A sustainable ocean economy is achievable, new paper finds, but barriers are high
A paper published in Nature Communications, “Financing a sustainable ocean economy,” was among a long list of articles, announcements, and pledges that appeared on 8 June, commemorating World Oceans Day.
The paper’s authors, a group of international economists and ocean policy experts, found that public and private investment lags far behind that needed to ensure a thriving, resilient, and sustainable ocean economy.
The paper postulates that adequate financial capital is needed to invest in ocean-related economic activities, science, management, and governance, in order to achieve sustained ocean health. Yet access to investment is limited and not fairly distributed, its authors found.
For example, in the fishing industry, women experience unequal access to capital to start or grow their own business, despite making up nearly half of the global workforce.
“This has real consequences for their ability to earn a stable living and provide for their families. While better financing is needed for the entire ocean economy, women especially need more and better financing options,” Environmental Defense Fund Executive Vice President Amanda Leland, one of the paper’s co-authors, said in a press release.
However, solutions do exist, according to the paper, which offers ways to mitigate key barriers to financing in order to support jobs, livelihoods, food security, nutrition, and ocean health.
The authors estimate that the global ocean economy, which includes fishing, shipping, offshore wind, tourism, and marine biotechnology, was worth USD 1.5 trillion (EUR 1.23 trillion), or 2.5 percent of global gross value added in 2010. Prior to the COVID-19 pandemic, this value was projected to increase to USD 3 trillion (EUR 2.47 trillion) by 2030. Ocean economic sectors with the strongest growth potential include marine aquaculture, fish processing, offshore wind, and shipbuilding, the paper found.
Set against this are aspects of unsustainable ocean resource use, including overfishing, destructive deep-sea mining and fishing practices, direct habitat damage, and pollution, plus the near-existential threat of climate change, according to the paper. These impacts will affect the ocean’s ability to sustain the flow of ecosystem goods and services, and impact livelihoods, food security, and income of marine resource dependent communities.
“These costs and projected impacts from climate change are precisely why global governments must come together with the same urgency as the Paris Climate [Accord] to declare sustainable ocean economy financing as a central pillar in our fight for a sustainable, equitable, and liveable planet,” EDF Senior Director for Oceans Climate Strategies Tim Fitzgerald, another of the paper’s authors, said.
According to the High-Level Panel for a Sustainable Ocean Economy, a consortium of ocean-dependent countries founded in 2018 to initiate action to improve global marine sustainability efforts, the definition of a sustainable ocean economy is one that involves “development of the ocean economy in a way that balances the needs of people, planet, and prosperity.” In the paper, the authors categorize the major financial capital types used for this purpose and their providers.
The four broad economic sectors that make up the ocean economy are extractable natural resources, natural capital, marine and coastal development, and knowledge and creativity. The paper points out that investments in some projects aimed at supporting a sustainable ocean economy will generate competitive market returns and attract private finance, while other investments will be capable of generating positive but below market returns, so are less attractive to the private sector. In this case, public, philanthropic co-financing or blended finance is needed.
Barriers that prevent adequate financing of a sustainable ocean economy include a weak policy and regulatory environment for attracting finance, insufficient public and private investment in the ocean economy, and the relatively high-risk profile of ocean economic sectors, according to the paper. A lack of high-quality, investable projects with appropriate deal size and risk-return ratios is also a factor preventing investment, the paper found.
To overcome such challenges, the paper suggests that public and private sectors create and mobilize a full suite of financial tools and approaches, including complex fiscal and market incentives, public-private partnership, use of green-, blue-, and climate-bonds, and new approaches to insurance to de-risk sustainable ocean investments.
The single most significant action that can be taken to create a sustainable ocean economy, the paper found, would be to influence future mainstream finance by providing “clear principles, frameworks, guidance and metrics, and proactively avoiding known illegal and harmful activities.”
The authors agreed that a global effort is needed on the issue, recommended a higher proportion of ocean-focused GDP is allocated to the attainment of a sustainable ocean economy. If just half of the world’s maritime countries made such a commitment, the paper stipulated, enough seed money could be generated to incentivize the necessary public and private investments.
“A lack of financing can scupper even the best ocean policies and practices,” Leland said. “Our paper offers solutions to overcome these barriers, and help transition to an ocean economy that is viable and inclusive for all, especially women, youth, and indigenous communities.”
Photo courtesy of Environmental Defense Fund