In a first, nonprofit buys insurance for Hawaii’s threatened coral reefs
By Christopher Flavelle and Catrin Einhorn
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 around the country — if it works.
The plan involves an urgent sequence of actions that, in theory, will unfold like this:
— Step 1: The Nature Conservancy, a large environmental nonprofit, takes out an insurance policy for the reefs surrounding the islands of Oahu, Molokai, Lanai, Maui and Hawaii, despite not owning those reefs, which are on public land.
— Step 2: If Hawaii experiences a storm strong enough to damage the reefs, the Nature Conservancy will get a payout from the insurance company within about two weeks. (Compared with most insurance policies, that is the approximate equivalent of light speed.)
— Step 3: The Nature Conservancy will ask the state of Hawaii, which owns the reefs, for a permit to repair the storm damage. Although permission isn’t guaranteed, the odds seem good considering Hawaii doesn’t have the money to do the work itself.
— Step 4: If state officials say yes, the conservancy will use the insurance money to pay teams of divers to start repairing the damage. This stage most closely resembles a race: They have about six weeks, starting from the storm. After that, the broken coral dies, further shrinking Hawaii’s best protection against future storms.
On Monday, the Nature Conservancy, which is based near Washington, D.C., completed the first step and bought a $2 million insurance policy on Hawaii’s coral reefs. It is the first insurance policy in the United States for a natural structure, according to the group, following similar efforts in Latin America. The conservancy says that if the experiment is successful, it will look at expanding the model to other states and include other natural features that shield against storms, such as mangroves, wetlands and coastal dunes.
“We think we can help our Hawaii state government put this into place as a pilot project,” said Makale’a Ane, who leads community engagement and partnerships in Hawaii for the Nature Conservancy. “It’s not simple.”
As governments struggle, insurers see an opening
The Hawaii test sits 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 is not just money but also an inability to adjust quickly enough to overlapping and evolving threats.
Coral reefs highlight that challenge. They act much like sea walls, blunting the destructive force of waves hurtling toward the shore, protecting the people, land and structures behind them. But reef repair isn’t eligible for money from the Federal Emergency Management Agency, even though the work to repair sea walls is. And Hawaii’s Division of Aquatic Resources doesn’t have the budget to restore reefs damaged by storms.
“We cannot do everything,” said Ryan Okano, the division’s program manager for ecosystem protection.
That leads to the second trend in climate adaptation: insurance companies presenting themselves as a solution, offering a suite of products that promise payouts for all sorts of calamities.
Focusing on wind speeds
Still, it won’t be easy.
The money needs to be available quickly in order to be effective, but assessing damage to coral reefs takes time. It can take a week or more after a hurricane for waters to calm down enough for divers to even access reefs safely.
So, instead of depending on a damage assessment, the insurance policy depends on the force of the winds generated by the storm, which is measured in close to real time. Under that approach, known as parametric insurance, a storm with winds of 50 knots (57 mph) or greater leads to a payout.
Wind speeds reflect the force of a storm; the more forceful the storm is, the more likely it is that damage will be done to the reefs. At 50 knots, storm winds are strong enough to cause damage to the reefs, generating large waves that break off pieces of coral or knocking tree limbs and other debris into the water that do further damage.
One of the most recent storms to have winds reach that speed is Hurricane Douglas, which passed close to Oahu in July 2020, said Eric Roberts, senior manager for climate risk and resilience at the Nature Conservancy.
A storm with lower wind speeds could still damage the reefs. But starting insurance coverage at less than 50 knots would have increased the cost of coverage. “The policy that we selected was reasonably priced,” Ane said.
Although healthy coral reefs can usually bounce back after storms, today’s weakened reefs need intervention, said Robert Richmond, a research professor at the University of Hawaii at Manoa who was not involved with the insurance effort.
In Hawaii and around the world, coral reefs have been damaged by a cascade of chronic afflictions. Overfishing reduces fish species needed to keep the ecosystem in balance. Sediment enters the water when people do things like clear land, smothering corals. Sewage causes destructive algae blooms. Most existentially, climate change threatens to make the oceans too warm and acidic for corals to survive.
‘I’d rather try something and fail’
The importance of coral reefs to Hawaiians cannot be overstated, said Ekolu Lindsey, co-founder of Polanui Hiu, a group that works to monitor and restore a reef off the coast of Maui called Nā Papalimu O Pi‘ilani.
“It’s really that foundation of life,” he said, noting that the coral polyp is the first form of life to emerge in the Kumulipo, a Hawaiian creation chant.
When the Nature Conservancy proposed the idea of reef insurance against high winds to Lindsey, he was intrigued but skeptical.
“I find it difficult to comprehend that the reef gets all busted up, and you’re going to send a bunch of scuba divers down there to glue everything back,” Lindsey said.
If it did work, he wondered, what about tsunamis and swells that tumble coral reefs without high winds? Still, he didn’t see a downside.
“If we need to pilot this thing in the United States,” he said, “I’d rather try something and fail at it than not try at all.”