Deep-sea mining not only poses significant environmental, social, and economic risks with far-reaching implications for coastal communities and Small Island Developing States, but it is likely to have a negative impact on the business community, including insurers and investors.

These are the findings of a new critical study into the wider, long-term potential impacts of deep-sea mining, in which it’s highlighted that the industry will likely increase the negative impact on environmental indicators by as much as 13%, notably through increased coastal vulnerability, pollution, and biodiversity loss.

Led by researchers from the University of British Columbia and the Dona Bertarelli Philanthropy, the study concludes that the risks associated with deep-sea mining “extend well beyond environmental degradation”, with significant risks also posed to marine ecosystems, coastal and indigenous communities, and for businesses.”

In particular, it is the insurance sector most at risk.

“The potential liabilities inherent in deep-sea mining activities necessitate a reassessment of current insurance models,” said Dr Rashid Sumalia, professor at the University of British Columbia’s Institute for the Oceans and Fisheries and School of Public Policy and Global Affairs – a senior author on the study. 

“Our analysis indicated a surge in risk factors will lead to a large increase in economic risks, with an estimated 11% rise in threats, including contractual violations and koss and profitability risks, which could have major implications for insurers as they directly impact risk assessment models and industry stability.”

Scientists have pointed towards the recent climate change impacts that are already disrupting coastal insurance, including rising sea levels, more frequent hurricanes, and extreme weather events, citing the ‘chilling effect’ that an 11% increase in flood risks would have on the insurance companies already spooked by high-risk areas such as Florida in the US.

“That’s exactly the kind of warning this 11% increase signals for nature,and nature – unfortunately – cannot regulate its premiums,” said Dr Lubna Alam, a research associate at the University of British Columbia’s Institute for the Oceans and Fisheries, and associate fellow at the Institute for Environment and Development of the National University of Malaysia.

Dr Alam has also highlighted the “unexpected impact of oil and gas catastrophes” on the marine environment, including the Exxon Valdez leak in Alaska back in 1989 which resulted in billions of dollars being spent on clean up costs and punitive damages, as well as the Deepwater Horizon well blowout in 2010 in the Gulf of Mexico – considered to be one of the largest environmental disasters in world history with impacts still being felt across the area.

“Again the economic costs paid by BP have been in the billions, and the environmental and health costs continue to affect the area,” said Dr Sumalia. “And these are environmental disasters that occurred in large, developed countries. How would they impact Small Island Developing States, which are much closer to the areas that would see the deep-sea mining activities?”