Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • August 2020
General Features

Nature-based solutions in tackling climate change

Open-access content Wednesday 5th August 2020
Authors
John Carstensen

John Carstensen discusses the role of nature-based solutions in tackling climate change

web_p36-37_sunset_shutterstock_1105404479-[Converted].png


Climate change is continuing at worrying pace despite our – in fairness, modest – efforts to decarbonise our economies and prepare for the impact on our lives and economy. It is increasingly clear that we are not going to be able to stay within the 2°C global temperature increase limit set out by international climate change agreements.

Fatih Birol, head of the International Energy Agency, has made it clear that if the world is to meet its 2050 net-zero carbon goal, we must take action on decarbonisation this year as part of the COVID-19 recovery response. The UK’s Climate Change Commission has just released its progress report on the UK’s efforts – and the headline is that we’re off-track in most areas and sectors.

We need to embrace all possible approaches to decarbonisation and adapting for the future. There must be fundamental changes to our industry, transport, farming and housing energy infrastructure. Much of what we need to do, such as renewable energy and electrification, is well-established, but we need to become better at implementing nature-based solutions if we are to achieve the scale and speed needed to respond to climate change.

Scale of investment

In September last year, the Global Commission on Adaptation published a report estimating that US$1.8trn 
was needed by 2030 to meet global adaptation needs.

This can’t all come from the public sector and development agencies; agencies and governments will have to use their resources to leverage private sector finance.

From a global perspective, a US$1.8trn investment concentrated in five categories – weather warning systems, infrastructure, dry-land farming, mangrove protection and water management – would yield US$7.1trn in benefits, nearly four times the investment. Yet the private sector is only going to invest if there’s a discernible return on their particular investment, and if that return comes with a minimal or manageable risk. We need to work out incentives that will help to transfer risk and economic benefits.

During the past few decades, more and more services that are dependent on environmental resources have started exploring ecosystems services, where nature solutions are applied. There are interesting examples of how valuing ecosystems services can help pay for protective interventions, and the UK water sector is exploring such options in many places to help maintain a clean water resource at a reasonable expense, as well as serving ambitious aims for both climate change and biodiversity.

Many of our water utilities have embraced a nature-based approach that has moved away from simply focusing on treating a water resource, and towards managing the entire ecosystem. Yorkshire Water, for example, has adopted a comprehensive analytical approach to understanding all its challenges, including weather extremes, rising sea levels and dry summers. Its approach aims to understand its customer base and their economic challenges, taking a local community focus. This has led to development of catchment strategies, but also nature-based solutions in the catchment area to slow the flow of the water. These solutions include the restoration of 43 hectares of blanket bog and the planting of up to 200,000 trees. Scottish Water and many other water utilities companies are making similar changes – partly because it is effective and economically sound to do so, but also because the companies themselves will benefit from the investment.
 

web_p36-37_figure-1.png


Circles of benefit

Unfortunately, the areas where investments are needed are often not directly connected to the people who will benefit. Connecting the circles of economic benefit will require innovation.

An interesting example is how those in charge of the New York City water supply have made a voluntary arrangement with local farmers in the Catskills, in which the farmers are paid for taking measures that reduce the amount of pesticide and nutrient run-off from farms. This in turn cuts the cost of treating the drinking water for the utility companies, and has avoided the need for regulation and expensive control regimes.

Insurance schemes are being explored with some degree of success, but they will only be part of the solution if climate impacts such as storms and floods are not recurring too frequently. Insurance is already a challenge for small businesses in areas that are repeatedly hit by flooding. Strong adaptation measures can allow insurance schemes to help spread the risk of extreme weather events – and nature-based solutions are integral to their success.

Nature-based solutions must also be rolled out in developing countries, where many nature-based benefits are found on a large scale. They can also be used effectively to address climate change issues, both in reducing GHG emissions and in helping communities adapt to the impacts of climate change and become more resilient.

The potential to achieve significant reductions in GHG has been highlighted in recent papers, such as ‘National mitigation potential from natural climate solutions in the tropics’ (Griscom et al., January 2020) and ‘Natural climate solutions’ (Griscom et al., October 2017). The former includes an overview of 12 pathways to reduced emissions through the protection, management or restoration of natural resources in tropical countries.

It is especially important to notice the volume of mitigation potential, not just from the individual areas of intervention, but also from the cumulative effect if all the measures are undertaken. These measures will not only have a climate impact, but also help protect biodiversity.

Intact mangrove forests and sea grass will slow wind and water flow to reduce the impact of storms and coastal floods, and they will also be a welcoming host to many species, thereby supporting fishing and agriculture.

There is a need to undertake the same type of research for nature-based approaches when adapting to climate  change impacts. There are good indications that both drought conditions and floods can be better managed by, for example, rewilding rivers, introducing beavers and slowing the flow of flood water. And there are many other types of nature-based solutions, both in developed countries such as the UK and in developing countries; we need to embrace them all in order to reduce our greenhouse gas emissions and make the inevitable adaptations we will need because of climate change.

The applications stretch from climate smart agricultural practices and the preservation of wetlands and peatlands, 
to the greening of cities using parks, green spaces and green buildings, which will help counter the effect of extreme heat.

