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POLICY REVIEW
major financial institutions, could adjust cost of capital can mandate investees
such as development banks available for the private or borrowers to go for
and multilateral institutions sector by adjusting premiums nature-based insurance.
to developing countries depending on whether the
to accelerate development proposed investment includes 3. Adoption of parametric
objectives (World Bank, nature-based solutions (such insurance mechanism
2021). Grants, loans and as development of mangrove (a type of cover that
equity investments are corridor along the intertidal pays out a pre-agreed
the most common type zone or belt of Casuarina amount to a policyholder
of concessional finance plantations along the beach according to pre-defined
products. Concessional to protect the hinterland) and event characteristics
finance can help in addressing how this increases resilience. or parameters) under
the globally significant The emerging blue carbon which the damage to the
development challenges such market—which businesses policyholder is covered
as climate change mitigation. are now looking at to offset as per the incidence (such
Blended financing refers to some of their emissions—is as storm surge, cyclone).
the strategic use of public also an opportunity to attract CONCLUSION
and philanthropic resources finance for the restoration and
to mobilise private capital protection of coastal marine The coastal areas in India
for development purposes ecosystems. Development of will face the risk of sea level
(Kandasamy, 2022). This an insurance market to cover rise in the not-so-distant
type of financing mechanism the risk of SLR in coastal future. This will impact the
encourages the involvement areas is another lucrative value of built assets on the
of private investors along with opportunity. The insurance coast adversely. Planning
public funding instruments industry need to understand and investment at the coastal
in identifying and executing and appropriately value region and local building
development projects. This the risk reduction achieved level will be necessary to
type of financing structure from natural coastal mitigate and adapt to the risk.
typically involve use of infrastructure investments, so It is, therefore, important to
instruments like grant as to price insurance products develop mechanisms which
capital, debt and equity. appropriately. The insurance could integrate mitigation and
Blended financing has several market can be developed in adaptation strategies in the
benefits like pooling capital following ways (https:// development plans of coastal
through various/multiple climatechampions.unfccc. regions. At the property
investors which may help int/a-guide-to-private- level, it is important that new
in reducing the overall risk sector-investment-in-coastal- market-based instruments
and enhance the success rate; resilience/): are developed that will allow
and ensuring that projects property owners to cover the
succeed on achieving social 1. The construction potential losses. Financing
and environmental objectives of natural coastal of development plans will
in addition to financial ones infrastructure can require that innovative
(Kandasamy, 2022). be financed by an financing mechanisms such
institution/player so that as blue finance, blended
In particular, when partnering the insurance premiums finance, concessional
on coastal resilience projects, can be reduced. financing, etc. are leveraged.
financial institutions These will help in developing
2. Financial institutions
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