Mexico launches pioneering scheme to insure its coral reefBy Elliot Bullman
Hotels and local government in Cancún will pay premiums, and the insurance industry will pay out if the reef is damaged by storms.
The reef, off the coast of Cancun, is the first to be protected under an insurance scheme by which the premiums will be paid by local hotels and government, and money to pay for the repair of the reef will be released if a storm strikes.
Coral reefs offer a valuable buffer against storm damage from waves buttheir condition has detorioratedin recent years, the result of human exploitation and destruction of the reefs, as well as climate change, plastic waste and theacidification of the oceans.
The Cancun scheme, which is to be run by Swiss Re and the Nature Conservancy, with backing from the Mexican government, is thought to be one of the first in the world to tie environmental benefits and the “eco-system services”provided by natural environmental features to firm monetary costs and rewards. It could provide a model for similar projects in the future, linking the protection and preservation of the environment to payouts in case of disaster.
Under the Cancun insurance policy, local organisations dependent on tourism will pay in to a collective pot likely to amount to between $1m (£770,000) and $7.5m for the insurance premiums on the policy, and a 40 mile (60km) stretch of reef and connected beach will be monitored. If any destructive storms damage the reef system, the insurer will pay out sums likely to be $25m to $70m in any given year.
Hotels and private companies are signing up to the scheme at present, and the plan is for a fund backed by the government that will cover the premiums. This is scheduled to be activated in September, with further contracts to be signed in November and December, and full coverage will then begin from next January.
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