Gonzalo Muñoz, the High Level Champion, COP25 Chile, opened the session by stressing both the need and the opportunity to act on ocean risks. The ocean provides close to $21B in GDP to the Latin America and Caribbean (LAC) region. Yet ocean-derived risks are multiplying, with wide-ranging implications for billions of people. Without action, 1 billion people will be at risk of coastal flooding by 2050. And a large portion will be in the Latin America and the Caribbean region, where between 25% and up to 100% of the population live along the coastline.
The launch of the Race to Resilience (R2R) Campaign this year offers an opportunity to spotlight the importance of understanding ocean risks and building coastal resilience. Ocean and Coastal Zones is one of the three pillars of the campaign, which aims to build resilience of 4 billion people who are vulnerable to climate risks by 2030. This side event convened many of the R2R partners around a virtual table to discuss innovative resilience financing mechanisms and insurance products that can enable climate adaptation in coastal countries.
Nature-based Solutions Has a Business Case
“Investing in coastal resilience is simply smart economics.” Gonzalo Munoz, High Level Champion for COP25, Chile
Karen Sack, CEO Ocean Unite and co-chair of ORRAA (Ocean Risk and Resilience Action Alliance) wholeheartedly agrees. Investing in Nature-based Solutions offers a cost-efficient way to achieve coastal resilience. A recent study from the Caribbean shows that Nature-based Solutions are 10 to 100 times cheaper compared to grey infrastructure options and can help avert up to 45 % of climate risk in coastal zones, saving the region $50 billion in flood damages.
Rapid action into coastal ecosystem recovery post-hurricane is another viable and cost saving tool, stressed Simon Young, Global Lead at Climate and Resilience Hub, Willis Towers Watson. The use of parametric insurance tools – such as the ones offered through Caribbean Catastrophe Risk Insurance Facility (CCRIF) – allows rapid deployment of resources to clean up coral reef systems after storm events thereby enabling them to recover more rapidly. The quicker recovery of the coastal ecosystems means reduced impacts of future storm surges. This recovery also enables small-scale fisheries, tourism operators and other livelihoods dependent on the health of coral ecosystem to recovery more quickly thereby delivering a high benefit-to-cost ratio.
The Tools of the Trade
“There is no one solution: not trying to fit one financing mechanism everywhere is the only way we will be able to achieve scale.” Emily Landis, Coastal Wetlands Strategy Lead, The Nature Conservancy, member of Global Mangrove Alliance
Blend to scale. Many island and coastal countries face barriers to the solutions they want to implement to safeguard the marine ecosystems they largely depend on. For countries with high national debts and low credit scores, debt restructuring, parametric insurance and carbon markets are some of the tools that – when used in combination – can be an effective and innovative method for driving investments into coastal Nature-based Solutions. An overview by The Nature Conservancy showed that 85 countries in the world that have coastline can use these innovative financing tools to achieve scale.
Long-term horizon is critical. The benefits of investing in coastal resilience and Nature-based Solutions needs to be better understood, and appropriate financial instruments with longer investment horizons should be developed. ORRAA is currently supporting a number of projects around the globe to understand the ocean risk landscape and the challenges and opportunities in this space. ORRAA also recently ran the Ocean Resilience Innovation Challenge to surface finance and insurance innovations that build coastal resilience to ocean change while delivering a return on investment.
Rewarding long-term investment upfront. Coalition for Climate Resilient Investment (CCRI) is working to advance innovative financial instruments that reward investments in upfront resilience. The aim is to facilitate the process of embedding future climate risks into the current decision-making processes. One such example is the National Investment Prioritization tool, which helps governments to assess and mange systemic exposure to physical climate risk to determine key public sector investment into resilience that have the greatest impact.
More to come. AXA XL is currently developing a Coastal Risk Index, designed to quantify the protective benefits of coastal ecosystems and incorporate them into insurance risk models. The Index is being developed in partnership with scientific institutions, governments, NGOs and private sector stakeholders, with plans to launch at COP26.
Coastal Resilience for Equity and Inclusion
Economic benefits aside, coastal ecosystems help protect the most vulnerable groups, including low-income communities, minorities and especially women and girls. Karen Sack pointed to the recent research from the US that shows that the loss of 1 meter of reef would increase the annual risk to low-income communities by over 263% in Puerto Rico compared to a 21% increase in Hawaii. Protecting marine ecosystems provides a natural protection mechanism for the most vulnerable groups who are already facing multi-hazard exposures.
Inclusive consultations with vulnerable coastal communities can be a powerful tool to drive effective context-specific solutions. One such success was the development of Salvador Climate Action Plan. In the process of developing the plan, the municipality received over 500 inputs from various constituencies, pointed out Daniela Ribeiro Guarieiro, Resilience Manager, Secretariat for Sustainability and Resilience of Salvador. While the process took longer, the upside was a more thorough overview of risks that helped to create more relevant Blue-Green solutions, especially for a city with a long stretch of coastline and a heavy reliance on the tourism industry and coastal economies.
Inclusivity also means creating an enabling environment to formaliy recognise small-scale fisheries and provide support to the industry. This sector employs 90% of all fisherfolk globally—providing over 50% of the world’s global catch. But without registration and financial literacy, it becomes next to impossible to drive large amount of capital to the sector as it simply cannot absorb it. RARE is working closely with small-scale fisheries to drive behavioral change and help them access formal financial services.
Join the Race to Resilience Campaign
This side event is part of GRP’s wider work on coastal resilience and ocean health in partnership with ORRAA and in supporting the High Level Champions’ Race to Resilience Campaign where coastal resilience figures as one of the three key pillars. Race to Resilience offers an opportunity to move the climate finance needle decisively in the direction of strengthening coastal resilience. The High Level Champions extend an invitation to all to join Race to Resilience today and help build resilience of the billions.