The economics of coral reefs: Why invest, why now

Coral reefs, lifelines for over half a billion people, are vanishing. At the same time, they hold one of the most powerful investment cases in the ocean economy. Around the world, new initiatives are treating coral restoration not just as a moral and ecological imperative, but also as an economic investment, which links marine science with sustainable finance to unlock scalable solutions.

The past year has marked unprecedented momentum in aligning global finance with ocean protection goals, including with respect to coral reef resilience. At the recent 2025 Blue Economy Finance Forum (BEFF) in Monaco and the 2025 UN Ocean Conference in Nice, multilateral banks, development agencies, and private investors pledged support for reef-positive investments. The One Ocean Finance initiative, co-led by UNCDF, UNEP, UNDP, UN Global Compact, UN Tourism, WRI and others, launched the One Ocean Finance Facility, a blended finance vehicle designed to mobilize finance for scalable, high-impact marine projects, particularly in vulnerable coastal and island nations. Complementing this, UN Global Compact and UNEP FI introduced the Ocean Investment Protocol, a new guideline framework for the evaluation, de-risking, and financing of ocean-positive projects.

Both forums emphasized the persistent financing gap in Small Island Developing States and the urgency of deploying blended finance models that integrate philanthropic risk-taking with private capital. Notably, BEFF estimated that transitioning the maritime sector to a sustainable blue economy will require US$175 billion in investment annually.

Coral reefs are at the frontline of the climate crisis

Coral reefs are among the most climate-vulnerable ecosystems. Rising ocean temperatures trigger widespread bleaching, while acidification, pollution, and overfishing accelerate their decline. Between 2023 and 2025, over 83% of the world’s reef areas experienced bleaching-level heat stress, according to NOAA's Coral Reef Watch. These pressures not only threaten biodiversity but also the economic value reefs provide, from fisheries and tourism to coastal protection, innovation, and culture.

As reef health deteriorates, so does the economic resilience of communities and industries that depend on them. Reefs support about 25% of all marine species and sustain the livelihoods of over 500 million people. Their flood protection services alone are valued in the billions, with small island states especially reliant on them as natural coastal defenses.

Quantifying the value of coral reefs

Many efforts have aimed to assign monetary value to coral ecosystems. The EPA’s 2012 publication Quantifying Coral Reef Ecosystem Services categorized coral reef benefits into direct extractive / non-extractive uses, indirect uses and nonuse values, capturing both market and non-market value. In Hawaii, Peng & Oleson (2017) found that beachgoers were willing to pay $15.33 per trip to increase coral cover from 10% to 25%, and another $4.89 to reach 45%. Fezzi, Ford & Oleson (2023) estimated that the 2014-2015 bleaching event caused a $26.4 million annual welfare loss for Maui residents and analyzed the benefits of different restoration strategies. In Florida, Wallmo & Allen (2024) used a stated preference choice experiment to estimate that visitors would pay up to $14.92 for every 1% increase in coral cover.

The 2018 The Coral Reef Economy report assessed the economic value of reefs in Mesoamerica (Belize, Guatemala, Honduras, Mexico) and the Coral Triangle (Indonesia, Philippines, Malaysia, Papua New Guinea, Solomon Islands, Timor-Leste) across tourism, fisheries, and coastal development. It estimated annual values of $6.2 billion and $13.9 billion, respectively. Under healthy reef scenarios, these could yield over $70 billion in global net benefits by 2030. In contrast, continued decline could reduce annual value by $3.1 billion in Mesoamerica and $2.2 billion in the Coral Triangle, with cascading impacts across economies. The report also emphasized that societal co-benefits like risk reduction, jobs, and livelihoods, often exceed private returns. These valuations not only reflect the economic magnitude of coral reefs but also lay the groundwork for identifying where and how investment makes sense.

The business case and financial risks of coral restoration

These economic valuations clearly demonstrate the strong business case for coral reef restoration, especially in areas where reefs support tourism, fisheries, and real estate. Globally, coral reef tourism generates an estimated US$35.8 billion annually, supports over 1 million jobs, and contributes more than $1 million in tourism spending across over 70 countries and territories.

Despite these long-term benefits, restoration projects face significant financial risks that deter private investors. These include ecological uncertainties such as coral survival and resilience to future heatwaves; high upfront costs; long return horizons; and a lack of standardized impact metrics and harmonized blue finance taxonomies. Legal and operational hurdles, including fragmented marine governance and complex permitting processes, further complicate investments. With few mature models and limited exits, the sector remains relatively financially high-risk.

This reality underscores the need for de-risking mechanisms that enable investors to seize the business opportunities and returns tied to coral reef protection and restoration. A range of such tools is now being developed, applied, and improved both locally and globally to better manage associated investment risks.

First, efforts to standardize coral-specific metrics across financial markets are gaining momentum. This is an essential step to scale reef-related green bonds and investments. While gaps remain, the Coral Restoration Consortium (CRC) and the Global Fund for Coral Reefs (GFCR), supported by UNCDF and Ocean Risk and Resilience Action Alliance (ORRAA), are making notable progress. The CRC is aligning ecological indicators such as coral cover, survival rates, species diversity, and genetic resilience with metrics on restoration efficiency and stakeholder engagement. Meanwhile, the GFCR is piloting integrated frameworks that merge ecological and socioeconomic indicators, including reef health, community benefits, and resilience outcomes, into investment reporting.

