THE SENATE	S.B. NO.	1083
THIRTY-SECOND LEGISLATURE, 2023
STATE OF HAWAII

A BILL FOR AN ACT

Relating to coral reef insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that the State's coastal areas face mounting climate change-related risks, including exposure to increasingly severe tropical storms, high wave events, sea level rises and flooding. Fortunately, the islands of the State contain environmental resources such as coral reefs, wetlands, forests, and other natural infrastructure that, if healthy, effectively managed, and properly maintained, can substantially mitigate the risks of climate change and damage to property and loss of life by natural disasters. A 2019 study prepared by the United States Geological Survey in cooperation with The Nature Conservancy and the University of California at Santa Cruz finds that healthy coral reefs absorb up to ninety-seven per cent of wave energy, protecting coastal properties and infrastructure from the destructive power of the sea. The same study estimates that Hawaii's coral reefs save the State $836,000,000 in annual costs by protecting coastal infrastructure and property from sea-originating floods. However, with the increasing severity of tropical storms and other climate change related events, Hawaii's coral reefs are increasingly vulnerable to damage and death, which, if left unchecked, would leave the State highly susceptible to the destructive and costly effects of climate change-related events.

The legislature further finds that in November 2022 the Nature Conservancy purchased an insurance policy to cover wind-generated storm damage to the coral reefs surrounding Oahu, Molokai, Lanai, Maui, Kauai, and Hawaii islands through the December 2023 hurricane season. The policy is triggered at windspeeds of fifty knots, or fifty-six miles per hour, and can provide payouts up to a maximum of $2,000,000 to allow for rapid reef repair and restoration after damage is inflicted upon the reefs. This policy is the first coral reef insurance policy of its kind in the United States and follows the success of the coral reef insurance program that covered the Mesoamerican Reef in Quintana Roo, Mexico, which was also purchased by The Nature Conservancy in 2019. Hurricane Delta made landfall in Quintana Roo in October 2020 and $850,000 in proceeds from this policy were paid out to quickly restore and repair reef damage inflicted upon the Mesoamerican Reef. Since then, policies have been purchased to cover the entirety of the Mesoamerican Reef and also have been purchased elsewhere in Mexico, Belize, Guatemala and Honduras.

The legislature further finds that The Nature Conservancy and Bank of America produced a reef insurance feasibility assessment in 2020 that finds reef insurance to be ecologically and economically feasible for the State in its ability to provide the financial assistance required to adequately restore reef damage after a severe tropical storm, hurricane, or natural disaster.

The purpose of this Act is to build upon the work of The Nature Conservancy by funding a continuation of their coral reef insurance policy by three years through the department of land and natural resources.

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $300,000 or so much thereof as may be necessary for the fiscal year 2023-2024 and the same sum or so much thereof as may be necessary for fiscal year 2024-2025 for the department of land and natural resources to fund a three-year continuation of The Nature Conservancy's coral reef insurance policy that covers the coral reefs surrounding Oahu, Molokai, Lanai, Maui, Kauai, and Hawaii islands.

The sums appropriated shall be expended by the department of land and natural resources for the purposes of this Act.

SECTION 3. This Act shall take effect on July 1, 2023.

INTRODUCED BY:

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Report Title:

Coral Reefs; Reef Insurance; The Nature Conservancy; Insurance Policy; Natural Infrastructure; Wind-Generated Storm Damage; Climate Change; Mitigation; Continuation; Appropriation

Description:

Appropriates funds for a three-year continuation of the wind-generated storm damage reef-insurance policy purchased by The Nature Conservancy in November 2022.

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