Building Back Better Together: Investing in nature-based solutions to build resilience to ocean risk
By José María Figueres (Board Chair, Ocean Unite) and Denis Duverne (Chairman, AXA Group and Chairman, Insurance Development Forum)
In a year in which the Covid pandemic has shown all of us the interconnectedness of our world and how important it is to invest in nature, the Ocean is often forgotten as a critical investible solution to both mitigate risk and build resilience to change. Last year’s IPCC Special Report on the Ocean and Cryosphere in a Changing Climate underscored how human activity is now changing the Ocean faster than at any time in the past 65 million years. Ocean heating from CO2 emissions results in a rise in sea levels, intensifying storms and damage to marine ecosystems which provide essential services from resilience to food security and climate regulation.
Ocean change poses threats to the lives and livelihoods of billions of people, most of them in the poorest and most vulnerable communities in the Global South and in Small Island Developing States (SIDS), with women and girls especially hard hit. It also results in significant costs. According to a research paper published in Nature Climate Change, by 2050 the global community will face annual costs of over $1 trillion to coastal urban areas as a result of the combined effects of rising sea levels and extreme weather events on our coastlines. Insurers alone have paid out over US$300billion for coastal storm damage in the past decade — which is far less than the significant and constantly rising costs to governments and taxpayers.
Yet our global response has not matched the scale and complexity of the challenge. Standard investment models don’t take account of climate change or other risks — neither do many government plans — and there is no global governance mechanism to address this. If there were, the UN estimates that almost US$400 billion could be saved in the next 15 years from investments into disaster risk management.
We need to better understand ocean-related risks and shift our global response to anticipating and adapting to hazards, rather than addressing them post-disaster. And investing in nature-based solutions plays a key role in that.
Coastal ecosystems such as coral reefs and mangroves are critical natural assets that can reduce disaster impacts. Mangroves reduce annual flooding to more than 18 million people. (Beck et al., 2018) and coral reefs can reduce coastal flooding and erosion by dissipating as much as 97 per cent of wave energy.
A lack of understanding around the full value of these ecosystems has led to significant degradation and loss, making these habitats some of the most threatened on Earth. To protect and regenerate these precious assets — and meaningfully address ocean risk — we need a transformative response that transcends sectors and borders.
This is why we have come together with key actors from across the insurance and finance sector, ocean NGOs and governments to create the Ocean Risk and Resilience Action Alliance (ORRAA). ORRAA’s aim is to catalyse capital market support and investment into coastal natural capital, ocean health and resilience. It is designed to foster crucial collaboration between the public and the private sectors and create innovative finance solutions that build resilience to ocean risk in the regions that need it most.
The Alliance has a diverse and growing set of members, observers and partners. This is a new form of multilateralism, leveraging public-private cooperation to enable key actors to problem-solve on critical issues — a theme that lies at the heart of the Paris Peace Forum.
ORRAA’s aim is to catalyse the expertise and investment power of the financial and insurance sector, as well as public finance, to reduce risk in the most vulnerable communities. From risk modelling to parametric insurance products, and from carbon credits to savings cubs, financial innovations are essential building blocks in strengthening local response and recovery, regenerating nature, and building forward better.
Views expressed in this publication are the author’s and do not necessarily reflect the views of the Paris Peace Forum.
José María Figueres is the co-Founder of Ocean Unite. He was President of Costa Rica from 1994 to 1998, and has since served as the Co-Chair of the Global Ocean Commission and on numerous other boards. In 2000, he was appointed Managing Director of the World Economic Forum, and served as the organisation’s first Chief Executive between 2003 and 2004. He has also been a Director of the World Resources Institute (WRI), the Stockholm Environment Institute, WWF, and served as the President of the Carbon War Room.
Denis Duverne was appointed Chairman of the Board of Directors of AXA in 2016 after spending more than twenty years at the insurance group. Since 2018, Denis has also been Chairman of the Insurance Development Forum, a public-private partnership aiming to enhance the use of insurance to build greater resilience against disasters and to help achieve the United Nations Global 2030 Agenda.