Presentation by Oliver Schelske, Swiss Re Institute, Director, Natural Assets & ESG Research Lead, as part of the webinar "Nature-Based Solutions as a Catalyst for Achieving Mutual Benefits for People, Nature, and Climate: Lessons learned from China and globally."

1. Biodiversity loss and nature-based solutions:
A view from re/insurance
January 20, 2021, Oliver Schelske, Swiss Re Institute, Director, Natural Assets & ESG Research Lead
Picture source: Swiss Re Image Gallery

2. Biodiversity loss and ecosystem service
degradation – link to re/insurance
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3. ▪ Residential and commercial development
▪ Agriculture and aquaculture
▪ Energy production and mining
▪ Transportation and service corridors
▪ Biological resource use
▪ Human intrusions and disturbance
▪ Natural system modifications
▪ Invasive and problematic species, pathogens and
genes
▪ Pollution
▪ Geological events
▪ Climate change
Biodiversity and ecosystem services at risk
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The rate of species extinction 1-5y is currently 1000x higher
than w/o human influence. By the middle of the 21st century,
30-50% of all species may be lost (scientific community
consensus)
Source: IPBES 2019
Source: IUCN / CMP 2016. Biodiversity threats classification
Reasons for decline are (i) land/sea use change, (ii) exploitation,
(iii) invasive species, (iv) climate change,
(v) pollution

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Nature’s contributions are significant
Coral reefs
W/o functioning
coral reefs, flood
damages for 100-
year storm events
would increase by
91% to USD 272 bn.
Reefs are therefore a
critical element in
assessing the risks to
coastal properties
from storms surges.
272bn
Invasive species
Annually, invasive
species cost the global
economy USD 540 bn.
The Eurasian
watermilfoil, for
example, has reduced
the value of lakefront
property in Vermont
16%.
540bn
Aquaculture
Nutrient run-off in
the Mississippi
watershed causes
algal blooms and
oxygen depletion,
costing shrimp and
oyster fisheries
>USD 300m per
year.
300m
Land degradation
According to the
OECD, land
degradation
impacted the global
economy by USD 6-
11 tr per year
between 1997 and
2010.
6-11tr
Pollinators
The world has
seen a 40%
decline in the top
pollinators.
This has
heightened the
risk for the global
pollinated crop
market, the value
of which is
estimated at USD
277-577 billion
-40%
Investment values
EUR 510 bn or 36% of
all of investments
from Dutch financial
institutions would be
lost if the ecosystem
services underpinning
were no longer
available.
510bn
Nature based
solutions
Action for nature-
positive
transitions could
generate up to
USD10.1 tr/a and
create 395m jobs
by 2030,
according to WEF
10 tr
Sources: DNB 2020, Beck et al 2018, Axa 2019, Pimentel 2005, US Fish & Wildlife Service 2012, OECD 2019, WEF 2020, SRI 2018. Full
sources details in Swiss Re Institute “Biodiversity and Ecosystem Services - A business case for re/insurance” publication, pp 18-19
Picture sources: Swiss Re Image Gallery
Dutch National
Bank and
Ministry for
Environment
World
Economic
Forum

5. Why these ecosystem service values - and what are related financial risks
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Direct contribution to economic
activity: physical input for
production processes (water,
timber)
Indirect contribution through
conditions essential for
production processes (habitat
intactness, pollination, soil
fertility, water quality,
regulation of local air quality
Protective against disruptions
caused by extreme events
(erosion control, coastal
protection)
Sources: Swiss Re Institute 2020, IPBES 2019, TEEB 2012, UNEP-WCMC ENCORE, OECD 2019, DNB 2020, WEF/PWC 2020, PWC/WWF 2019
Ecological (physical) risks
(=direct operational risks
associated with resource
dependency, scarcity, quality)
Liability / regulatory risks
Market risks, reputational
risks
Finance risks, insurance
risks

6. Nature-based solutions
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7. • Actions inspired and supported by nature, building resilience and providing social and economic benefits
(high level of interdependency between nature and economic activity).
• Often taken for granted for the ecosystem services they provide.
• According to Seddon et al 2019, there are three dimensions of NBS with respect to climate change and socio-economic vulnerability:
Reducing exposure*
• Erosion control (af-/re-forestation)
• Management of inland flooding (river
restoration)
• Coastal hazards and sea level rise
management (coral reefs, saltmarshes,
mangroves)
• Urban heat waves and heat island effects
(green roofs/walls, parks)
• Managing storm water and urban flooding
(wetland, green spaces)
• Sustaining natural resources in drier areas
(agro-forestry)
Nature-based solutions
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Reducing sensitivity*
• Buffering communities from climate
shocks by enhancing and diversifying
ecosystem services (rangeland
restoration; forest diversity)
Supporting adaptive capacity*
• Governance reform, empowerment,
improved resource access (common
pool, community involvement
management of resources)
*Source: Seddon N, Chausson A, Berry P, Girardin CAJ, Smith A, Turner B. 2020 Understanding the value and limits of nature-based solutions to climate change and other global
challenges. Phil. Trans. R. Soc. B 375: 20190120. http://dx.doi.org/10.1098/rstb.2019.0120

