Asia Pacific Nature-Based Risk Reduction & Insurance Facility

Struck by an average of around 20 typhoons per year and affected by many other natural hazards, the Philippines rank as the world’s most disaster-prone country. With 7,600 islands and a coastline of 36,300 km, many coastal communities are at risk from typhoon-related storm surges, as Typhoon Haiyan tragically demonstrated in 2013. Mangroves can greatly reduce wave height and thus the impact of storm surges, while bringing many other benefits. Yet, the country has lost almost half its mangrove forests and, of the remaining 264,000 hectares, less than 20% are protected. Initiatives to scale mangrove restoration is a daunting task: most humanitarian and DRR funding is for project cycles of three years or less, and conventional funding tends to be too limited to implement programmes at ecosystem scale and over periods of at least ten years. A new funding model for nature-based solutions (NbS) is needed.

This project aims to protect and restore key ecosystems that provide disaster risk reduction and other essential benefits, such as biodiversity conservation and livelihood support, for communities vulnerable to climate change exacerbated extreme events, using a blended finance approach. Starting in the Philippines, with the goal of scaling up across the region, the Red Cross and Red Crescent National Societies and their partners will develop an insurance mechanism that covers both critical mangrove ecosystems and humanitarian assistance. In addition, the project will leverage blue carbon credits through large scale mangrove restoration. Revenue from the sale of these credits will then be used, in part, to help cover insurance premiums.

Project Updates

1. Strengthening Partnerships and Regional Engagement: 

The project is engaging with partners across the Red Cross Red Crescent network, technical organisations, and the insurance and finance sectors. The team has contributed to webinars and sector discussions on insurance, carbon finance, humanitarian blended finance and innovative finance for nature. These activities have helped raise awareness of the proposed mechanism and identify opportunities for future collaboration and regional scale-up. 

2. Advancing the Insurance and Blended Finance Model:

The project has continued to developed a concept for a hybrid insurance model that combines rapid parametric support for humanitarian response and mangrove damage assessment with indemnity cover for post-typhoon mangrove restoration. This marks an important step towards designing a practical financing solution that can support both people and ecosystems after climate-related shocks. 

3. Preparing for Replication and Scale-Up:

To support future expansion beyond the Philippines, PwC Netherlands is developing a scalability playbook. The playbook will provide practical guidance for assessing whether and how the mechanism could be replicated in other countries, including key steps, timelines, readiness considerations and enabling conditions for innovative finance approaches. 

4. Exploring Long-Term Finance for Mangrove Restoration:

The project is exploring how blue carbon finance could support the long-term sustainability of the mechanism. The next stages of work will focus on site confirmation, restoration feasibility, land and tenure considerations, and potential partnerships with carbon finance actors. 

5. Preparing for Country-Level Design and Community Engagement:

Once sites are confirmed, the project will move forward with local stakeholder engagement and community-level assessments, including Enhanced Vulnerability and Capacity Assessments and livelihood assessments. These will help ensure that the proposed ecosystem-based adaptation interventions are grounded in local risks, needs and capacities.