Restoration Insurance Service Company for Coastal Risk Reduction (RISCO)

Overview
Restoration Insurance Service Company for Coastal Risk Reduction (RISCO) is an enterprise that restores and conserves mangrove habitats in vulnerable coastal areas. It contracts with coastal asset owners, who receive reduced insurance premium rates due to reduced property damage risk, and who over time use these cost savings to pay the RISCO for restoration and conservation.

The Problem
There is rapidly growing global recognition of the importance of mangroves for climate adaptation and mitigation. Estimates show that continued loss of mangroves will result in more than 18 million people at risk from flooding, and flood damages could increase to US$ 82 billion a year. Annual mangrove deforestation also contributes 10% of all greenhouse gas emissions from tropical deforestation, increasing climate change impacts. Globally, vulnerable communities with intact mangrove habitats sustain less wave and flood damage from storms; recent research values the flood reduction benefits of restoring the Philippines’ mangroves, for example, at US$ 453 million per year. Simultaneously, mangroves are important blue carbon stores with global significance for climate mitigation. Driving finance to mangrove restoration and conservation is an important and needed pathway to reduce disaster risk to coastal communities and their assets.

The Solution
Restoration Insurance Service Company (RISCO) is a social enterprise that finances mangrove restoration and conservation in order to reduce property damage risks and protect blue carbon. A key innovation is to develop insurance policies that will reduce premium rates for owners of coastal assets (e.g. homes, tourism infrastructure, fisheries, ports, and other infrastructure), according to the quantified property damage risk reduction benefits provided by mangrove restoration and conservation. The RISCO contracts with such owners to pay a portion of their cost savings on insurance premiums to the RISCO, allowing the RISCO to recoup its upfront investment in the mangrove restoration and conservation. Sales of blue carbon credits associated with the simultaneous climate mitigation benefit of mangrove conservation and restoration will provide additional revenue directly to the RISCO or a source for subsidizing insurance to coastal asset owners.

Target Impact
This instrument introduces a new approach to the insurance industry and will help accelerate the development of blue carbon credit projects. The proponent, Conservation International, estimates the global market potential of avoided damage losses at of US$ 8-16 billion/year, and aims to raise $5 million from blended impact investment for the first pilot.