The Nature Conservancy buys insurance to protect Hawaii’s coral reefs

As climate change makes coastal storms more destructive, an environmental group is trying a new approach to protecting Hawaii’s coral reefs. It could become a model for defending natural structures across the country – if it works.

The plan includes an urgent sequence of actions that will theoretically unfold as follows:

  • Step 1: The Nature Conservancy, a large nonprofit conservation organization, takes out an insurance policy for all 400,000 acres of coral reefs surrounding Hawaii’s 137 islands, even though they don’t own those reefs because they’re on public lands.

  • Step 2: If Hawaii experiences a storm strong enough to damage the reefs, the Nature Conservancy will receive a payout from the insurance company within about two weeks. (Roughly the speed of light compared to most insurance policies.)

  • Step 3: The Conservation Department will seek permission from the state of Hawaii, which owns the reefs, to repair the storm damage. While permission isn’t guaranteed, the odds seem good considering Hawaii doesn’t have the money to do the job itself.

  • Step 4: If state officials say yes, the conservancy will use the insurance money to pay diving teams to begin repairing the damage. This stage is most like a race: you have about six weeks, starting with the storm. After that, the broken coral dies back, further shrinking Hawaii’s best defense against future storms.

On Monday, the Nature Conservancy, based near Washington, DC, completed the first step, purchasing a $2 million insurance policy for Hawaii’s coral reefs. It’s the first insurance policy in the United States for a natural structure, according to the group, after similar efforts in Latin America. The Conservancy says that if the experiment is successful, it plans to expand the model to other states and include other natural features that provide shelter from storms, such as mangroves, wetlands, or coastal dunes.

“We believe we can help our Hawaii state government pilot this,” said Makale’a Ane, who leads Hawaii’s community engagement and partnerships for the conservation agency. “It is not easy.”

The Hawaii Test lies at the intersection of two trends that demonstrate the difficulty of adapting to climate change. First, the effects of warming are increasingly overwhelming the ability of governments to respond, even in wealthy areas. The problem isn’t just money, it’s an inability to adapt quickly enough to overlapping and evolving threats.

Coral reefs underscore this challenge. Acting much like sea walls, they mitigate the destructive power of waves pounding the shore and protect the people, land, and structures behind them. But reef repair isn’t eligible for money from the Federal Emergency Management Agency, although levee repair work is. And Hawaii’s Division of Aquatic Resources doesn’t have the budget to restore reefs damaged by storms.

“We can’t do everything,” said Ryan Okano, the Department of Ecosystem Conservation’s program manager.

This leads to the second trend in climate adaptation: Insurance companies pose as a solution, offering a range of products that promise payouts for all types of disasters.

Cities and states have bought policies against hurricanes; the federal government has taken out insurance against unexpectedly high flood insurance claims; Wealthy countries have offered to help less developed nations buy disaster insurance. The new insurance policy in Hawaii represents the next step in this evolution by applying insurance to a natural structure.

The conservation agency can send crews to fix the reef faster than the state can, Mr. Okano said. He added that the Conservancy can raise private funds to pay for this insurance, while the state cannot.

Still, it won’t be easy.

The money needs to be available quickly to be effective, but assessing damage to coral reefs takes time. After a hurricane, it can take a week or more for the waters to calm down enough for divers to even safely access reefs.

So instead of being dependent on a damage estimate, the insurance policy is dependent on the wind strength of the storm, which is measured in near real time. Under this approach, known as parametric insurance, a storm with winds of 50 knots (57 miles per hour) or more will result in a payout.

Wind speeds reflect the strength of a storm; The stronger the storm, the more likely it is that reefs will be damaged. At 50 knots, gale force winds are strong enough to damage reefs and create large waves that break off chunks of coral or throw branches and other debris into the water, causing further damage.

One of the most recent storms to see winds reach this speed is Hurricane Douglas, which passed near Oahu in July 2020, said Eric Roberts, senior manager of climate risk and resilience at the Nature Conservancy.

A storm with lower wind speeds could still damage the reefs. But starting coverage at less than 50 knots would have increased insurance costs. “The policy we chose was reasonably priced,” said Ms. Ane.

Sediment choking corals off the Hawaiian island of Lanai after a heavy rainstorm.Recognition…Ku’Ulei Rodgers/University of Hawaii, via Associated Press

While healthy coral reefs can usually bounce back after storms, today’s weakened reefs need intervention, said Robert H. Richmond, a research professor at the University of Hawaii at Manoa, who was not involved in the insurance effort.

In Hawaii and around the world, coral reefs have been devastated by a cascade of chronic conditions. Overfishing reduces the fish species needed to keep the ecosystem in balance. Sediment gets into the water when people do things like clear the land or suffocate corals. Sewage causes destructive algal blooms. Most existentially, climate change threatens to make the oceans too warm and acidic for corals to survive.

These stressors mean the reefs need help recovering from storms, said Dr. Richmond. At the same time, repairs will never be enough as they don’t solve the underlying problem.

“Unless the reason corals died in the first place hasn’t been addressed,” he said, “there’s not much point in putting stuff back in the water.”

A 2018 report by the National Oceanic and Atmospheric Association found that Hawaii’s coral reefs were “fair” on a scale of “very good” to “critical” condition, placing them in the middle of the scale.

The importance of coral reefs to Hawaiians cannot be overstated, said Ekolu Lindsey, co-founder of Polanui Hiu, a group dedicated to monitoring and restoring a reef off the coast of Maui called Nā Papalimu O Pi’ilani.

“It’s really that basis of life,” he said, noting that the coral polyp is the first life form to appear in the kumulipo, a Hawaiian chant of creation.

When the Conservation Authority proposed the idea of ​​reef insurance against high winds to Mr. Lindsey, he was intrigued but skeptical.

“I find it difficult to believe that the reef is going to break down and you’re going to send a bunch of divers out there to glue it all back together,” said Mr. Lindsey.

If it worked, he wondered, what about tsunamis or waves that collapse coral reefs without strong winds? Still, he doesn’t see a downside.

“If we have to pilot this thing in the United States,” he said, “I’d rather try and fail than not try at all.”

The Nature Conservancy has tried a similar model in other countries. In the summer of 2019, the Group took out insurance for a coral reef off the coast of Puerto Morelos on the Yucatán Peninsula in Mexico. Two years later, the group helped arrange reef insurance for Turneffe Atoll off the coast of Belize.

The results of these experiments were mixed. Mexico policy generated a payout in 2020 after Hurricane Delta hit the coast. The insurance quickly paid the money.

But it took about a year for local officials responsible for deciding how that money should be used to release those funds, said Claudia Padilla, a researcher at Mexico’s National Fisheries and Aquaculture Institute who is involved in repairing the reefs was.

“They need to become more efficient,” Ms. Padilla said.

This month the model got another chance. After Hurricane Lisa struck Belize on November 2, it took just 12 days for the insurance money to reach the MAR Fund, a group formed to protect the Mesoamerican Reef and a policyholder on that insurance.

Three days later, divers were in the water and beginning repairs, said Claudia Ruiz, the coordinator of the fund’s Reef Rescue Initiative.

When asked if she had any advice for the Hawaii project, Ms Ruiz said, “Be prepared in advance.”