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  • DRR Voices blog: 4 Jul 2017 Siddharth Narayan
    Postdoctoral Scholar in Flood Risk Modelling at the University of California Santa Cruz and The Nature Conservancy

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Siddharth Narayan

Postdoctoral Scholar in Flood Risk Modelling at the University of California Santa Cruz and The Nature Conservancy

Dr. Siddharth Narayan is a Lloyd’s Research Foundation Postdoctoral Scholar in flood risk modelling, based at the University of California Santa Cruz and The Nature Conservancy. His work focuses on developing approaches and tools to assess the role of coastal habitats in flood risk reduction and to understand their interaction with human activity on the coastline. He was formerly the post-doctoral fellow for the Science for Nature and People Partnership Working Group on Coastal Defenses.

Funding natural solutions for coastal risk reduction

Published on 04 Jul 2017

The world’s coastlines face increasing risks from flooding and storm surge. Nature can reduce that risk. A new report reviews new and emerging opportunities for investing in natural solutions for coastal risk reduction.

Risky coastlines and threatened ecosystems

An economist, ecologist, engineer and insurer walked into a pub. This sounds like the start of a joke, but in fact, it’s the true story of how an idea was born a few years ago to investigate how ecosystems like mangroves and coral reefs act as natural defenses, and how we can fund their conservation.

From the USA to the Philippines, coastal development and climate change are increasing the risks to people and property from coastal flooding. Today, an estimated 840 million people face the risk of coastal flooding. In the past 30 years, global GDP annually exposed to tropical cyclones has increased by more than US$1.5 trillion. In the past decade, insurers have paid out more than $200 billion for damages from coastal storms. What’s more, these numbers do not capture the millions of people below the poverty line who are highly vulnerable to coastal hazards.

We now know that coastal ecosystems reduce vulnerability and flood risk. Over several decades, ecologists and engineers have observed and realized that coastal habitats, including mangroves, coral reefs, and salt marshes help save billions annually in avoided flood damages. In the USA, salt marsh wetlands reduced damages during Hurricane Sandy by around $625 Million. Even in heavily urban areas where few wetlands remain, these have a significant effect on risk and damage reduction. In Vietnam, mangroves are less than half the cost of a breakwater and can provide multiple risk reduction benefits. Large-scale restoration projects are underway to try and reverse losses to these ecosystems due to land-use change and human activity. However, we still spend 30 times more money on coastal gray infrastructure such as seawalls, than we do on conserving or restoring natural infrastructure like mangroves. Gray infrastructure is costly, often has adverse effects on the surrounding coastline, and rarely keeps pace with sea level rise and environmental change. Natural infrastructure solutions can be cost-effective, can adapt to changing environmental conditions, and often offers multiple socio-economic benefits beyond risk reduction. Yet these valuable natural assets, which provide livelihoods, reduce vulnerability and enhance resilience, continue to be lost at alarming rates.

Investing in natural infrastructure solutions

A new report was released on June 13th by Lloyd’s of London – the world’s leading insurance marketplace – as part of a research project on examining natural solutions for risk reduction. Led by Charles Colgan at the Middlebury Institute of International Studies in California, the report, Financing Natural Infrastructure for Coastal Flood Damage Reduction, reviews the opportunities and mechanisms available world-wide, for financing natural infrastructure solutions for risk reduction. It identifies some barriers that prevent wider uptake of natural infrastructure within risk reduction strategies and proposes a framework to assess the applicability and utility of different mechanisms for financing these solutions.

The report has good news: there is a large and growing pool of funding available that could be used to design and realize natural infrastructure solutions with wins for both flood risk reduction and conservation. The report finds that multiple public and private sector opportunities exist to finance such natural infrastructure solutions, from the World Bank’s Global Facility for Disaster Reduction and Recovery and the Green Climate Fund, to mechanisms like resilience bonds and facultative insurance schemes. In the United States, the same mechanisms that fund gray infrastructure, such as special purpose tax districts and FEMA flood mitigation funding, can be applied to natural solutions. In other parts of the world, like Mexico, innovative mechanisms like catastrophe bonds and resilience bonds can be used to incentivize a shift in focus towards greener, more sustainable solutions for building back better from disasters.

Making better choices for coastal resilience

While we now recognize that nature reduces risk, this realization is yet to be translated into conservation action. The report emphasizes the opportunities that exist in how we prepare for and react to disasters. In most parts of the world the immediate reaction to a major coastal disaster is to build back our gray defenses. This view is undergoing a gradual but significant shift. Public and private sector institutions are realizing that we need to look harder at the choices we make both before and after a disaster. The report finds that the biggest opportunities for funding natural infrastructure lie in redirecting our focus from post-disaster spending on rebuilding coastal structures, to pre-disaster spending on sustainable solutions that protect human and natural assets. In countries like the Philippines, national governments and international donors are actively pursuing large-scale restoration of degraded ecosystems to reduce risks and improve the resilience of vulnerable coastal communities. Another key need is to ensure that restoration ecologists and practitioners have good lists of shovel-ready projects that optimally align the twin goals of conservation and risk reduction.

The report also highlights some barriers to the uptake of natural infrastructure solutions. These include a lack of institutional capacity for developing innovative funding, difficulties in capturing the risk reduction benefits of some solutions, and the administrative processes of permitting and funding restoration projects. As potential natural infrastructure projects are identified, and as a skilled body of practitioners develops project experience and standards, the barriers for implementing these solutions will drop. The greater our investments in natural infrastructure, the easier their implementation becomes, and the more resilient our coastlines will be.

The way forward

For some time now, ecologists and engineers have been gathering evidence to show that restoring and protecting our coastal ecosystems can reduce risks and save millions of dollars in damages. As this body of evidence grows, so does the interest from governments, corporate industries and risk insurers to understand how these benefits and savings can be translated into effective investments for conservation. We have come a long way from just a few decades ago when the concept of restoring a wetland for its flood defense value was considered unworkable. However, more work needs to be done, to understand the financial tools and mechanisms that will help to conserve and restore habitats achieve these benefits. The collaborative efforts of many, across academia, conservation and the insurance industry, can help further the idea that conservation and risk reduction can go hand-in-hand to address challenges such as climate change, coastal development and environmental degradation. The hope is that the insurer, ecologist, economist and engineer leave the pub, agreeing to work together to keep our ecosystems healthy while making sure people and their homes remain safe.

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