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Insurance could cost-effectively help protect and restore mangrove forests, which can offer increased resilience and protect against coastal flooding, according to a report published today by The Nature Conservancy and University of California, Santa Cruz, and supported by AXA XL.

The report, Reducing Caribbean Risk: Opportunities for Cost-Effective Mangrove Restoration and Insurance, identifies 3,000 km of coastline across 20 states, territories and countries in the Caribbean region where post-storm mangrove restoration, which could be paid for by insurance and other mechanisms, would provide flood protection benefits that significantly outweigh the cost of mangrove rehabilitation. It adds that although the U.S. 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. 

Globally, mangroves protect 15 million people from flooding and also reduce flood damages by US$65 billion every year1.  The first 100 meters of mangroves forests can be particularly critical, as they can lower wave heights by as much as 66%2.

The uncertainty around the frequency and severity of tropical cyclones combined with rising sea-levels threaten coastal communities globally. Integrating nature-based solutions alongside more traditional coastal defences is seen as a critical component of disaster risk management and climate adaptation.

The report suggests that a parametric insurance policy based on wind speed is most feasible and could be paired with a traditional indemnity policy to cover both short-term and longer-term restoration actions. The funding source(s) and beneficiaries of the programme, whether public or private bodies, will significantly influence how a mangrove insurance scheme is structured.

Chip Cunliffe, Director, Sustainable Development, AXA XL, said: “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. 

“AXA XL is an innovator in this field, and in line with AXA Group’s focus on climate and biodiversity, we are using our risk management expertise to look for new ways to reduce community vulnerability to coastal flooding, which is expected to increase as sea levels rise. A specific mangroves solution could provide effective protection to coastal communities.”

Professor Michael W Beck3, of the University of California, Santa Cruz said: “With increasing sea levels and waves, more communities will be exposed to impacts from extreme weather. Mangroves provide a cost-effective first line of defence protecting people and property from these hazards”

The Nature Conservancy, which helped develop and launch the first coral reef insurance policy off Quintana Roo in Mexico, is helping lead this new approach. 

Mark Way, Director of Coastal Risk and Resilience at The Nature Conservancy said: “This report represents an important milestone in our work to develop insurance solutions that can help protect valuable coastal ecosystems that provide so many vital services, including enhancing resilience to storm surge and coastal erosion. We are about to begin a second phase of research to build on this report and deepen our understanding of technical aspects and the potential demand for an insurance product to protect mangroves in particular locations in the Caribbean region.”

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1. Menéndez, P., Losada, I. J., S. Torres-Ortega, S. Narayan, M. W. Beck. 2020. Global flood protection benefits of mangroves. Scientific Reports 10:4404.

2. McIvor, A., Möller, I., Spencer, T., and Spalding, M. 2012. Reduction of Wind and Swell Waves by Mangroves. The Nature Conservancy and Wetlands International.

3. Professor Michael W Beck is one of the world’s leading experts in modelling flood risk associated with mangroves and coral reefs. His research, together with that of TNC, forms the basis for this study.