Can Reef and Beach Insurance Improve Coastal Resilience?

Aerial photography of Punta Gorda, on Florida’s Gulf of Mexico coast. Photo by Carlton Ward

When you hear the word “nature,” what do you think about? A pristine beach? Maybe your favorite wild animal? Nature means different things to different people. But do you think of nature as a powerful source of protection from storms, rising sea levels and other negative impacts of climate change?

You should.

Climate change is no longer a distant threat. We are living with the reality of it, right here and right now. The impacts of climate disruption from Florida to Fiji, and everywhere in between are clearcostly and widespread, as storms, floods and droughts become more severe and less predictable. Storms are costing the world $300 billion a year, and 68,000 people are being displaced every single day.

We can’t afford to do nothing – literally.

An estimated 840 million people around the world live with the risk of coastal flooding, many in coastal cities. For these communities, the health of their economies is directly related to the health of coastal ecosystems. For example, in 2012, while Hurricane Sandy did tremendous damage to the eastern United States, coastal wetlands likely saved more than $625 million in additional flood damages across coastal communities in 12 states. And, in the Philippines, mangroves are expected to avert more than $1.6 billion in damages for 1-in-25 year events, and $1.7 billion in damages from 1-in-50 year events.

Seawalls, breakwaters and sand bags often come to mind first for disaster preparedness tools, but these are not the only options. And sometimes they aren’t even the best option. Natural resources, including coral reefs, mangroves, wetlands, sand dunes and healthy beaches, offer the first lines of defense to slow waves, reduce flooding and protect coastal people and property.

Coral reefs protect 200 million people around the world. A healthy coral reef can reduce 97 percent of a wave’s energy before it hits the shore, and just 100 meters of mangroves can reduce wave height by 66 percent. These nature-based solutions are cost-effective, self-maintaining and adaptable to sea-level rise. And they also offer other benefits to communities that traditional “grey infrastructure” solutions simply can’t, including improved water quality, more fish and new ecotourism opportunities. In fact, there are more than 70 countries and territories across the world that have “million dollar” coral reefs – reefs that generate more than one million dollars in value per square kilometer.

Economists, engineers, insurers and conservationists are together developing new science, models and strategies to evaluate and leverage the protective services of this natural infrastructure, including coral reefs and beaches, and to make sure they can be restored after damaging storms.

Indeed, one of the most promising new developments to maximize the value of nature is the possibility of actually putting an insurance policy on it – to protect the health and protective services of these ecosystems and ensure they are restored after extreme storms hit. This combination of insurance and science could be a powerful step toward protecting and improving the health of reefs and beaches so they can continue to protect us.

The Nature Conservancy is currently designing and testing the first-ever insurance mechanism to leverage the protective services of reefs and beaches to create new financing for restoration and protection. If successful, similar insurance might cover other naturally protective systems like mangrove forests and coastal marshes and even oyster reefs.

The increased threats of severe storms and climate impacts are here today – but so too are replicable and scalable nature-based solutions. We need action at all levels, from the international to the local, to shift our behavior and thinking around nature and drive investment in nature at a level equal to the value it provides us.

Now is the time to examine the full suite of solutions available to protect and sustain coastal communities and economies – and that includes taking a closer look at the potential of insuring nature to ensure nature keeps protecting us.

Kathy Baughman McLeod is the Managing Director for Risk and Investment at The Nature Conservancy. To learn more about The Nature Conservancy’s work on insuring reefs and beaches, visit

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