Emergency response and risk financing for coral reefs
The Bahamas is home to one-third of the Caribbean’s coral reefs, which are critical for coastal protection, fisheries, and tourism—contributing over US$ 694 million annually to the national economy. Yet, these ecosystems are increasingly vulnerable to hurricane damage, exacerbated by climate change.
The Bahamas Emergency Response and Risk Financing programme, supported by the Global Fund for Coral Reefs (GFCR), is pioneering the use of parametric insurance and an emergency fund to accelerate post-storm reef restoration. By securing pre-arranged financing, this solution enables rapid response to storm events, reducing long-term ecological and economic losses while enhancing reef and community resilience. The programme also promotes capacity-building, awareness, and multi-sector engagement across government, civil society, and private stakeholders.
Key components of the initiative include:
- Parametric insurance coverage for category 3+ hurricanes, with payouts triggered by wind speeds in defined reef zones.
- Emergency fund for lower-category storms or insurance payout delays, ensuring year-round readiness.
- Governance and response framework, including trained diver networks (Reef Rescue Network) and pre-identified priority sites.
- Economic analysis and stakeholder engagement confirming that reef repair yields significant returns on investment.
- The programme is designed to be scalable across geographies and ecosystems and is already influencing models in seven countries, with eleven more exploring similar approaches. As a next step, the programme will formalise its governance structure, secure sustainable financing sources, and finalise its insurance policy and emergency protocols for full implementation in 2025.
The below diagram illustrates the structure of this finance solution:
