Media headlines would have you believe the “game is up” for coral reefs with declining coral reefs and mass bleaching events. Yet delve a little deeper and you find investors from across the world are betting on coral reefs as a viable, green investment. With insights from various projects, the Lab makes the case why coral reefs are critical landscapes that can create returns for investors alongside wider, positive social and environmental impacts.

Created by tiny colonies of marine invertebrates, coral reefs emerge slowly over thousands to tens of thousands of years, secreting calcium carbonate to build up the beautiful hard coral structures you would recognise. They cover only 350,000 km² of seafloor– equivalent to about 0.1% of our oceans. Yet coral reefs are some of the most important landscapes in the world and the most biodiverse ecosystem in the ocean. You’ve probably heard of the Great Barrier Reef in Australia but coral reefs actually occur in more than 100 countries and territories worldwide. From the Great Sea Reef in Fiji, to the Red Sea Reef off the coast of Egypt, to the Mesoamerican Barrier Reef System off the coast of Mexico, Belize, Guatemala and Honduras, these incredible landscapes are homes or food sources for approximately one third of all marine life.

If coral reefs’ biodiversity credentials weren’t impressive enough, these landscapes are also invaluable to humans as well. Specifically, they play an integral role in the economies, livelihoods and food security for people across the globe. Coral reefs are a key source of food. For instance they include fish and seafood species like groupers, lobsters and snappers that make up part of the huge $143 billion global fisheries trade industry and nearly half of all US fisheries depend upon coral reefs for sustainable fish stocks. When you look at the jobs and economies depending on healthy coral reefs, their importance is clear. UNEP estimates that the goods and services provided by coral reefs, including tourism, fisheries, coastal protection or medicinal compounds, is estimated to be US$2.7 trillion per year.

Unsurprisingly coral reefs are huge draws for tourists and the UNEP shows that coral reefs contribute a huge US $36 billion to the global tourism industry annually. For local communities and/or indigenous communities coral reefs often feature as part of their traditions, culture and/or spiritual or religious beliefs and practices. They also have a practical benefit to those living near them. Many coastal cities, shorelines and low-lying or small island states are protected by coral reefs – they form a natural barrier that protects against waves, storms and floods. In a world increasingly facing the consequences of climate change and rising sea levels, these protections are invaluable. In fact, one article noted that ‘worldwide, the total value of coastal protection provided by reefs is estimated at over 4 billion in averted damages during usual storms’.

A final - perhaps lesser known - superpower of the coral reef is its positive impact on human health. The UNEP puts it well saying coral reefs are considered ‘the medicine cabinets of the 21st century’ and increasingly are a source of medicines for various diseases. They say ‘the prospect of finding a new drug in the sea, especially amongst coral reef species, may be 300-400 times more likely than isolating one from a terrestrial ecosystem’. In fact, coral reefs have already helped us find new medicines. For example, a compound called Ara-A was isolated from a Caribbean sponge that lives on coral reefs, which helped create two antiviral drugs to treat herpes simplex infections and HIV. 

Many of us have heard the headlines that coral reefs are highly impacted by global warming and climate change. This is certainly true – the UN explains that pollution, biodiversity breakdown and climate change have deeply affected coral reefs. So much so that if global warming remains at 1.5ºC then up to 90% of coral reefs might disappear by 2050. Mass bleaching events often hit the headlines – making it seem that coral reefs are a lost cause in the face of the environmental and climate crises. However, delve beneath the deadlines and there is good news. Scientists are identifying pockets of coral habitats known as ‘climate refugia’; these are coral that are more resilient to climate change and rising sea temperatures, and have been found off the coast of countries like Kenya, Australia, Indonesia and more. With the right interventions now, scientists and decision makers have realised that coral reefs - especially coral refugia - can be saved or recovered. The case for decisive action is clear: protecting and restoring coral reef landscapes delivers huge benefits for nature, climate and people across the globe, whilst requiring investment in relatively small areas of coast and sea.  

The urgency to scale activities to protect, restore and build resilience for coral reef ecosystems has led to a growth in coalitions of public and private investment. One of the largest of these efforts is the Global Fund for Coral Reefs, which in July 2024 announced a further $US 25 million in grant funding to help build and scale up resilience across coral reefs. The Global Fund for Coral Reefs describes itself as ‘a public-private coalition deploying a range of financial solutions and support for sustainable businesses to improve the resilience of coastal ecosystems, economies, and communities’. They specifically are investing in the coral reefs (coral refugia) that leading scientific studies show have the best chance of surviving climate impacts. Working across many geographies, their private financing targets areas including sustainable ocean production, sustainable coastal development and ecotourism, circular economy & pollution management and enabling technologies for a sustainable future.

We are increasingly seeing this blended finance model being used to enable a ‘landscape approach’ to coral reef restoration and protection. In September last year, the Egypt Red Sea Initiative (part of the Global Fund for Coral Reefs) was launched to increase the protection of the Red Sea’s coral reefs. The Red Sea’s coral reefs stretch over 1,200 kms and the initiative aims to enhance the protection of approximately 99,899 hectares. As the announcement shared, ‘the health of coral reefs in the Red Sea is critical not only for the conservation of biodiversity, but also for the livelihoods of the communities that rely on these ecosystems’. There are some reports that suggest the Red Sea coral reefs are particularly resilient to heat and rising temperatures, making them an urgent coral refugia to protect. 

Whilst these examples might seem like a “new” trend in landscape financing, it builds on over twenty years of growing evidence to support this public-private approach to investing in and restoring reef landscapes (with the Great Barrier Reef and the Mesoamerican Reef being early adopters). Indeed, almost a decade ago, Landscape Finance Lab (whilst still a part of WWF, and alongside many other partners) helped to establish the Great Sea Reef Resilience programme in 2017. The aim was to ensure the reef and coastal ecosystems were healthy and resilient to climate change by developing holistic land and marine use management, financial systems for regenerative production and strengthening systems for removal of waste and pollution. The Great Sea Reef in Fiji, locally known as Cakaulevu, is the third longest continuous barrier reef system, running over 200km. Cakaulevu is central to Fijian life both now and stretching back for generations. The reef provides food, livelihoods, tourism and natural protection. However, like the majority of coral reefs around the globe, overfishing, pollution (agriculture run off in particular) and the consequences of climate change put Cakaulevu under immense pressure. 

The Great Sea Reef Resilience programme was led by Fijian government ministries, a partnership with WWF-Pacific, the Lab, The Earth Care Agency and other partners. The Lab’s role was to facilitate a flow of funds to catalyse stakeholder engagement, carry out early stage scoping of sustainable investments, analyse multiple regenerative sectors and develop financial tools to help private sector enterprises. The eventual result was Matanataki, a dedicated financial partnership which sources investable businesses and attracts international investors, including private investors and international development institutions. Matanataki is a Fiji-based and women-led company with a goal to build Pacific economies and bring health to Pacific reefs. 

Now 8 years on from The Great Sea Reef Resilience programme, Matanatki’s portfolio includes 13 businesses focusing on waste management, agriculture or fisheries – each theme tackling specific issue(s) affecting the reef. For instance, the five businesses in agriculture are addressing the land-based runoffs that pollute the reef through the creation of organic fertiliser products and the use of regenerative farming techniques. The collective impact of these businesses is impressive:

• 1,200 hectares of regenerative agriculture
• 80,000 tonnes/year of non-synthetic fertilizer produced from green wastes and invasive seaweeds, supplied alongside farmer trainings 
• 26,000 hectares of sugar cane farms supported to reduce nutrient runoff

It's exciting to see the momentum being created by investors across the world who are financing holistic activities restoring, protecting and building resilience of coral reefs. Media headlines would lead you to believe that coral reefs are a lost cause. Yet as all these examples illustrate, investing in the ‘rainforests of the oceans’ is more than possible with coral refugia leading the way. These projects are transformative for local communities and can protect these biodiversity hotspots for years to come. If you feel inspired by what you’ve read, then see below on how you can get involved and be part of saving this incredible ecosystem.

Here’s how you can get involved:

• If you're an investor interested in reef-friendly businesses, get in touch with Matanataki and see how you can be part of transforming the iconic Great Sea Reef's future.
• Keep an eye out for our upcoming publication, Investing In Critical Systems - the short guide will explore a practical methodology for directing investments into four critical ecosystems, including coastal and reef systems, which we argue are crucial to solving our planetary crises. 
• Join our mailing list to be the first to hear about news from the Nature Positive Landscapes Facility - a blended finance vehicle focused on landscape-scale biodiversity investments across our four critical systems, expected to launch in 2025. 

Sources:

• Saving the ocean’s vital ecosystems, UNEP, https://www.unep.org/interactives/why-blue-ecosystems-matter/ 
• Coral Reefs, UNEP, https://www.unep.org/topics/ocean-seas-and-coasts/blue-ecosystems/coral-reefs 
• The potential for coral reefs to adapt to a changing climate - an eco-evolutionary modelling perspective, by Roger Cropp & John Norbury, ScienceDirect, https://www.sciencedirect.com/science/article/abs/pii/S0304380020301101 
• Coral reefs are critical for our food supply, tourism, and ocean health. We can protect them from climate change, by Hanny E. Rivera, Andrea N. Chan & Victoria Luu, MIT Science Policy Review, https://sciencepolicyreview.org/2020/08/coral-reefs-are-critical-for-our-food-supply-tourism-and-ocean-health-we-can-protect-them-from-climate-c
• Life Below Water, UNEP, https://www.unep.org/interactives/status-world-coral-reefs/ 
• Coral reef restoration to improve ecosystem services policy brief, UNEP, https://wedocs.unep.org/bitstream/handle/20.500.11822/34811/CRRPB.pdf?sequence=1&isAllowed=y
• Saving the ocean’s vital ecosystems, UNEP, https://www.unep.org/interactives/why-blue-ecosystems-matter/ 
• Global Fund for Coral Reefs approves more than US$25 million in additional funding for resilience action, UNEP, https://www.unep.org/news-and-stories/press-release/global-fund-coral-reefs-approves-more-us25-million-addition 
• Global Fund for Coral Reefs, https://globalfundcoralreefs.org/ 
• Ministry of Environment, Global Fund for Coral Reefs, USAID, and UNDP partner to launch the Egyptian Red Sea Initiative, UNDP, https://www.undp.org/egypt/press-releases/ministry-environment-global-fund-coral-reefs-usaid-and-undp-partner-launch-egyptian-red-sea-initiative.
• The RED SEA: Protecting the World’s LAST Coral Refuge, by Iman El Chehaly, UNDP, https://www.undp.org/egypt/stories/red-sea-protecting-worlds-last-coral-refuge  
• Portfolio, Matanaki, https://matanataki.com/portfollio/