Incorporating the insurance value of peri-urban ecosystem services into natural hazard policies and insurance products: Insights from Mexico

Abstract

Understanding how to adapt to increasing risk under climate change is essential for governments wishing to mitigate harms and manage insurance and disaster assistance costs. An approach that values the public good of hazard mitigation provisioned by natural ecosystems could also incentivise government, beneficiaries and insurance companies to share responsibility and funding for targeted conservation and restoration. To illuminate this concept of the insurance value of ecosystems, it is important to map the relationship between the area(s) that benefit from and provide regulating ecosystem services and to identify what determines the level of protection. In the case of flood control regulation that benefits at-risk urban areas, upstream or inland peri-urban areas are key.We present steps to operationalise the insurance value in policy using spatial indicators of periurban biodiversity and vegetation and soil health for four Mexican cities. For Mexico City only, we identify at-risk areas and characterise upstream peri-urban areas and find this insurance value is already diminished. Combining spatial analysis with a damage cost function we estimate the expected damage costs of different flood events and the monetary value of enhancing this insurance value. This estimate could be compared to other policy interventions and integrated into hazard insurance.

Prioritizing actions: spatial action maps for conservation

“…[18][19][20][21][22] Best management practices were introduced and shown to elevate biodiversity in multiuse ecosystems, such as agricultural lands, commercial or community-managed forests, [23][24][25][26][27][28] coastal zones, and cities. 29 Additional interventions are being adopted to drive impacts through community empowerment and capacity building, 30,31 development planning and mitigation, 32 changes in markets or access to markets, formal or informal governance changes, 33,34 communication campaigns, 35 or creation and use of novel finance mechanisms, 36 including insurance instruments 37,38 or debt conversions. 39,40 These approaches have differing impacts on species, ecosystem processes, and aspects of human wellbeing depending on how they are implemented and the surrounding biophysical and socioeconomic contexts.…”

Securing the sea: ecosystem-based adaptation and the biopolitics of insuring nature's rents

“…Biopolitics thereby involves establishing the boundary between the human and the non-human as well as mobilizing techniques for governing both (Lemke, 2015). While there might be several ways of relating to nature within the capitalist mode of production, the mode of production nonetheless fundamentally conditions the relation between humans and non-human nature insofar as the production of nature becomes informed by the social imperative to realize value through market-mediated exchanges in capitalism (Smith, 2008). Building on notions of biopolitics, Stephanie Wakefield (2020) has analyzed the production of nature as infrastructure and how this requires work by humans and oysters alike.…”

Assessment moral hazard of crop insurance in Indonesia

“…[9] found using the Enhanced Vegetation Index (EVI) to determine flood susceptibility. To reduce risk in urban areas, upstream or inland suburban areas are key [10]. Smallholders are increasingly vulnerable to extreme weather but lack access to affordable insurance products [11].…”