Market Forces

The loss of nature is not just an environmental crisis. It is an economic one.

When ecosystems degrade, we lose the services that protect us: wetlands that absorb floodwaters, trees that cool overheated streets, and reefs that protect coastlines. Without these protections, disasters hit harder and cost more.

And the economic stakes are enormous. More than half of the world’s GDP depends on nature, so as natural systems decline, the stability of our economy declines with them. We are already seeing the consequences in insurance markets. Climate-related losses are climbing and in many high-risk areas, coverage is shrinking. Higher risks mean higher premiums, lower coverage, and in some places, no coverage at all.

Maintaining healthy insurance markets will require reducing risk at its source. Nature can be a critical part of that solution. Our report, “Nature for Insurance and Insurance for Nature, informed by a workshop with over 100 experts from insurance, government and conservation, examines how. Read More »

New York City, along with the rest of the mid-Atlantic, is seeing more extreme rainfall events that overwhelm local infrastructure and lead to localized, but often severe, flooding. These flash floods can impose myriad costs on residents from lost income when businesses are interrupted to higher commuting costs when transit is flooded to the need to muck out homes and repair flood damage. 

When disasters like this strike, access to funds is crucial for covering immediate expenses. Unfortunately, low- and moderate-income (LMI) households often lack the resources to meet these urgent needs, leading to financial distress that can persist long after the disaster has passed. To help address this, a group of partners crossing sectors designed a learning-pilot that consists of an emergency assistance program, financed by a novel parametric insurance product. The project team has recently published a new report summarizing lessons from this effort. Read the report here.

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As the effects of climate change continue to unfold, all communities across the U.S. will face a wider range of risks. However, some communities will be more affected by those risks due to greater exposure and limited ability to recover from their effects.  

For two neighboring communities in Detroit, the U.S. Climate Vulnerability Index, a new tool developed by Environmental Defense Fund and Texas A&M University in partnership with many others, illustrates how a community’s baseline vulnerability can determine its capacity to address devastating floods, storms, droughts, wildfires and other extreme weather events.  Read More »