Coral reefs are not only a source of wonderment for scuba divers, they also provide important ecological services. In one of the most promising developments for reef restoration, economists, insurers, and conservationists are now collaborating to leverage the ecological and protective services of coral reef s putting an insurance policy on habitats.
By combining insurance and new science, beneficiaries like hotels, government and tourism associations, can protect the health of reefs and ensure they are restored after extreme storms hit. The Reef and Beach Resilience and Insurance Fund (RRIF) fund will be designed to coordinate and unlock sustainable private sector capital for the protection and restoration of coral reefs.
Insurance For The Reef
The project started 4 years ago to reduce risk to coastal communities and to the infrastructure. The Mesoamerican reef side of Mexico was selected as it is the most important tourism destination in Mexico attracting 10 million tourists per year.
This area has high capital and is highly exposed to Hurrican, making it an ideal candidate to understand the process and how to replicate throughout Mesoamerica.
Fernando explains the steps necessary to assess the need for environmental insurance, as well as developing a plan for potential buyers, designing insurance, and scenario outcomes and intervention tables.
One of the interesting point I found in this presentation was the threshold necessary to trigger the fund. Fernando gave an example of wind speed threshold, for example, if wind speeds are over 100 knots during a storm, they found that damage to coral reef significantly increases.
Depending on the severity of wind speeds, insurers can estimate payouts based on these numbers. This is followed by a scenario evaluation with varying degrees of ecological and structural reparation to the reef.
Fernando goes into the technical and economic details of ensuring an ecological habitat, very interesting to hear him talk about this. If you want to learn more we suggest watching the full webinar!
Presented by Reef Resilience Network.