Nature-based solutions will serve multiple purposes and reconnect us with the natural world. 
 

John Carstensen is climate resilience lead at Mott MacDonald

 

Picture Credit | Shutterstock
Actuary Banner august6.png
This article appeared in our August 2020 issue of The Actuary .
Click here to view this issue

You may also be interested in...

web_p34-35_flood_shutterstock_1724619049.png

Climate liability: time to settle up?

Quintin Rayer and Karsten Haustein discuss the concept of a climate liability regime, and how such a regime could affect investors’ decisions
Wednesday 5th August 2020
Open-access content
web_p40_00020558-©Ikon-.png

Risk: a clean sheet

Julian Kirkman-Page reflects on how risk managers can offer value to their businesses in a volatile era
Wednesday 5th August 2020
Open-access content
web_p30-31_boats_shutterstock_1756495694-[Converted].png

Data science and global development

Tim Harris and Jacob Wilcock describe how data science is helping the UK’s Department for International Development tackle global development challenges
Wednesday 5th August 2020
Open-access content
web_28-29_iStock-1201272694-[Converted].png

Protecting generation rent

Siobhan Lough and Richard Purcell look at the needs of renters, and how the insurance industry can serve them better
Wednesday 5th August 2020
Open-access content
web_p24-27_binary_ikon_00024543.png

Machine learning: The deep end

Francesca Perla, Ronald Richman, Salvatore Scognamiglio and Mario Wüthrich investigate time series forecasting of mortality using neural networks and deep learning techniques
Wednesday 5th August 2020
Open-access content
web_p28-29_iStock-1163299084-[Converted].jpg

Joining the dots between operational and non-operational risk

Patrick Kelliher covers issues in modelling dependencies between operational and non-operational risks
Wednesday 8th July 2020
Open-access content

Latest from Risk & ERM

KV

Liability-driven investments: new landscape

What now for liability-driven investments, after last year’s crash in the market? Pensions experts Rakesh Girdharlal and Moiz Khan say it should lead to a more balanced approach
Wednesday 1st February 2023
Open-access content
cj

Natural capital investing

Chris Howells and Andrew Dreaneen discuss how today’s investments in natural capital profit portfolios as well as the planet and humanity
Wednesday 1st February 2023
Open-access content
bl

'Takaful' models of Islamic insurance

Ethical, varied and a growing market – ‘takaful’ Islamic insurance is worth knowing about, wherever you’re from and whatever your beliefs, says Ali Asghar Bhuriwala
Wednesday 1st February 2023
Open-access content

Latest from Environment

rdth

Make My Money Matter's Tony Burdon on the practical power of sustainable pensions

Years working in international development showed Tony Burdon, head of Make My Money Matter, that sustainable pensions can harness trillions of pounds to build a better world – at a scale governments and charities can’t. He talks to Travis Elsum
Wednesday 1st March 2023
Open-access content
iugu

Interview: chemist and climate expert Sir David King on how actuaries can save the Arctic

Actuaries can save the Arctic, according to esteemed chemist and climate-change expert Sir David King. He tells Alex Martin that risk management is as relevant to preserving the planet as groundbreaking science
Wednesday 1st February 2023
Open-access content
dty

Can we embrace a circular economy?

With our pull on the planet’s resources, are we bold enough to embrace a circular economy? The potential benefits are not just material, argues Travis Elsum
Wednesday 1st February 2023
Open-access content

Latest from General Features

yguk

Is anybody out there?

There’s no point speaking if no one hears you. Effective communication starts with silence – this is the understated art of listening, says Tan Suee Chieh
Thursday 2nd March 2023
Open-access content
ers

By halves

Reducing the pensions gap between men and women is a work in progress – and there’s still a long way to go, with women retiring on 50% less than men, says Alexandra Miles
Thursday 2nd March 2023
Open-access content
web_Question-mark-lightbulbs_credit_iStock-1348235111.png

Figuring it out

Psychologist Wendy Johnson recalls how qualifying as an actuary and running her own consultancy in the US allowed her to overcome shyness and gave her essential skills for life
Wednesday 1st March 2023
Open-access content

Latest from August 2020

web_p19-21_broken-lollipop-iStock-510309044-feature.png

Lonely hearts: the effect of spousal death on mortality

Kira Henshaw, Corina Constantinescu and Olivier Menoukeu Pamen investigate the effects of spousal death on the surviving partner’s mortality – and how their model could be applied to disease outbreaks in closed communities such as care homes
Wednesday 5th August 2020
Open-access content
web_p43_laugh_shutterstock_177652160.png

August: People & Society News

A side-splitting success
Wednesday 5th August 2020
Open-access content
web_p4_editor.png

Radical reading

Normally, August means a mass exodus out of the office and to a beach, city break or walking holiday.
Wednesday 5th August 2020
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Shape the Future of Insurance

London (Central)
£ excellent package
Reference
149090

Senior Pricing Actuary - Life Reinsurance

London (Central)
£ excellent
Reference
149089

Insurance Investment Leadership Opportunities

Flexible / hybrid with 2 days p/w office-based
£ dependent upon experience
Reference
149088
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