Independent
Abatify Summary
Nature & Climate Perspective
**Escalating wildfire frequency in 2025 represents a critical threat to global carbon sinks, severely undermining the permanence of forest-based carbon sequestration. **
- Massive habitat destruction from record-breaking wildfires decimates regional biodiversity, disrupting trophic structures and accelerating ecosystem collapse.
- Mega-fires rapidly transition vital forest ecosystems from net carbon sinks into major carbon sources, releasing gigatons of stored carbon back into the atmosphere.
- Repeated high-severity burn cycles degrade soil microbial networks, preventing natural forest regeneration and permanently altering regional hydrological cycles.
Market & Policy Outlook
**The unprecedented rise in wildfire-related insured losses is forcing a radical repricing of risk in climate finance, highlighting the inadequacy of current carbon project buffer pools. **
- Regulators are reassessing LULUCF sector frameworks and tightening Article 6.4 rules to account for extreme permanence risks associated with forestry-based ITMOs.
- Insurance premiums for nature-based solutions are skyrocketing, reducing market liquidity and challenging the viability of projects seeking ICVCM Core Carbon Principles (CCPs) validation due to non-permanence risks.
- Corporations aiming for SBTi Net-Zero alignment are increasingly shifting their portfolios away from vulnerable terrestrial offsets toward high-permanence technical carbon dioxide removal (CDR) to mitigate Scope 3 compliance risks.
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