Insuring Natural Capital to Protect Ecosystems and Communities
The Nature Conservancy has demonstrated that natural infrastructure such as coastal marshes, mangroves, and coral reefs play a vital, cost-effective role in protecting people and property. Healthy coral reefs, for example, can break-up as much as 97% of wave energy. During major storms, this dramatically reduces flooding in the coastal communities that sit behind reefs.
However, the force of the waves also damages the reef, reducing ecological function and coastal protection benefits. The loss of the top meter of a healthy reef can double onshore financial losses from subsequent storms. This damage can be reduced by immediate post-storm cleanup and repair actions. But funds are needed to pay for first-response reef brigades and the work they do to restore reefs to their full protective value following major storms.
With support from Swiss Re, TNC developed the first-ever reef insurance policy, which insures a stretch of the Mesoamerican reef and adjacent beaches along the Yucatan Peninsula in Mexico. This policy, purchased by the State Government of Quintana Roo’s Coastal Zone Management Trust, ensures the health of the coral reef, reducing flood damage in coastal communities, and protecting the livelihoods of thousands of people whose jobs rely on tourism.
Hurricane Delta, which hit the coast of Mexico on October 7, 2020, triggered this policy and led to the world’s first ever coral reef insurance payout. The payout totaled $850,000 and will be used to restore the reef.
Swiss Re played a vital role in helping to establish this innovative insurance policy, and the Swiss Re Foundation has supported the development of “Reef Brigades” made up of teams of community members who are trained and equipped to repair the reef after a storm. With support from the Swiss Re Foundation, TNC created protocols, recruited reef brigade members, and delivered intensive classroom and underwater training sessions. We also partnered with Mexico’s National Commission of Natural Protected Areas to establish frameworks to maintain, manage, and deploy reef brigades.
With support from Swiss Re Foundation, we have established similar partnerships with the national agencies that manage marine protected areas in Guatemala, Honduras, and Belize. We are delivering reef brigade trainings in those countries, with the expectation that insurance policies will be established there as well, thereby protecting coral across all four Mesoamerican reef countries.