Governing the provision of insurance value from ecosystems

Highlights • Insurance value is a public good jointly produced with provisioning ecosystem services • Existing institutions do not lead to optimal provision of insurance value • Rights and responsibilities of providers and beneficiaries are often undefined • Trade-offs in ecosystem service provision, transaction costs and spatial considerations influence the choice of governance solutions • Polycentric governance supporting stakeholder collaboration, knowledge production and cost sharing is needed. ; Ecosystems can buffer against adverse events, such as storms or pest outbreaks by reducing the probability of harm and magnitude of losses. We conceptualise factors involved in the governance of insurance value provision, drawing on the notions of protection and insurance, exogeneity and endogeneity, and allocation of rights and responsibilities. Using riverine floods and forest pest outbreaks as examples, we explore the challenges of governing ecosystem-based risk management. We suggest that such governance should build on existing institutions, because insurance value is jointly produced with provisioning ecosystem services and the governance arrangements for them importantly shape insurance value provision. However, existing institutional arrangements do not acknowledge involved actors' rights and responsibilities and they do not facilitate landscape level management of risks. While PES schemes and other market-like solutions may govern the provision of insurance value when transaction costs and trade-offs between the provision of insurance value and private goods are low, regulation or public provision is needed when transaction costs and trade-offs are high. The complexity of challenges in governing the provision of insurance value highlights the need for polycentric governance involving collaboration, knowledge creation and dissemination and the funding of activities needed for them.