Mangroves pay their way
Mangroves are tropical forests that form dense masses important for coastal land building. They are the foundations of extremely valuable but threatened ecosystems that deliver irreplaceable climate adaptation and mitigation benefits and support local livelihoods. In particular, mangroves provide flood protection to 15 million people living on tropical coastlines that’s worth an estimated value USD 65 billion each year. Mangroves are also among the world’s most carbon-dense ecosystems, storing up to 10 times as much carbon – known as “blue” carbon from coastal ecosystems – as terrestrial forests.
The main threats to mangroves are commercial aquaculture, coastal development, climate change, typhoons and tropical storms. On current trends, mangroves will disappear by the year 2100. The challenge persists among other reasons for a lack of awareness, incentives, knowledge and skills on how to conserve and restore mangroves. There are currently few business models to sustainably finance mangrove conservation. Yet when their economic benefits outweigh those of converting mangrove sites to other uses, there is a strong business case for conserving and restoring them.
Envisioned as a social enterprise to be launched by Conservation International following a piloting phase, the Restoration Insurance Service Company (RISCO) will model and monetise the flood risk reduction and climate change mitigation benefits of mangroves to finance mangrove protection and restoration, starting with two to three pilot sites in the Philippines. Specifically, RISCO aims to capture the economic value of threatened mangroves before they are destroyed through two revenue streams: (1) insurance-related payments for mangroves’ flood risk reduction benefits and (2) blue carbon payments – for instance, from property owners wishing to lower their flood insurance premiums – for mangroves’ climate mitigation value.
Once the sites are selected, implementing the pilots will entail developing conservation and restoration plans, conducting blue carbon feasibility assessments, modelling mangroves’ benefits to assess the risk reduction they provide, securing blue carbon credit purchase and insurance agreements and entering into agreements with debt and equity investors. In addition to being the first instrument to sustainably finance mangrove conservation and restoration through both adaptation and mitigation revenue streams, RISCO will work with the insurance industry to develop new products that incorporate the value of mangroves’ insurable risk mitigation benefits. It will also engage in knowledge-sharing, networking and training to expand and improve mangrove conservation and restoration practices wherever it operates.
GOALS AND EXPECTED IMPACT
Linked to the 2030 Sustainable Development Goals related to Climate Action and Life Below Water, this project aims to prove that RISCO is a replicable, financially sustainable business model for debt and equity financing of mangrove conservation and restoration. Targeting 4 000 hectares of mangroves in the Philippines for each pilot, it’s expected to provide attractive returns to debt and equity investors, reduce flood risks for 7 340 people and provide a climate change mitigation benefit of more than 600 000 tons of CO2, equivalent to the annual energy use of about 70 000 homes.
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