Financing natural infrastructure for coastal flood damage reduction

This report - reviews the existing and potential funding avenues for natural infrastructure, examines the barriers that prevent the broader use of these natural solutions, and proposes a framework to identify when and where natural infrastructure financing may be most relevant.

The key conclusions are: 

• There is a large and growing pool of funding for natural infrastructure, but the availability is geographically uneven and providing sufficient resources will require significant actions by industry, government, scientists, and communities. 
• There is no single appropriate financing mechanism for natural infrastructure. Financing should reflect the distribution of public or private benefits of flood protection through the payment mechanism as determined by specific local conditions.
• The largest opportunities for funding are in the redirection of post-disaster recovery funds to pre-disaster investments in risk reduction. 
• The largest barriers for securing adequate resources are: identifying locations where natural infrastructure can play a significant role in flood risk reduction; developing the experience and standards to overcome institutional biases that favor gray infrastructure; and developing institutional arrangements capable of matching available funding with the needs of individual situations. 

The report highlights the important role of the insurance industry in both preventative and recovery efforts and in driving innovation towards new solutions. With the development of new financial tools, including catastrophe and resilience bonds, and with a growing community of practice and many project examples, many of the existing barriers to natural infrastructure can be overcome.