This article was written by William Buttler, GaiaSicura

Nature regeneration projects, such as initiatives focused on biodiversity enhancement, carbon sequestration and rewilding, are increasingly recognised as essential to sustainable development and climate resilience strategies – not to mention an extremely rapidly growing private capital market. Despite their potential ecological and economic value, projects are often characterised by high levels of uncertainty, complex contractual arrangements, and long delivery timelines. These factors are seen as exposing nature developers and investors to substantial risks, limiting access to capital and slowing market growth. The development of tailored insurance solutions as a result becomes a critical need to scale nature regeneration and transform environmental ambition into investable (and valued) assets.

At the core of this challenge lies the structure of nature regeneration projects themselves. Developers typically enter multiple interdependent contracts with landowners, service providers, regulators, investors, and purchasers of ecological units through SPVs. While responsibilities may be distributed across these actors in theory, in practice the developer usually retains ultimate liability for project performance. This includes obligations to deliver agreed quantities of biodiversity units, carbon credits, nutrient indicators, water-based metrics, or other nature-based outcomes, even when shortfalls result from third-party failures or unforeseen environmental events. Without mechanisms to transfer or mitigate these exposures, developers are left carrying risks that are difficult to quantify and expensive to absorb and currently rely on inefficient risk transfer models such as buffers or escrows.

Insurance can play a pivotal role in addressing this imbalance by converting uncertain and potentially open-ended liabilities into defined and transferable risks. When designed specifically for nature regeneration, insurance not only protects project developers but also strengthens confidence among investors, lenders, and offtake purchasers. Crucially, insurance can function as an enabling financial instrument rather than a peripheral cost, particularly when premiums are integrated into project economics and reflected in the pricing of ecological units. This approach aligns risk management with value creation, improving project bankability and supporting capital mobilisation, and as the underlying risk transfer to insurers benefits not just the nature project but the investors and buyers as well then the integration of these premiums into operational costs should be considered standard – it would be the same if the asset were a block of houses under construction, for example, cost of insurance throughout the project’s construction phase would be built into the final housing price upon completion.  

Insurances

There are three core insurance ‘buckets’ that apply to nature projects. As all projects are different and the output can significantly affect the liability these are not specific policies, but rather types of insurance under which several similar policies lie. 

During the initial phase of a project there are significant capital requirements in order to implement the necessary works, and with this comes the bulk of the investment/up-front funding requirements. There are now a group of insurances that can feasibly fit under ‘green finance guarantees’. These instruments are analogous to surety bonds in conventional markets and are designed to protect financiers against default on financial obligations from the delivery party. Coverage may extend to loan repayments, prepayments for ecological outputs, and milestone delays, with particular relevance during the early stages of a project when uncertainty is the highest. By reducing perceived credit risk, green finance guarantees facilitate access to debt and equity capital and lower the cost of financing nature regeneration initiatives. These insurances, whilst usually taken out by the project delivery entity, cover the investor/bank/financier and as such early-stage engagement with insurers as part of these financing conversations is vital as the same information utilised for funding needs will be used to underwrite the risk. 

Beyond financial guarantees, comprehensive project-level insurance must address ecological performance risk, which we have labelled as “restoration” type insurance and legal liability around output stability which we have labelled as ‘replacement’ type insurance.

“Restoration” insurance reimburses the costs required to return a project to its expected performance trajectory following an insurable event, like extreme weather or third-party operational failure. Unlike conventional property insurance, restoration coverage is outcome-focused, addressing ecological functionality rather than physical damage. It can typically be linked to monitoring, reporting, and verification processes conducted by independent ecological experts, ensuring alignment with scientific standards and regulatory expectations – as well as initial underwriting reviews.

“Replacement” type insurance complements restoration coverage by addressing scenarios in which a project site becomes permanently unable to deliver contracted outcomes or those contracted outcomes are cancelled. This may arise from contamination, land-use restrictions, legal disputes, counterparty default, or irreversible ecological degradation. In the cases outlined, replacement insurance provides financial resources to secure alternative units or equivalent outcomes, allowing project delivery entities to meet contractual commitments despite site-level failure. Importantly, replacement coverage can be priced at project inception and incorporated into long-term financial planning, offering certainty to purchasers and investors alike.

Finally, it’s important to ensure existing insurances are reviewed to accurately reflect the obligations being taken on by all parties, to ensure both proper coverage and no overlap with unnecessary premium burdens. Professional indemnity insurance throughout the value chain further strengthens the risk transfer framework by covering liabilities arising from errors or omissions in project design, modelling, or reporting by all parties involved in the SPV and its subcontractors. Given the reliance on specialist ecological assessments and third-party service providers, such coverage is essential to protect developers against non-malicious failures that nonetheless have contractual or financial consequences.

Conclusion

The integration of these (and other) specialist insurance mechanisms helps deliver benefits that extend beyond individual projects. By redistributing risk from nature project delivery entities and toward insurers capable of pooling and diversifying exposure, insurance supports the maturation and development of natural capital markets. Embedding risk pricing into ecological unit valuation also enhances transparency and credibility, while standardised insurance solutions facilitate comparability across projects and jurisdictions. Increased scale and data availability over time are likely to reduce premiums and improve coverage efficiency, reinforcing a cycle of investment and ecological delivery with failures leading to issues being readdressed rather than market exits.

In this context insurance is not only a protective instrument but a structural enabler of nature regeneration at scale. By aligning financial resilience with ecological ambition, tailored insurance programmes can help bridge the gap between environmental necessity and economic feasibility, supporting the long-term growth of nature-positive markets and ensuring that regeneration projects are both environmentally effective and financially robust.