Environmental Insurance: Protection for Ecosystems and Biodiversity in Asia
Asia's ecosystems and biodiversity are some of the richest and most diverse in the world.
Asia has more than 100,000 species of plants, 1,200 species of birds and 850 species of mammals, as well as various types of ecosystems such as tropical rain forests, grasslands, deserts, mountains and seas.
However, ecosystems and biodiversity in Asia are also facing serious threats due to climate change, environmental degradation, habitat loss, poaching, pollution and invasion of foreign species.
According to the 2020 Global Biodiversity Report published by the United Nations Convention on Biological Diversity (CBD), Asia has lost around 45% of its natural habitat since 1970.
In addition, about 25% of the plant and animal species in Asia are threatened with extinction. This loss of ecosystems and biodiversity does not only have a negative impact on the balance of nature, but also for the well-being of people who depend on environmental services such as clean water supply, flood control, carbon sequestration, pollution and tourism.
Protecting Asia's ecosystems and biodiversity requires the concerted efforts of various parties, including governments, civil society, the private sector and local communities.
One instrument that can be used to support this protection effort is environmental insurance.
Environmental insurance is a mechanism that provides financial protection for owners or managers of ecosystems against the risk of damage or loss of ecosystems due to natural disasters or human activities.
Environmental insurance can also provide incentives for ecosystem owners or managers to carry out sustainable management and adopt environmentally friendly practices.
Environmental insurance can be applied to various types of ecosystems such as forests, wetlands, coral reefs, mangroves and seagrass beds.
Some examples of the implementation of environmental insurance in Asia include the following:
- In Indonesia, the World Bank is working with the Government of Indonesia to develop an insurance scheme for Wakatobi National Park which is one of the ASEAN Heritage Parks (AHP) which has high marine biodiversity. This insurance scheme aims to provide compensation to local communities who experience losses due to damage to coral reefs due to natural disasters such as hurricanes or earthquakes. This insurance scheme is also expected to increase local community awareness and participation in coral reef conservation.
- In the Philippines, The Nature Conservancy (TNC) is working with Swiss Re and the local government to develop an insurance scheme for a marine protected area in Palawan which is one of the world's biodiversity hotspots. This insurance scheme aims to provide funds for the restoration of coral reefs damaged by tropical storms. This insurance scheme is also expected to encourage local governments to improve management of marine protected areas and reduce anthropogenic pressures such as illegal fishing and burning of mangroves.
- In India, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) is working with ICICI Lombard and the local government to develop an insurance scheme for mangrove ecosystems in Gujarat which is one of the provinces with the largest mangrove area in India. This insurance scheme aims to provide financial protection to local communities who depend on the mangrove ecosystem for their livelihoods. This insurance scheme is also expected to increase the motivation and capacity of local communities in the management and restoration of mangrove ecosystems.
Environmental insurance is one of the innovations that can provide benefits for ecosystems and biodiversity in Asia, as well as for the welfare of the people who depend on it.
However, environmental insurance also has challenges and obstacles in its application, such as difficulties in determining the economic value of ecosystems, lack of data and information regarding ecosystem conditions and functions, and low awareness and interest from relevant stakeholders.
Therefore, strong cooperation and coordination between various parties is needed, as well as support from adequate policies and regulations, so that environmental insurance can optimally contribute to the protection of ecosystems and biodiversity in Asia.
