Coastal Infrastructure: Is It Time to Update our Investment Portfolio?
Editor's note: The following op-ed piece originally appeared on the Cool Green Science blog of The Nature Conservancy. Please visit the original article to view related photos and charts.
Coastal gray infrastructure – roads, bridges, buildings, ports, and everything else we build along coastlines – is clearly critical for keeping our society functioning, and we invest significantly in it.
Coastal green infrastructure, such as wetlands and reefs, is critical to us too as it provides many services and benefits including coastal defense. But just how much money do we ‘allocate’ to gray and green infrastructure? Just like any good investor, we should occasionally assess our portfolio and think about our allocations.
My colleague, Mike Beck, and I sought to run a quick check-up on our coastal portfolio. In brief, here’s what we found: we spend 400 times more on coastal gray infrastructure around the world than we do on coastal conservation (green infrastructure). How did we arrive at these numbers?
We evaluated spending breakdowns along coastlines by crunching the numbers from several global datasets. First, we looked at a really useful new database that tracks a vast number of aid projects from many of the biggest public and private donors. From 2000 to the present, about $77 billion of international aid funds (these coming from agencies like the World Bank and the UN) were devoted to industry, construction, transportation, and energy projects in developing island nations and coastal countries.
We also looked at municipal bond funding for coastal infrastructure – that is, private support to public investments. We looked at just one big sector of bonds that is highly coastal in nature – support for ports and marinas. In the U.S. alone, nearly $33 billion in municipal bonds was spent on ports and marinas since the year 2000.
Adding up these numbers, we’ve identified about $110 billion spent on building and maintaining coastal infrastructure since 2000
Most of us know that a huge amount of coastal infrastructure is damaged or destroyed in coastal storms, but numbers can be hard to come by. What are the costs of storms like Typhoon Haiyan in the Philippines and Hurricane Sandy in the Northeastern U.S.?
We wanted to put a number, even if a rough one, on these financial losses. We searched international aid data again, this time looking for projects that involved humanitarian aid and reconstruction after coastal storms in developing countries. We found that about $2 billion was allocated for such projects since 2000.
In wealthier countries, insurance companies often cover the losses of property and investments from storms. MunichRe, the world’s largest global reinsurance company, identifies that more than $280 billion was paid out by re-insurers overall to recover coastal damages from the largest hurricanes, typhoons, and floods in the last decade.
We estimate, then, that at least $110 billion was invested in building coastal infrastructure, and more than twice that value was paid outprivately to recover coastal infrastructure from damages (this figure does not include the public funds that governments spend on re-building after storms, e.g., the $120 billion the US government paid out after Hurricane Katrina).
To assess financial allocation toward coastal green infrastructure, we took one more look at the international aid data and added up the funds used for conserving coastal biodiversity and ecosystems. The total amount was miniscule compared to infrastructure spending – about $1 billion in the same timeframe. In other words, environmental projects receive about a quarter of one percent of the amount spent on coastal infrastructure.
What if we were to spend some of that infrastructure money differently: to build long-term coastal resilience?
Imagine if we invested just one tenth of the infrastructure funds on conservation and restoration. We could increase our coastal conservation investment by some 40 fold – and that’s just with the infrastructure money that we’ve identified here. Importantly, we could rebuild those coastal ecosystems in ways that would help protect our coasts and people too; in fact, we increasingly know how to do this. Healthy coastal ecosystems including mangroves, coral reefs, and salt marshes are some of the best defenses we have against storms that already cause damage and that are predicted to become more frequent and severe with climate change.
Channeling a bit more coastal funding toward protecting ecosystems might actually save money in the long run, by preventing expensive damage to our investments. Indeed, the insurance industry finds that investments in coastal infrastructure can be particularly cost effective for climate adaptation and risk reduction.
Without doubt, more work remains to be done before we fully understand our coastal portfolio. Nevertheless, even a small shift in the funding allocation toward ecosystem protection would likely lead to big decreases in future losses from coastal storms. Using coastal environmental funds strategically – for example, restoring mangrove or reef habitats located near densely populated areas – could prevent billions of dollars worth of damage, and at the same time, protect the lives and livelihoods of coastal residents. The world doesn’t offer many true win-win solutions, but carefully planned restoration of coastal habitats is pretty close to one, and it’s worth taking advantage of.