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Insuring the Belize Barrier Reef against climate change

Posted: Thursday, September 23, 2021. 3:16 pm CST.

By Aaron Humes: Belize’s Barrier Reef, often grouped with adjoining reef systems in Mexico, Guatemala and Honduras, is the second-longest and most cared for in the world behind the Great Barrier Reef in Australia. It has served us well over the years, protecting the coast from storms and providing economic activity through tourism and fishing.

But as the World Economic Forum points out, climate issues could set the Reef on a path to destruction – rising average sea temperatures, storm damage, and the results of human activity, such as trawler fishing.

There is a suggestion that countries like Belize can invest in insurance, as the regional government of Quintana Roo did prior to Hurricane Delta striking the Yucatan Peninsula last October, through work Swiss Re had undertaken with the Nature Conservancy to create an insurance product specifically designed for the reef. It cost approximately US$800,000.

Beyond restoration and repair, says the Forum, more needs to be done to combat climate change, and insurance may play a role by supporting innovation in climate-resistant technologies and by de-risking investments in fighting the interconnected problems of climate change.

Being able to accurately assess and mitigate risk can encourage businesses to make investment decisions with confidence. Knowing there is insurance available to pay out quickly following damage can offer additional reassurance that business will still be able to flourish even in the aftermath of setbacks.

But insurers are also working with governments, NGOs, and the private sector to build the business case for nature-led solutions that protect our environment and provide economic prosperity. This is where some of the real gains can be made.

For this outlook to reach the kind of scale needed to truly make a global difference, governments must help supercharge the response from the private sector.

For example, national governments – or regional bodies such as the European Union – could start to introduce mandatory environmental considerations in a range of infrastructure projects, for example. The use of regulation to incentivize investment that is beneficial to the natural world, or rationalizing certifications and standards, could make it more practical for solutions developed in one market to be rolled out elsewhere, too.

Mechanisms such as Environmental Impairment Liability cover could be deployed to direct a percentage of developers’ revenues towards reinvestment in protection or remediation of natural habitats. Or, as in the case of the Mesoamerican Barrier Reef, governments could work with industry to make sure there is always insurance cover in place for vital, vulnerable natural assets.

Directing private capital towards these large-scale solutions can be transformational, helping governments in places vulnerable to climate change to protect important natural assets and safeguard the health of their local economies.


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