THE Asian Development Bank (ADB) is exploring an insurance cover scheme for coral reefs in the Philippines.
“Across Asia and the Pacific, there are likely many places where an insurance policy could be a cost-effective way — that is, the price of the premium payments is offset by the protective value provided by the coral reefs — to ensure funds are available to restore coral reefs following triggering events,” it said in a recent report.
“The ADB, with funds from the Global Environment Facility and Asia-Pacific Climate Finance Fund, is exploring where in Fiji, Indonesia, the Philippines, and Solomon Islands such an insurance scheme can be put in place,” it added.
It estimated that 3.8 million or more than half of the fishing communities dependent on coral reefs globally are found in Asia and the Pacific.
“In addition, 1 square kilometer of healthy coral reef can provide as much as $900,000 in associated tourism value and provide hundreds of millions of dollars in annual flood production benefits in Asia and the Pacific,” it added.
However, 80% of coral reefs in the region are at risk due to overfishing, pollution, coastal development, and climate disasters, among others.
The bank said insurance payouts will go towards the repair and recovery of damaged coral reefs after a disaster.
“In some instances, coral reefs may not recover naturally without active restoration. This active emergency restoration can include debris cleanup and coral planting to help ensure that coral colonies and reefs remain intact and are able to continue to benefit coastal communities,” it added.
The ADB recommends funding mechanisms such as parametric insurance policies instead of utilizing traditional financing sources like government grants. These insurance policies are most suited for coral reefs as they are able to “fund rapid emergency restoration post damage.”
“Ultimately, a comprehensive reef management system will include the financing of reef management, reef restoration, and post-disaster reef repair. Until sufficient funding is established, however, effective progress will not be made in reef management and restoration because a single disaster event can erase years or decades of progress,” it said.
“Coral reef insurance offers one innovative means of managing the risk to coral reefs from disaster events. Given the rapid loss and degradation of reefs, there is an urgent need to focus on identifying opportunities for and piloting reef insurance policies as a specific policy frequently takes months or years to develop,” it added. — Luisa Maria Jacinta C. Jocson