Australia's Great Barrier Reef is in such dire condition it should be insured for A$56 billion (US$38 billion) against climate risks and environmental damage, global law firm Clyde & Co says in a report.

The report, "Threats, challenges, and opportunities for the sustainable future of Australia's greatest environmental asset," states the Barrier Reef risks being overwhelmed by coral bleaching, sea level rises, ocean acidification, and pollution.

"Aside from being a World Heritage site, the Great Barrier Reef is an economic asset which provides jobs, income and government revenue," the report's author, Jacinta Studdert, a Sydney-based environment partner at Clyde & Co, said in a statement. "Like other economic assets, it should be insured against certain catastrophic events to guarantee its long-term resilience."

The report cites figures from Deloitte Access Economics valuing the Barrier Reef at A$56 billion (US$38 billion) and said it contributed A$6.4 billion (US$4.4 billion) and over 64,000 jobs to the Australian economy in 2015-2016.

The report also states government and businesses operating in and around the reef can be the target of public interest litigation to curtail particular activities. It said there is a long history of public interest litigation concerning the reef, given the number of relevant stakeholders and regulators, as well as high community expectations for its protection.

"As such, there are strong litigation risks for proponents of development or activities within the GBR Marine Park, or which are within the catchment area for the reef," the report states.

The 42 million-hectare Great Barrier Reef sits off the east coast of Australia and incorporates a World Heritage marine park that attracts more than 2.2 million international and 1.7 million domestic visitors per year.

The report says one option for managing the risk of physical harm to the reef, and consequential economic and other losses, is to establish a dedicated management trust fund and obtain parametric insurance coverage.

Parametric insurance provides coverage where a specific event occurs and differs from traditional types of insurance policies, as they involve an advance agreement between the insurer and insured that a specific payment will be made upon the occurrence of a specific event. When the insured event takes place, this triggers a fixed amount to be paid to the insured.

"Parametric insurance can therefore provide greater certainty of coverage and payments for weather-related risks can be made more quickly," the report states. "This can be crucial for governments and communities responding to natural disasters or environmental issues that may occur."