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NAture Insurance value: Assessment and Demonstration

Periodic Reporting for period 2 - NAIAD (NAture Insurance value: Assessment and Demonstration)

Reporting period: 2018-06-01 to 2020-08-31

The costs from natural hazards are on the increase and likely to increase even further under future climate change scenarios. Innovative approaches and solutions are needed. The NAIAD project has turned to nature to look for solutions to these water risks.

The overall aim of the project is to operationalise the assurance value of ecosystems i.e. a better knowledge and methods to help both prevent and mitigate risks associated with water (floods and drought), while helping to generate valuable co-benefits like biodiversity, health, recreation, etc. This risk reduction and prevention can be assessed and incorporated into insurance and investment schemes. We have called this “natural assurance schemes” or NAS. To deliver NAS, the project developed a comprehensive NAS approach and a series of tools and methods, testing them in nine sites so that this methodology can be now be adapted and adopted by others.

NAIAD´s conceptual frame is based on three pillars:
(i) to help build a resilience approach to risk management through nature-based solutions,
(ii) the operationalisation and test these methods in nine demos across Europe
(iii) the facilitate the uptake of nature-based solutions that are cost-effective and provide environmental, social, and economic benefits.

Trans-disciplinarity and stakeholder engagement are at the core of NAIAD for two reasons: first, because the conceptual and assessment methodologies combine physical, social, cultural and economic aspects, integrated into tools and methods; and second, these are “road tested” and validated with the stakeholders and end users themselves at the DEMOs.

NAIAD has contributed by providing a robust framework for assessing the assurance value for ecosystem services by (i) enabling full operationalisation through improved understanding of ecosystem functionality and its assurance value at a broad range of scales in both urban and rural contexts; (ii) making explicit the links between ecosystem values and social risk perception; and (iii) the application of developed methods and tools in water management by relevant stakeholders, especially businesses, public authorities and farmers.
The biophysical assessment developed at the 9 demos provides evidence of the role of NBS on risk management associated with water and characterised the biophysical hazards present at each location. The ecosystem services delivered in each of the DEMOs were assessed applying several tools and methods/approaches at different levels depending on the readiness of the DEMOs: System assessment tools and approaches, risk modelling.
NAIAD developed a framework to assess at DEMOs level the risk perception and risk management behaviour for the different actors and explored the underlying drivers of social risk perception and tested effective crowdsourcing systems to involve local stakeholders: Ambiguity analysis, information sharing and learning process, trade-off assessment, stakeholders engagement protocol, etc.
Building on the biophysical-social assessments developed in the project, a standardized method for economic, life cycle, damage costs and co-benefits assessments were developed. Principles and concepts needed to evaluate the cost of NBS implementation were presented.
To enhance decision-making and policy-planning for environmental risk reduction the scientific and societal knowledge was integrated as well the knowledge from different disciplines: MOOC, Freestations, Street level guidelines on the Insurance value of ecosystems, participatory modelling, adaptive planning, multi-criteria decision-making toolkit, integrative modelling, etc.
To support the EU (member states and Commission strategies) to identify and address specific barriers and opportunities for the uptake of NBS, it was developed: i) Innovative Business Models were developed to facilitate the identification of elements required to successfully deliver value from NBS, and i) economic and Financial Instruments to understand the different funding and finance options for operationalization the insurance value of ecosystems.
The project started asking some questions, and now, after more than 3 years, NAIAD provides some new insights:

i) in a context of climate change and land-use change plus and increase of asset values and distributions, the level of losses is increasing significantly, posing a challenge to governments, cities, the insurance sector and citizens. Are NBS the solution? Can the design of natural assurance schemes better prepare and avoid potential costs? On the evidence from our results, all these questions have a positive answer.

ii) NAIAD demonstrates that NBS are an important part of the portfolio of risk reduction, increasing the resilience of the system while providing additional societal co-benefits. However equally NBS are not a silver bullet, sometimes a combination of NBS with other measures, including grey solutions could be the best option. Therefore, the answer to how we best develop locally adapted solutions in catchments and urban areas is through a systematic approach to implement and deliver real evidence on NAS and by revisiting existing evidence. What is clear is a revised paradigm benefits from bringing in multi-disciplinarity to better understand the nature of what are inherently complex problems. Here the correct integration of knowledge (and disciplines) is key, which is ideally suited to the properties of nature-based solutions, that are inherently multifunctional. Our simulations also seem to indicate that NBS will be particularly well suited to frequent events, rather than the most extreme, thus increasing the overall resilience of the system. In prevention, we saw that NBS display their highest assurance value at the prevention stage against extreme events but also against more frequent events related to water risks.

iii) the possibility of evaluating NBS and NAS will facilitate the incorporation of these solutions in River Basin Management, River Restoration Plans, flood and drought risk planning and, therefore, the mobilization of resources for their financing, as part of an adaptive management cycle that shifts the focus earlier into the risk management cycle towards prevention.
Finally, one important insight learnt in the process was to identify the specific barriers, namely the different risk perceptions and ambiguity between the different stakeholders in the uptake of NBS as a latent opportunity for their uptake. The mobilization of collective action to deliver risk prevention and reduction will be central and what until now were bundled as “transaction costs” need instead to be “unbundled” and understood for their enormous potential to help deliver collective action for risk reduction tapping in the value of nature for increased resilience and prevention.

NAIAD cookbook- How to do a Natural Assurance scheme:

1.UNDERSTAND the underlying conceptual frame of what is natural assurance.

2.CHOOSE the NAS tools, methods and co-design processes that best suit your needs,

3.TEST their applications in a demonstration site,

4.DEVELOP the business models and financing schemes necessary for the adoption and mainstreaming of your “natural assurance schemes”

5.IMPLEMENT your NAS ensuring that you MONITOR and EVALUATE the main avoided damages from water risks and the associated co-benefits,

6.SHARE your experience with others so that these learnings are transferable across all of Europe and beyond
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