Taking stock of the empirical evidence on the insurance value of ecosystems

Abstract

Ecosystems can buffer against adverse events and, by so doing, reduce the costs of risk-bearing 13 to society; benefits which have been termed 'insurance value'. Although the terminology is recent, the concept is older and has its roots in ecological resilience. However, a synthesis of studies through the lens of the insurance value concept is lacking. Here we fill this important knowledge gap by conducting a rapid evidence assessment on how, where and why the insurance value of ecosystems has been measured. The review highlighted the often substantial positive values that were associated with restoration, rehabilitation or avoidance of loss of natural ecosystems. However, many regions, ecosystems and hazards are not widely researched. Most studies focused on forests, agriculture and wetlands, often with an emphasis on habitat restoration to reduce flood risks. Over half the studies provided non-monetary or monetary estimates of value, reporting, for example, improved ecological function, achieved/achievable cost reductions or willingness-to-pay. Nevertheless, the evidence-base remains fragmentary and is characterised by inconsistent reporting of valuation methodologies. This precludes drawing general conclusions. We recommend that future studies of insurance value adopt a common approach to facilitate the development of a more robust evidence-base. KeywordsEcosystem services; insurance value; natural hazards; risk; resilience; rapid evidence assessment Highlights  We assess the existing empirical research on the insurance value of ecosystems;  There is a mismatch between research topics and hazard types, location and severity;  Values can be substantial, but there is little consistency in how they are calculated;  We recommend a common approach to facilitate mainstreaming of insurance value.

Insurance Value of Ecosystems: An Introduction

“…As an example of the metaphorical use of the concept, an operational framework developed by Gómez Martín et al (2020) categorizes risk reduction functions for extreme hydrological events. Metaphorical use of the term is apparent also in the review of insurance value analyses by Dallimer et al (2020), indicating that while most papers address insurance value in monetary terms, e.g., by ecosystem characteristics providing cost savings or contributing to benefits, also non-monetary ways of analysing insurance value is common, e.g. in terms of sociocultural value and ecological value.…”

“…Land-use type, green space or vegetation cover (Paavola and Primmer, 2019;Soto-Montes-de-Oca et al, 2020) can also serve as relevant parameters when assessing insurance value, particularly if the comparison is made with artificial surfaces or structures. Indeed, as Dallimer et al (2020) find regulating risks on water and soil ecosystem to be a major focus of insurance value analyses, simple proxies can be helpful for the consideration of many regulating ecosystem services as providers of insurance value, particularly if the analyses are expected to serve operationalization.…”

The wicked problem of biodiversity and ecosystem services in a changing world

“…For example, restored forested wetland in the Lower Mississippi River Valley had not regained the projected level of denitrification for nitrate removal after 13 years (Ullah & Faulkner 2006). Another challenge is that values are often estimated over short, or unspecified timescales, which do not align with timescales of political and economic decision-making (Dallimer et al 2020). Climate and environmental change can also undermine the resilience of ecosystems in the future, tipping the systems into new and unknown states; conventional economic valuation cannot handle these kinds of non-marginal changes (Turner et al2003).…”

“…Therefore, monetary valuation of ES as it has been traditionally practiced may not be appropriate for all facets of environmental goods such as non-use values (Nunes & van den Bergh 2001). Monetary value may not capture the full value of intact ecosystems in maintaining resilience against shocks and stresses and thus providing natural insurance: such insurance values, as well as option and quasi-option values of having the chance of future use of an ecosystem service have seldom been considered in valuation studies (Dallimer et al 2020). Yet, they could provide further support for conserving and restoring ecosystems (Paavola & Primmer 2019).…”

Nature-Based Solutions for Water Management in Peri-Urban Areas: Barriers and Lessons Learned from Implementation Experiences

“…In addition, the links between NBS and other green terms framed it as an 'umbrella' concept [1,4,9], an aspect that was originally coined by IUCN [10] and is commonly cited [9,[11][12][13][14][15]. The nexus of NBS with other terms has been studied by setting out how the concepts depict a metaphor [1].…”