New partnerships; Restoration Insurance Service Company (RISCO)

Conservation International and Swiss Re Foundation piloting innovative business model to finance mangrove conservation and restoration

Arlington, Va. and Zurich, Switzerland (March, 2021) – Today the Swiss Re Foundation announced its support of a first-of-its kind instrument developed by Conservation International to assess and monetise the coastal asset risk reduction value and carbon storage benefits of mangroves.

These biodiverse coastal forests protect more than 15 million people who live along tropical coastlines, lessen the flood damage to coastal properties and assets by more than USD 65 billion annually and provide enormous climate mitigation benefits, storing an average of more than 500 tons of carbon per hectare.

However, approximately 25% of the world’s mangroves have been lost in the last 20 years. If current trends continue unabated, mangroves will disappear by the year 2100, mainly due to commercial aquaculture, coastal development, climate change, typhoons and tropical storms.

“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 to improve coastal resilience,” explained Stefan Huber Fux, Director of the Swiss Re Foundation.

The Restoration Insurance Service Company (RISCO) will combine two revenue streams – insurance-related payments and blue carbon credits – to sustainably finance mangrove conservation and restoration. RISCO will target sites where mangroves are protecting insured coastal assets such as tourism, energy, transportation and municipal infrastructure. The mechanism will also tap into a growing demand for nature-based carbon credits and the approval of the first blue carbon conservation methodology under the Verified Carbon Standard.

Conservation International will pilot RISCO in two to three sites in the Philippines, where typhoons frequently hit vulnerable coastlines and mangroves often serve as the first line of defense, saving lives and providing a benefit of more than USD 450 million in flood risk reduction benefits annually. Initial analysis projected that targeting 4 000 hectares in the Philippines would reduce flood risk to more than 7 000 people and provide a climate change mitigation benefit of more than 600 000 tCO2, equivalent to the annual energy use of about 700 000 homes.

“After a two-year start-up phase, our goal is to prove the viability of RISCO as a replicable business model that could take on debt and equity investors and become self-financing,” explained Allie Goldstein, Director of Climate Protection at Conservation International.

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.

Beyond the Philippines, Conservation International has found favourable market conditions for replicating RISCO in Vietnam, Indonesia and Costa Rica. If RISCO pursues projects in the most promising countries, it is expected to generate nearly USD 200-280 million in insurance sector and blue carbon revenues over a 10-year period, providing a significant source of sustainable finance for mangrove conservation and restoration.

This new partnership with Conservation International adds to our previous work on nature-based solutions as a powerful, financially viable risk management approach related to our priority theme "coastal resilience". The first model of this kind has been successfully prototyped and is currently being replicated jointly by the Swiss Re Foundation and The Nature Conservance with a focus on reef resilience.