Insuring reefs to protect coastal communities
According to scientific consensus, a warming climate is causing more intense hurricanes around the world. With more than 60% of the global population living within 50 miles of a coast, this puts millions of people at risk of weather-related loss of life and property, and whole communities at risk of grave damage to infrastructure and their economy.
Natural barriers along coasts, including mangroves, wetlands and reefs, offer significant protection against storm surges by reducing incoming wave energy. A healthy coral reef can absorb 97% of a wave's energy before it hits the shore, putting it on par with more expensive and typically less durable and less sustainable man-made protections like breakwaters or seawalls. Healthy reefs make vulnerable coastal communities more physically resilient and serve as the economic backbone of many coastal economies by supporting fisheries and tourism.
For example, a scientific analysis by The Nature Conservancy (TNC) estimates that the loss of one meter of height in the Mesoamerican coral reef would translate into an estimated 1 300 square km of inland flooding and USD 20 billion in lost infrastructure in Mexico alone, imperiling millions of lives and livelihoods. Mexico’s reef is threatened not only by storms, but also by intense coastal development, rising ocean surface temperatures and the pressures of the tourism industry.
Despite reefs’ protective and economic value, more than 27% of the world’s reefs have already been lost and 32% are severely threatened. With the exception of philanthropy, no private mechanisms – including insurance – have been developed to fund the protection and restoration of reefs on a large scale. This is partly due to the fact that many communities, governments and companies are not aware of their vulnerability to climate change or of the multiple benefits of reefs and other coastal ecosystems.
Starting with local tourism-based economies, The Nature Conservancy believes that it can help safeguard increasingly vulnerable coastlines and economies by protecting coral reefs. In this project, which focuses on the state of Quintana Roo, Mexico, it is working with the Swiss Re Foundation and Swiss Re employees who have relevant expertise to:
- Measure and communicate the value of the local reef to key stakeholders, which range from local hotel associations to government ministries and the National Parks Service
- Build local capacity to protect and repair the reef system by developing and distributing a user-friendly toolbox and other resources on how to repair and restore reefs post-storm event
- Create the first-ever replicable insurance model that recognises the protective power of a healthy coral reef system and be the first to close a commercial transaction of an insurance policy on a natural asset
GOALS AND EXPECTED IMPACT
The project objective is to develop the local communities’ capacity for reef protection and repair and to share related knowledge and resources. Anticipated impacts include:
- Improved reef health as well as science and methodology protocols with a bolstered capacity to restore and repair reefs to maximize wave attenuation
- Increased physical and financial resilience of the communities in Puerto Morelos, Mexico
- A new, replicable solution for building the coastal resilience of tourism communities and economies through an insurance mechanism