The Landscape of Marine Ecosystem Challenges and the Role of Insurance in Climate Change Adaptation

Marine and coastal ecosystems are home to numerous plant and animal species, which all produce various valuable services for humans. The ocean has warmed unabated since 2005, continuing the clear multi-decadal ocean warming trends documented in the IPCC Fifth Assessment Report (AR5). Over the past decades, all scientific studies suggest that the oceans will continue to grow warmer and more acidic in the following decades. Even more alarming is the possibility that major ocean circulation patterns may disrupt the highly productive regions where upwelling brings nutrients from the deep waters of the ocean. The most key change in marine ecosystems associated with ocean warming has been coral-bleaching events. Often called “rainforests of the sea,” coral reefs are biodiversity “hotspots” and support an incredible array of flora and fauna. From 2016 that 31 per cent of tropical corals worldwide were already bleached.

Quantifying the value of natural capital and associated ecosystems, and representing the value of ecosystems in monetary terms, is crucial to envisage coastal management strategy. It is the first step toward coastal protection, enabling any meaningful cost-benefit analysis. Thus, effective mechanisms to translate these values into ecosystem protection strategies are essential, which are discussed in this paper.

Insurance, as a market-based financial instrument, has the potential to address some of the adaptation challenges related to safeguarding coastal and marine ecosystems. Designing an insurance product, for instance, to protect a coral reef system necessitates examining complex and dynamic interactions between exposure, hazard, and vulnerability.

With an 8,000-km long coastline, India has around 28 million workers in the fishing sector. The government, in 2020, introduced a draft National Fisheries Policy that offers insurance coverage but with several challenges and limitations. In India, the availability of quality marine data and enhancing the scope of marine and coastal insurance have the potential to address some of the challenges outlined above. This policy paper, with a focus on the global as well as Indian marine landscape, explores challenges around marine ecosystems and how insurance can play a role in adaptation to climate change and identify further areas of research.