Oceans hold 96% of the water on earth
They serve as the natural habitat for thousands of living species, while also playing a key role for life on land – producing 50% of global oxygen, absorbing 30% of CO2 emissions and 93% of heat arising from changes to the atmosphere.
It’s critical that humans conserve marine resources in a sustainable way, yet climate change and the economic exploitation of the oceans have become major threats to the oceans and our own livelihoods.
With oceans being overfished, almost 90% of global marine fish stocks are now fully exploited. Meanwhile, wild capture fisheries struggle without sound regulatory frameworks and strong enforcement. 50% of the world’s Coral Reef system has been destroyed, and rising sea levels are a threat to human livelihoods and coastal cities.
All together, about two-thirds of the world’s oceans showed signs of increased human impact between 2008 and 2013. Without public and private intervention, these issues will only become worse. It’s important that we work together to conserve and use the oceans, seas and marine resources for sustainable development.
Defining the blue economy
The term “blue economy” is used to describe all sectoral and cross sectoral economic activities related to the oceans, the seas and the coastlines. Traditional industries in this economy include fishing, marine transport, tourism, shipping/ports, ship building, dredging and other activities.
Emerging industries have recently joined the blue economy, such as renewable energy, aquaculture, seabed extractive activities and marine biotechnology and bioprospecting. The blue economy also attempts to embrace ocean ecosystem services that are not captured by the market but provide significant contribution to economic and human activity. For example, carbon sequestration, coastal protection, and waste disposal.
According to the Worldwide Fund for Nature, the blue economy is estimated to be worth $24.2 trillion in terms of assets, and it’s expected to grow at twice the rate of the mainstream economy. In Europe alone, it’s estimated that 40 million people will have jobs in ocean industries by 2030.
What is a sustainable blue economy?
According to the UNEP Finance Initiative, a sustainable blue economy is one that seeks to promote economic growth and preserve and improve livelihoods across a range of sectors, while ensuring the sustainable use of marine resources. It is an economy based on circularity, collaboration, resilience, opportunity and interdependence.
A sustainable blue economy is driven by investments that reduce carbon emissions and pollution, enhance energy efficiency, harness the power of natural capital, and halt the loss of biodiversity and the benefits that these ecosystems provide.
However, there is currently no supranational body to manage the oceans. Both private and public investments can contribute to protect the health of ocean ecosystems.
Financing the sustainable blue economy
A sustainable blue economy will require reevaluation of both new and old sectors. There will be opportunities in new sectors in relatively undeveloped areas, but equally important will be the reimagination of existing industries, which are already important in terms of the economy and employment – such as coastal tourism or offshore energy.
Financing solutions via the capital markets are still relatively small scale, however it’s promising to see growing interest in the sustainable blue economy. At the national level, Governments are beginning to issue “blue bonds,” which are debt instruments issued to raise capital from impact investors to finance marine and ocean-based projects for sustainable development. The Seychelles project laid the groundwork for what is now the largest blue bond transaction in the world, in Belize, involving over US$550m.
Blended Finance vehicles are also being developed to bring together development funding sources (public and philanthropic sources) with private capital to finance sustainable solutions. One recent example being the Global Fund for Coral Reefs, a blended finance vehicle established by United Nations agencies, financial institutions, and private philanthropy sources to finance conservation and development goals for coral reefs.
Several blue themed impact funds were also launched in the second half of 2020 to accelerate progress on the UN’s sustainable development goal number 14 that covers life below water. These examples make clear that the blue economy has an immediate and growing importance for investors. Reliable mechanisms need to be established in order to enable continued growth in financing in order to enhance ocean conservation.