8. How can nature-based insurance contribute towards building resilience as well
as scaling up nature-based solutions?
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Investors – insure projects against delays or
non-completion, protecting the investment
or/and returns
Businesses – protect the revenue earned from
activities based around nature, cover costs
when business is interrupted due to natural or
man-made perils
Governments – insure against the cost of
damages, regeneration and associated
revenues, with fast payout for clean up and
restoration of natural sites
Picture source: Swiss Re Image Gallery

9. 9
Mexico Hurricane Coral Reef Cover
Parametric solution for fast pay-outs, to fund recovery and restoration activity
Swiss Re, TNC and the State
Government of Quintana Roo
collaborated to provide a parametric
hurricane solution. This is the first
deal of its kind in the world.
It is triggered based on a stepped
payout structure and pays an
increased % of the limit as windspeed
increase.
The insurance payments are used to
fund essential restoration measures
to the coral reef and beaches,
undertaken by trained local people.
This solution allows for faster recovery from strong hurricanes, which allows the tourist industry and hence the local
economy to minimize its losses. Additionally, the parametric mechanism does not require any loss adjustment, which
simplifies the process.
Benefits
Mexico’s Caribbean coast – home to
the longest reef in the north-
western hemisphere - was struck by
hurricanes Emily and Wilma in 2005,
causing USD 8bn damages, with USD
1.8bn alone in Quintana Roo.
A few hotels and beaches in Puerto
Morelos suffered less damage than
others, likely resulting from an
intact coral reef. While beaches and
reef provide significant revenue for the
local government and tourism industry,
they also sustain Quintana Roo by
providing coastal protection against
storms, including by reducing beach
erosion.
Swiss Re partnered with The Nature
Conservancy (TNC) and local
stakeholders to design a unique
protection mechanism.
TNC’s research had shown that strong
storms put the reefs at risk, with between
20% to 60% of live coral cover lost after a
Category 4 to 5 hurricane, compared
with an annual decrease of 2% to 6% in
live coral due to other causes.
Furthermore, 97% of wave energy is
estimated to be reduced by a healthy
coral reef. Losing the top 1 meter of an
existing coral reef is estimated to double
expected damages from flooding.
Challenge
Client Solution
Picture source: Swiss Re Image
Gallery

10. 10
Netherlands Prince Hendrik dyke reinforcement
Insurance covers to assure delivery and return on investment
The project not only protects the island of Texel against rising sea levels, but makes it larger and more beautiful with
additional natural habitat. Local residents were very pleased with the result and the consultation during the planning
and construction process.
The island of Texel is situated
on the most western side of the
UNESCO World Heritage site
Wadden Sea, the world’s
largest tidal flat system.
It is a popular tourist
destination in the Netherlands,
with 1 million visitors every
year.
The Prince Hendrik Sand Dyke
protecting the island was in danger of
major failure so the local authorities
were in search for an innovative
concept. A dredging company found the
solution: making use of and enhancing
the local natural habitat by placing 5
million cubic meters of sand as well as
planting 2 million marram grasses in
order to create a landscape gradient.
This 2019 project was one of the
biggest dyke reinforcement
operations in the Netherlands.
Swiss Re Corporate Solutions
supported the construction of this
nature-based solution and provided
high levels of insurance capacity.
Swiss Re co-signed ‘Contractors All
Risk’ (CAR) policy.
The project was delivered on time and
won the “Netwerk Groene Bureaus”
prize*. The Prince Hendrik Sand Dyke
project was chosen as the most
educational project by the fellow
agencies.
Challenge
Client Solution
* It is intended for initiatives in which efforts are made to strengthen biodiversity and where cooperation and innovation are important elements.
Picture source: Swiss Re Image
Gallery
Benefits

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Thank you for your attention
Contact us
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solutions/nature-based-solutions.html
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solutions/nature-based-solutions/world-heritage-site-nature-
based-solution-leads-way-reducing-risk-rising-sea-levels.html
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publication-biodiversity-and-ecosystems-services.html
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presentation for private or internal purposes but note that any
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are not permitted to create any modifications or derivative works
of this presentation, or to use it for commercial or other public
purposes, without the prior written permission of Swiss Re.
The information and opinions contained in the presentation are
provided as at the date of the presentation and may change.
Although the information used was taken from reliable sources,
Swiss Re does not accept any responsibility for its accuracy or
comprehensiveness or its updating. All liability for the accuracy
and completeness of the information or for any damage or loss
resulting from its use is expressly excluded.

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Legal notice
©2021 Swiss Re. All rights reserved. You may use this presentation for private or internal purposes but note that any
copyright or other proprietary notices must not be removed. You are not permitted to create any modifications or
derivative works of this presentation, or to use it for commercial or other public purposes, without the prior written
permission of Swiss Re.
The information and opinions contained in the presentation are provided as at the date of the presentation and may
change. Although the information used was taken from reliable sources, Swiss Re does not accept any responsibility
for its accuracy or comprehensiveness or its updating. All liability for the accuracy and completeness of the
information or for any damage or loss resulting from its use is expressly excluded.