October 25, 2016 by Canadian Underwriter
More than US$625 million in property damages were prevented during Hurricane Sandy in 2012 by coastal wetlands along the coast northeast coast of the United States, according to a new report released on Tuesday.
Using the latest modelling techniques, scientists from the conservation, engineering and insurance sectors studied the impact of Hurricane Sandy in the northeast U.S. in 2012, when New York and New Jersey were badly hit by storm surges.
The study found that more than US$625 million in property damages were prevented by wetlands along the northeast coast of the U.S. and without these wetlands, the damage bill “would be much higher for Sandy and other predicted hurricanes,” Lloyd’s of London said in a press release. Where wetlands remain, the average damage reduction from Sandy was greater than 10%. Experts within the study team expect that the analyses of the effects of Hurricane Matthew earlier this month will demonstrate similar protections, Lloyd’s reported.
The study was led by the University of California, Santa Cruz, the Nature Conservancy and the Wildlife Conservation Society in association with Risk Management Solutions, Inc. and Guy Carpenter & Company, LLC. The project was supported by the Lloyd’s Tercentenary Research Foundation (LTRF) with additional support from the Science for Nature and People Partnership.
According to the report, titled Coastal Wetlands and Flood Damage Reduction, wetlands reduced property damages from Hurricane Sandy by nearly 30% in Maryland and prevented US$425 million in property damages in New Jersey. In Ocean County, N.J., the conservation of salt marshes is predicted to reduce average annual coastal property losses by more than 20%.
Wetlands are critical not just for catastrophic hurricanes, but also for all the likely storms in the region, Lloyd’s said in the release.
“It was unexpected to find just how effective wetlands can be at reducing property damages from catastrophic storms and hurricanes,” said Siddharth Narayan, University of California Santa Cruz (UCSC) research fellow and lead author of the study. “It was also critical that we were able to combine state-of-art engineering models with coastal ecology and economic analysis. Our coastal habitats are natural defences, and in this study, we show that their risk reduction services add up to hundreds of millions of dollars along the U.S. east coast.”
Paul Wilson, vice president of model development at RMS and an expert in hurricane and storm surge, noted in the release that modelling has traditionally focused on man-made coastal defence structures or on other “grey architecture solutions,” like elevating properties above sea level. “This study is pioneering because it applies cutting-edge modelling science to natural defences, and it allows us to put a financial value on the role wetlands play in protecting our coastal communities against storm surges.”
By quantifying the economic value of natural defences, they can be more effectively included in risk models and coastal management, the release noted. “In fact, the protection they provide is often incorporated in industry risk models, but these benefits are often pooled with many other factors and then not clearly recognized by model users, (re)insurers, brokers, clients and others. Wetlands can be straightforwardly included in results provided by the risk and engineering sectors and thus more easily considered in coastal development and habitat restoration decisions.”
There were also additional critical findings for coastal policy makers, the release said. For example, some townships with few wetlands within their borders benefit greatly from wetland preservation in neighbouring townships; the value of wetland to properties accumulate as one moves upstream away from the coast.
The magnitude of the benefits was surprising given how many coastal wetlands already have been lost throughout the region, the report found. As an example, wetlands did not reduce as much damage in New York in part because of their extensive loss in past decades. At the same time, even relatively small, thin bands of wetlands serve as an effective first line of defence, and they can be restored to build coastal resilience.
“This work shows the unlikely yet powerful benefits of collaboration between insurers, engineers and conservationists in identifying solutions to reduce risks to people, property and nature,” said Michael Beck, the Nature Conservancy’s lead marine scientist, UCSC adjunct professor and LTRF project lead. “The work highlights where we can find innovative financing opportunities and incentives for conserving and restoring coastal wetlands, which plainly put is good for the environment and good for business.”