Insurance could cost-effectively help protect and restore mangrove forests, according to a report published today by The Nature Conservancy and University of California, Santa Cruz, and supported by AXA XL.
Mangrove forests can offer increased resilience and protect against coastal flooding.
The report, titled Reducing Caribbean Risk: Opportunities for Cost-Effective Mangrove Restoration and Insurance, identified 3,000 km of coastline across 20 states, territories and countries in the Caribbean region. Post-storm mangrove restoration would provide flood protection benefits that significantly outweigh the cost of mangrove rehabilitation, it said. These mangroves could be paid for by insurance and other mechanisms, the report added.
A parametric insurance policy based on wind speed is the most feasible option, the report argued, and could be paired with a traditional indemnity policy to cover both short-term and longer-term restoration actions. The funding sources and beneficiaries of the programme, whether public or private bodies, will significantly influence how a mangrove insurance scheme is structured, it noted.
Although the US and the Bahamas have the most robust insurance markets, mangrove forests' protective benefits are also significant in the Dominican Republic and Jamaica due to their high population densities, the report found.
Globally, mangroves protect 15 million people from flooding and also reduce flood damages by $65 billion every year, according to data cited by the report. The first 100 meters of mangroves forests can be particularly critical, as they can lower wave heights by as much as 66 percent.
Chip Cunliffe, director of sustainable development at AXA XL, said AXA XL is looking at how it can use its risk management expertise to reduce the risk of flooding. “As part of our Ocean Risk Initiative, we’re looking to develop insurance and finance products that incorporate nature-based solutions - including mangroves - to help close the protection gap and build resilience at local, regional and global levels,” he added.
AXA XL, The Nature Conservancy, University of California, Chip Cunliffe