(Reuters) — The Nature Conservancy’s vision for the future of coral protection involves speedboats and a global army of snorkelers and divers deployed when tropical storms and hurricanes damage reefs.
On Monday, the global “Reef Brigades” plan moved closer to reality when it bought insurance on behalf of the state of Hawaii, the first US coral insurance deal, which will provide funds for repair work, building on similar policies taken out in the Caribbean.
“Until now, conservation has really relied on philanthropy and government grants,” said Eric Roberts, a senior risk and resilience program manager at The Nature Conservancy. “By using insurance, we are also leveraging the private sector for this work.”;
Apart from being a precious nursery for fish, coral reefs that line developed coastlines can limit flooding by providing a barrier against ocean storm surges, which means insurance companies have every interest in protecting them.
“Even with just the flood risk reduction value, that’s usually enough to make a business case to say, yes, we need to protect these reefs,” Roberts said.
The reef brigades recover reef fragments, store them in ocean or shore-based nurseries, and then replace them, using cement or epoxy, when safe at a cost ranging from $10,000 per hectare to $1.5 million per hectare when new corals are grown. in a nursery is required.
For the $110,000 premium in Hawaii’s contract announced Monday, the state will receive up to $2 million in insurance coverage for its coral reefs through the end of December 2023.
The insurance covers most of Hawaii, from the Big Island to Kauai, and starts paying out at 50 knots of wind.
Higher wind speeds trigger higher payouts as a percentage of the policy’s value, up to its limit. The idea is that the payouts are available for restoration work within seven days of a storm. With this type of policy – a “parametric” policy – no claims assessment is required.
The idea of insuring reefs was first tested three years ago by the Mexican state of Quintana Roo.
Just offshore from some of the country’s most famous Mayan ruins, local tourism companies and the government bought insurance to cover their share of the Mesoamerican Reef.
The environmental group MAR Fund later adopted a policy for the rest of the Mesoamerican Reef, including elsewhere in Mexico, Belize, Guatemala and Honduras.
The officers were paid for a storm in Mexico in 2020 and another in Belize in November. Quintana Roo paid 6 million Mexican pesos ($307,850) to renew its policy last July.
“Yes, it can be a lot of money,” said Ecology and Environment Secretary Josefina Huguette Hernández Gómez, but it was worth it.
“The cost is higher when you have loss of biodiversity or coral than what you pay in insurance,” she said.
Willis Towers Watson PLC, which worked on the MAR fund policy and the Hawaii policy, said it is actively working on a coral reef policy for Fiji and policies on coral reef bleaching, runoff due to excessive rainfall and lost fishing days due to storms caused by climate change.
The need for the work to be rolled out globally is clear.
“An unprecedented coordinated global effort among the public, private and philanthropic sectors will be required for reefs to survive beyond the end of this century,” concluded a 2020 Reef Insurance Feasibility Study by The Nature Conservancy.
Among the criticisms of UN climate talks that concluded this weekend in Egypt was that they did too little to link biodiversity management with limiting wider environmental damage.
Its breakthrough result was agreeing a “loss and damage” fund to help poor countries deal with climate disasters.
Patricia Espinosa, a Mexican diplomat and former head of the United Nations Framework Convention on Climate Change, said reef insurance dovetailed with the loss and damage talks taking place at COP27 and should be explored more.
“The reality today is that most of the losses that we see as a result of these very radical and very severe climate phenomena are not insured,” she said.
“If we don’t address the climate crisis, we will really have a total disaster that will be felt in every sector.”