Abstract
Coral reefs are exceptional natural ecosystems. Not only do they provide direct and indirect employment for local communities, but they are key structures in local ecosystems, creating beaches and providing an important level of coastal protection against severe hurricanes and storms. The protection of reefs is of crucial importance for many coastal communities. In this article, the coral reef insurance mechanism that financially protects the coastal areas in the State of Quintana Roo, Mexico, is discussed. The authors explore why coral reefs are threatened and which ecosystem services they provide to humans, a crucial step in providing insurance coverage. Further, the authors show how technology has made insuring coral reefs a viable business proposition. Insurance can support conservation funding while it is a form of financial disaster risk management. Finally, the authors illuminate that the conditions bringing public and private sector actors together like in the case of Quintana Roo, Mexico, are not easily replicable; and more research and understanding will be needed to provide extensive coral reef coverage. Insurance manages residual disaster risk, but it is not a replacement for physical disaster risk management measures.
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Notes
- 1.
For example, corals are home to over 4000 known species of fish, many of them the brightly coloured and patterned varieties that make this ecosystem so visually appealing (NOAA NOS 2020b).
- 2.
Researchers are using coral to study antimicrobial resistance. For example, ageliferin, a natural agent made by coral, can break down the biofilm coating bacteria, robbing them of their antibiotic resistance. Reef researchers are also developing medicine to aid the fight against cancer, viruses and Alzheimer’s disease.
- 3.
Sewage, sediment and algae growth, all resulting from coastal building and investment, can coat and choke coral. Wear and Thurber (2015) state sewage from coastal settlement (Zepeda-Centeno et al. 2018) is underestimated as a threat to coral in the literature. Ali et al. (2020) found that the more a coastline is altered by human construction, the higher it is at risk. Even reefs not proximal to human settlement have suffered. In a study of the Samoan island Upolou, Ziegler et al. (2018) demonstrated substantial reef damage, with resulting impacts on fish populations and coastal storm damage. By way of balance, reefs located in marine protection areas around Samoa were in a much better state of health.
- 4.
Fishing methods, such as nets and traps, can be nonselective, particularly threatening juvenile stock. Satellite imagery has demonstrated how larvae in heavily fished seas are no longer swimming into the open ocean (Wolanski et al. 2020 and James Cook University 2020). Blast fishing, using explosives, is particularly devastating, causing substantial direct damage to the coral, killing fish indiscriminately and in a way in which many cannot be harvested.
- 5.
- 6.
High levels of carbon dioxide in the water stop coral building skeletons. Even before reaching these widespread destructive levels, climate change is causing weaker and slower skeleton growth, leaving reefs more vulnerable to breakage.
- 7.
Valuing ecosystem services is inherently complex. This body of work began in the last few decades, coming into prominence in the late 1990s. Proliferation of technology and available data eases estimations. Many disciplines have controversely discussed valuation (Costanza et al. 2014). The focus here is on nature’s contribution to reduce expected losses, not on commodification. With growing societal ecological conscience, many think it is tawdry to value natural assets and the services they provide in monetary terms. An assigned monetary value to a species or an ecosystem service – and some might equal this value as a ‘price’ – could suggest tradability of (or the possibility to exchange) such a species against anything else with the same price, by taking the function of ‘price’ as a ‘numeraire’. However, such a species could be unexchangeable, while manufactured goods are reproduceable. Nevertheless, monetary values can provide helpful insights for decision-making, depending on the context.
- 8.
The steps follow the four classical natural hazard assessment modules, according to Zimmerli (2003): (1) hazard, where, how often and how severe; (2) vulnerability, damage at a given intensity, depending on, e.g. building codes, material and characteristics like height, roof, front and windows; (3) value distribution, location of assets, risks and their value; and (4) insurance conditions, what proportion of the loss is to be insured, insurance limits, deductible and exclusions.
- 9.
Original source is CENAPRED (2006).
- 10.
The Nature Conservancy, ‘Insuring nature to ensure a resilient future’, global.nature.org, 2018.
- 11.
In detail, these institutions are The Nature Conservancy (TNC), the Center for Research and Advanced Studies (CINVESTAV) – Merida Unit, the Institute of Marine Sciences and Limnology (ICML) from the National Autonomous University of Mexico (UNAM) and the Engineering Institute (II) from UNAM. Mexico’s National Commission of Natural Protected Areas (CONANP) supported the process, as well as the Marista University and the Reef Resilience Network, and Mesoamerican Reef Fund has given inputs.
- 12.
For a modelled tropical cyclone over a return period of 25 years, Beck et al. 2018 estimate: healthy coral reefs can reduce the flooded area by 8700 km2, protect 1.7 million people living at the coast and avoid USD 36 billion damage to happen. Without reefs, the damage (on average) of tropical cyclones to coastal property would be 2× higher, flooded land would be +69% higher, and affected people would be +81% more (Beck et al. 2018).
- 13.
Schott, T., Landsea C., Hafele G., Lorens J., Taylor A., Thurm H., Ward B., Willis M. and Zaleski W. 2019. The Saffir-Simpson Hurricane Wind Scale. National Hurricane Center and Central Pacific Hurricane Center. Online available at https://www.nhc.noaa.gov/pdf/sshws.pdf
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Acknowledgement
The authors would like to thank two anonymous reviewers for their helpful comments on an earlier version of this paper; Rubem Hofliger, Swiss Re Public Sector Solutions Head Latin America, Simon Woodward (Swiss Re Institute), for his comments on earlier versions of this paper and for this editing of our text; and Jon Burt (New York University Abu Dhabi Associate Professor of Biology and Program Head Environmental Studies), for his insights into coral reef ecosystem biology explained to us. The article reflects the view of the authors. In addition, the authors would like to thank all stakeholders of the Quintana Roo coral reef collaboration because the majority of the insights presented here would not exist without their work – namely, The Nature Conservation (TNC), Mexico’s National Commission of Natural Protected Areas (CONANP), the Research Center for Aquaculture and Fisheries (CRIAP), the Quintana Roo Hotel Owners Association, the Government of Quintana Roo, the Mesoamerican Reef Fund, the Center for Research and Advanced Studies (CINVESTAV) – Merida Unit, the Institute of Marine Sciences and Limnology (ICML) from the National Autonomous University of Mexico (UNAM) and the Engineering Institute (II) from UNAM, as well as the Marista University and the Reef Resilience Network, Swiss Re Public Sector Solutions, and all involved individuals.
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Schelske, O., Bohn, J.R., Fitzgerald, C. (2021). Insuring Natural Ecosystems as an Innovative Conservation Funding Mechanism: A Case Study on Coral Reefs. In: Eslamian, S., Eslamian, F. (eds) Handbook of Disaster Risk Reduction for Resilience. Springer, Cham. https://doi.org/10.1007/978-3-030-61278-8_19
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