Will insurance save mangroves?

Sarah writes*

Mangroves are trees in tidal tropical and subtropical ecosystems that are essential for providing storm protection to coastal communities in over 120 countries and territories (Conway and Mazza, 2019). The Dominican Republic (DR) is one of these countries where mangroves have been vital for protection against storms and erosion (Bryony Cottam, 2021).  In fact, conservationists in the province of Monte Cristi have seen a loss in shoreline, erosion and degradation in areas where mangroves have been removed (Bryony Cottam, 2021).

Even though mangroves are protected under the law in DR, weak enforcement has not stopped their removal (Bryony Cottam, 2021). Shrimp farms, fertilizer pollution, and other toxins have decreased mangroves by 30-50% (Chip Cunliffe, 2020).

This leads to the question: how do we encourage people to prioritize mangroves over tourism and agriculture?

Since tourism is one of the biggest industries in DR, it is more profitable to advance tourist infrastructure than protect mangroves (“Tertiary industries”, n.d.).  Thus, there needs to be a value placed on the mangroves to incentivize protecting them. In the insurance industry, new products are emerging to cover the $1.5 trillion global “blue economy” (Conway and Mazza, 2019).  Reinsurance companies such as Swiss Re implemented policies to protect dozens of km of coral reefs and mangroves in Mexico. These policies are putting a value on mangroves and coastal protection, which reduces the potential human and infrastructure loss. Axa XL also recognizes mangrove value. They found that a 100m-wide mangrove forest  can reduce flood damages by US$65 billion per year since mangroves can reduce wave heights by as much as 66% (“Tertiary industries”, n.d.).  Insurance companies will invest in mangrove rehabilitation when long-term benefits outweigh costs.

However, there are drawbacks to this insurance product. For one, insurance companies are likely to only provide coverage to areas that are mildly affected by global warming. Insurance companies are less eager to invest in protecting Dominican mangroves because there is more risk involved (Chip Cunliffe, 2020).

The second drawback is that pollution and over-fishing also contribute to the destruction of mangroves, which are difficult to value (Beck et al., 2020). Even if the mangroves are protected from being cut, they are not protected from pollution run-off. Additionally, over-fishing affects the balance of the food chain and, consequently, ecosystem health. Since it is difficult to quantify all the services that each aspect of an ecosystem offers, it is difficult to insure (Beck et al., 2020).

Although it is challenging, insurance companies such as Axa XL recognize the value of mangroves. They have already implemented policies in Mexico, and they are in the process of gauging the potential demand for an insurance product in the Dominican Republic and other locations in the Caribbean (Chip Cunliffe, 2020).

Bottom line: Mangrove protection is a nature-based solution to tropical storms that deserves investment. However, there are challenges in getting insurance companies to invest in countries that are highly affected by global warming. And it is difficult to implement a protection plan that not only prevents mangroves from being cut, but also reduces pollution and overfishing.


* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Author: David Zetland

I'm a political-economist from California who now lives in Amsterdam.

2 thoughts on “Will insurance save mangroves?”

  1. Dear Sarah, I really enjoyed your blogpost!
    One question to start off, I was wondering if there is a necessary conflict of interest between the tourism industry and the goal of protecting mangroves. Perhaps it would help to be more clear about the way tourism infrastructure negatively impacts ecosystems with mangroves. Moreover, I think that perhaps the tourism industry can definitely benefit from mangrove ecosystems, and maybe the tourism industry’s
    monetary value of these ecosystems is something that you can jump into if you haven’t already.
    You mention insurance companies, which I think are important for this topic as you have explained their role in protecting these ecosystems. I’m wondering if there are other actors that can play a significant role when it comes to a cost-benefit analysis, for instance civil society and local industries that can benefit from the protection of mangroves and that can therefore be important in placing value on these ecosystems, as well as the prevention of over-fishing and pollution of the land/coastal areas.
    Moreover, you include the dangers of pollution for the ecosystems, and I would suggest to add the impact on human health and local industries as well. I’m also wondering which actors benefit from over-fishing/pollution and the destruction of mangrove ecosystems? It would be useful to point them out and clarify which economic interests are the cause of weak enforcement of mangrove protection laws and from then on explore potential solutions to this troublesome, complex situation.
    Keep up the great work!

    1. Hey Enrica, thanks so much for your reply to my blog post. You have given me some really useful feedback that I can incorporate into my essay. I think diving deeper into the details of the effects the tourism industry has on mangroves will bring clarity to the solutions.

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