20 Nov 2018 - Coastal zones are critical to life and livelihoods, people and planet. They are conduits to trade, to communications, they provide resources and livelihoods, they are often centers of economic growth. Critical coastal ecosystems underpin a number of key economic sectors, including tourism, fisheries, mineral extraction, oil and construction. The ocean-economy, covering broad categories of employment and ecosystem services is estimated at between USD 3-6 trillion a year. And these areas are, of course, centers of population; already, half of the world’s population lives within 60 kilometers of a coast, and more than 600 million people (10% of the world’s population) live in coastal areas that are less than 10 meters above sea level.
These critical zones are under intense threat. Our changing climate is making sea levels rise and flooding more frequent, with storms intensifying in severity, while water-tables are increasingly tainted by sea-water intrusion and coastal waters are increasing in temperature and acidity. This is having a significant impact on coastal lives and livelihoods, undermining fishing, tourism, biodiversity and much more. These increasing climate effects and their corresponding consequences for countries, communities and households (especially the most vulnerable), necessitate a new level of understanding of risk and awareness about resilience. The World Bank recently identified for example the impact of extreme disasters as equivalent to a global USD 520 billion loss in annual consumption, forcing some 26 million people into poverty each year.
This paper considers how new and scaled up investments in coastal areas can build the resilience of countries and communities, combating the threat of climate change and its impact, reducing the threat of hazards, increasing coping capacity and reducing vulnerability. It examines some of the most innovative approaches to the mobilization of private capital for coastal resilience - particularly in SIDS (Small Island Developing States) - namely: insurance for natural capital, regional risk pools, bond structures and debt restructuring. None of these mechanisms are yet operating at scale. This paper draws on the discussions from a Roundtable convened at the Canadian Mission to the UN, drawing together public and private sector experts on innovative finance, climate risk insurance, and coastal resilience to present a set of recommendations for the G7 Environment Ministers to bring these innovations to scale.
This report was produced through a collaboration between the United Nations Development Programme and The Nature Conservancy, to highlight what is being done, and moreover, what more can be done to protect coastal zones through emerging insurance mechanisms.