Risks from natural hazards are growing due to climate change and habitat loss. Both insurance and nature-based solutions (NBS) can play important roles in reducing risks. Practitioners in the fields of risk management, insurance, and environmental management have many common goals for assessing risks and developing practical tools for risk reduction. Risk reduction is the core goal of risk managers such as the U.S. Army Corps of Engineers (USACE) and the U.S. Federal Emergency Management Agency (FEMA), along with state and local risk managers. Insurers and re-insurers also have significant incentives to reduce risks, including to decrease payouts and ensure the affordability of insurance. Environmental managers can leverage the risk reduction benefits from NBS to scale up conservation and restoration efforts. This report identifies tangible opportunities for practical science and action at the intersection of NBS and insurance to support more effective environmental and risk management solutions. Our recommendations are based on insights gathered through extensive interviews with leaders in risk science, insurance, risk management, and conservation; literature review; and our practical experience working across these fields. This work was principally supported by and conducted in partnership with the USACE Engineering With Nature (EWN) program, and we pay attention to where recommendations on NBS and insurance may be relevant to USACE and other federal risk managers.
Recently, some connections have been made between NBS, risk science, and insurance – for example, through assessments of habitat benefits in industry risk models and the insurance of coral reefs as natural assets – but integration across these fields is still nascent. Risk industry firms do work on NBS, but usually through sustainability initiatives and only infrequently as part of core business operations. Federal risk management agencies have some dedicated units on insurance and NBS, but these rarely overlap. Few environmental groups have expertise in insurance, and it is not common for academics to work across these fields. While interest in these integrated solutions is high and growing, progress towards on-the-ground implementation has remained limited. We identify 15 recommendations to further integrate NBS into risk science and insurance. These recommendations are grouped into the 4 key categories of
- Risk Models,
- Insurance Coverages,
- Public-Private Partnerships, and
- Financing Opportunities.