Second, a key element of de-risking coral reef investments involves addressing ecological and climate vulnerabilities, particularly the risk of future bleaching events that could undermine returns. Progress is being led by both non-profit and for-profit organizations. Coral Vita in the Americas and the Assisted Recovery of Corals (ARC) facility in the Seychelles, as examples, both grow climate-resilient corals through land-based aquaculture and selective propagation, enhancing survival rates and reducing investment risk. Coral Vita operates as a for-profit selling restoration services, while ARC is a non-profit led by Nature Seychelles, supported by donor and corporate impact funding. 

Other efforts like SECORE International, a non-profit active in Mexico and the Caribbean, enhance reef resilience through coral sexual reproduction and larval rearing, increasing genetic diversity and enabling restoration at scale. It also builds local capacity to transfer project leadership to partners. In a complementary effort, Dutch startup Reefy merges marine biology and engineering to install modular reef structures that restore habitats and shield coastlines from erosion. These examples showcase how climate-resilient innovations can help de-risk blue economy investments.

To reduce financial risk and create favorable market conditions, stakeholders increasingly recognize the need for blended finance. By combining private, public, and philanthropic funding, which have varying interests and risk appetites, blended finance helps absorb potential losses and attract investment. Organizations like GFCR, UNCDF, and ORRAA are actively developing such mechanisms to close the coral reef funding gap. UNCDF, for instance, uses donor contributions to offer off-balance sheet guarantees and risk-sharing tools, reducing investor exposure and mobilizing private and local capital at scale.

ORRAA’s collaboration with Blue Alliance to support Marine Protected Areas (MPAs) deploys over $22 million through a mix of grants, impact loans, loan guarantees, and innovative insurance tools. The investment model is designed to generate revenue from community-based aquaculture, sustainable fisheries, ecotourism, and blue carbon initiatives. This allows the vehicle to deliver measurable impact for donors, financial returns for investors, and long-term sustainability for the MPAs themselves.

Up till now, this article briefly discussed the economic value and necessity of coral reef preservation and restoration and some of what is being done today. Given the great extent of the funding needed to protect and restore coral habitats, and the relatively early stage of investments in the field, it is important to reiterate two very important points, especially for policymakers and philanthropists. 

Targeting concessional finance to high-impact, low-return projects

First, in areas with strong market incentives such as popular tourist destinations or where coral reefs protect valuable assets, private finance often plays a leading role in funding restoration and adaptation. Elsewhere, especially in low-income countries or where commercial returns are limited, public and philanthropic financing remains essential. As in other environmental sectors, governments and donors sometimes prioritize projects with a strong business case, since these are often the most mature in the pipeline, with clear KPIs, metrics, reduced risks, and measurable impact.

National and international institutions need to acknowledge this dynamic. Given current funding constraints, concessional finance should target projects with strong environmental or social benefits but weaker financial returns. Prioritizing these underfunded areas can help bridge the gap between ecological urgency and economic feasibility.

The role of stakeholder collaboration

Second, restoring coral reefs is not just a funding challenge; it’s also a governance one. As Kong, Taylor & Graham (2024) emphasize, cross-sectoral collaborative sustainable business models (CSBMs) are essential for success. These models bring together governments, scientists, communities, investors, and entrepreneurs to co-design and implement scalable solutions. Effective coral reef restoration depends not only on funding, but also on aligning stakeholders under a shared framework that spreads both risk and opportunity.

The Seychelles offers a strong example of what meaningful stakeholder collaboration looks like in practice. After recognizing gaps in entrepreneurship and coordination among conservation NGOs, businesses, and government, the Seychelles Conservation and Climate Adaptation Trust (SeyCCAT) partnered with the GFCR to launch Ocean’s Resolve in 2024. The program aims to foster the coral reef economy by addressing both investment risks and governance fragmentation.

Ocean’s Resolve functions as a de-risking platform that enables private investment in coral reef restoration. With a $3 million grant from the GFCR, it provides first-loss capital, guarantees, and subsidized parametric insurance. The insurance triggers payouts when environmental thresholds like sea surface temperatures or coral bleaching intensity are breached. These payouts are aimed to fund rapid response actions, providing a financial safety net that reduces climate-related risks for investors.

The ARC facility, supported by SeyCCAT,  involves funding partners like the Adaptation Fund, the Government of Seychelles, and CMA CGM, a global shipping and logistics company. According to the CEO of Nature Seychelles, Dr. Nirmal Shah, the ARC’s development required navigating significant regulatory and logistical hurdles: obtaining permits, conducting an environmental impact assessment, obtaining planning approvals, roadworks for pipe infrastructure, an aquaculture license, and fulfilling donor environmental and social safeguards. 

This example illustrates the real-world complexity of launching reef restoration initiatives and the critical role that cross-sector coordination plays in overcoming those barriers. From permitting and infrastructure to financing and science, effective coral restoration depends on a whole-of-society holistic approach. If restoration projects are to scale globally, bureaucratic and financial obstacles must be streamlined through structured collaboration. In other words, for coral reef initiatives to succeed, every stakeholder needs to be on board, or rather, in the reef.

Both the UN Ocean Conference and the BEFF underscored the importance of blended finance strategies that combine philanthropic risk-taking with private sector scale. They also emphasized the need for strong governance, transparent metrics, and investment-ready pipelines to unlock sustained capital for reef restoration. As the examples in this article show, with the right financial structures and multi-stakeholder collaboration, coral reef initiatives can be effectively de-risked to attract private investment and allow public and philanthropic finance to flow where it is needed most. Such projects are emerging; now the question is whether investors are ready to take the plunge.

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