In Mesoamerica, the value of coral reefs across the tourism, commercial fisheries and coastal development sectors is linked to their health, and is estimated at US$6.2 billion per year, according to the 2018 UNEP study The Coral Reef Economy: The business case for investment in the protection, preservation and enhancement of coral reef health. Today, however, the vitally important goods and services of coral reefs are at risk from local and global human activity.
Insurance payments for restoring a coral reef after it has been smashed by a hurricane may seem a bit far-fetched. Nevertheless, this is one of a raft of measures being proposed for the Mesoamerican Reef, the largest transboundary coral reef system in the Atlantic Ocean, stretching more than 1,000 km along the coastline of four countries: Belize, Guatemala, Honduras and Mexico. It is critical to the ecological and economic health of the entire region and the Caribbean area.
The Mesoamerican Reef Fund, a partner of the International Coral Reef Initiative, The Nature Conservancy and UNEP, was set up in 2004. Through its Reef Rescue Initiative, with the collaboration of various donors and partners, it is developing emergency response actions and long-term financing mechanisms for reef restoration, including reef insurance, to cover the cost of emergency response and restoration after a climate event.
This work includes identification of key reef sites across the four countries, an economic valuation of reefs and the services they provide, hurricane risk and vulnerability assessments as well as an estimate of the cost of emergency response actions.
Parametric reef insurance is an innovative financing mechanism to support rapid response and restoration actions for reefs after a hurricane.
Pay-outs will be designed to ensure execution of critical actions in a timely fashion. For this, it is vital to understand the legal and administrative structure in each country. Accordingly, the Fund has prepared a regional and country analysis of the existing regulatory framework and public policy, where needed, on financing mechanisms for reef restoration.