Tourism is a key pillar of Mexico's economy, with resorts such as Acapulco central to that sector. The fragility of that model was underlined by Hurricane Otis, which struck near the city in October 2023 as a Category 5 storm and became one of the costliest hurricanes in Mexico’s history in both economic and insured terms.
According to HRC, shocks like Otis, layered on top of gradual sea-level rise and erosion, are making it harder to rely on historic loss experience when underwriting coastal risks. The firm said tourism centers that want to remain both bankable and insurable over the long term will need more granular data on how hazards and exposure are evolving.
“Through our initiative, we translate complex climate data into precise decision-making tools for on-site risk management,” said Lars Regner, head of resilience services at HDI Risk Consulting. “Our aim at Acapulco is to ensure, through forward-looking resilience planning, that hotels, promenades and the local economy remain operational even under changing climate conditions. In doing so, we are securing the foundation for investments that must stand the test of time for decades to come.”
HRC’s work indicates that Acapulco Beach is already experiencing rapid shoreline retreat. Studies cited in the analysis suggest that, without additional technical or nature-based measures, the coastline is moving inland by around 1.20 metres a year. The loss of land narrows the beach that underpins the local tourism offer and erodes natural defences such as mangroves, dunes and beach ridges.
The weakening of those buffers increases exposure to storm surge and heavy swell – a pattern highlighted by Otis, which caused extensive damage to hotels, marinas and other waterfront assets.
“Our analyses do not view physical climate risks in isolation, but as an interconnected system,” said Johanna Rohrer, risk analyst natural hazards at HRC. “This highlights how coastal erosion and sea-level rise are gradually combining to create new infrastructural and economic risks.”
Under higher-emissions scenarios, sea-level-rise projections for Mexico’s Pacific coast point to significant increases by the end of the century. Under a “business-as-usual” pathway with a projected rise of around 1.23 metres by 2100, HRC warns that parts of the current tourism strip could become functionally unusable.
“In Mexico, where many economic value chains are located directly along the coast, environmental changes have a direct impact on the financial stability of businesses. In Acapulco, we are seeing how coastal erosion, heat, and extreme weather are increasingly posing balance-sheet risks for both insurers and operators,” said Omar Mendoza, CEO of HDI Global Mexico.
Offshore coral reefs, which act as natural breakwaters, are being weakened by ocean acidification and thermal stress, reducing their ability to dissipate wave energy before it reaches shore. On land, more frequent and intense heatwaves affect guests and staff, driving up cooling and maintenance costs and, over time, potentially eroding the resort’s competitive position.
HRC said this combination translates into higher day-to-day costs, rising capital expenditure on adaptation and greater uncertainty over future insurability if critical upgrades are delayed. It raises questions around aggregate exposure, catastrophe modelling, underwriting appetite and the conditions attached to cover in high-risk coastal zones.
Those concerns are sharpened by Mexico’s relatively low insurance penetration, which leaves a significant gap between economic and insured catastrophe losses when severe events hit. While the local market has so far absorbed major hurricanes with the support of international reinsurance, the mix of underinsurance, high exposure and a changing hazard profile is keeping pressure on pricing, terms and risk selection in coastal business.
As part of its work in Acapulco, HRC has set out a package of adaptation measures it says can be built into operations and investment planning at coastal sites. The recommendations combine engineered interventions with nature-based solutions.
On the coastal side, the team highlighted conserving and replanting mangroves to absorb wave energy and targeted beach nourishment to restore the beach’s protective function. For buildings, it points to using saltwater-resistant materials, elevating structures and maintaining minimum setbacks from the waterline.
Infrastructure upgrades are another focus, including expanded wastewater systems to reduce contamination risk and early-warning systems for storm surge and extreme heat. Nature-based buffers such as seagrass beds and calcareous organisms can add further protection, while enhanced mosquito control is flagged as a way to limit disease risk after flooding.
HRC stressed the need to embed climate-risk data into long-term investment decisions and to demonstrate credible adaptation pathways to lenders and underwriters. The direction of travel, it suggested, is towards capacity in climate-exposed destinations becoming increasingly conditional on visible, verifiable resilience measures at both asset and municipal level.
For tourism-dependent economies such as Acapulco, that shifts climate adaptation from a purely environmental or planning issue into a prerequisite for maintaining insurability and access to risk transfer over the long term.
