The blue economy or sustainable use of the ocean’s resources for economic development, offers us a trillion dollar chance for climate mitigation and adaptation. Host Atte Palomäki finds out what’s stopping us and how we can go forward with Martin Koehring, head of the World Ocean Initiative at Economist Impact and Andrea Morgante, Vice President, Performance Services, Wärtsilä. Tune in.
More than 3 billion people in the world rely on oceans for their livelihood and nearly 80% of world trade is dependent on the seas. A blue economy is no doubt a need of the hour. Do you think economic development and ocean health make a compatible proposition?
Martin: Just in terms of the value of the blue economy, we're talking about 2.5 trillion USD per year, that's about 3% of GDP already. So, if the ocean actually was a country, it would be the eighth largest economy in the world, and natural capital from the ocean alone would be valued at 24 trillion USD.
The lack of viewing the ocean in economic terms, as well as environmental and social terms, has meant that we have underestimated the value of the ocean economy. Look at the opportunities in aquaculture, renewable energy, blue carbon, and the ecosystem services that the ocean provides in absorbing CO2 from the atmosphere. Climate change mitigation potential has enormous economic value as well. So, ocean health and economic development of the ocean can very well go hand in hand.
What are the barriers to building a blue economy?
Andrea: Lack of data and information is that is an area that needs to be heavily developed. Policy and regulatory gaps also need to be closed. For instance, on the shipping side, we see the International Maritime Organization (IMO) trying to bring together views from different parts of the world, but at the same time having to compromise. Then you see regional regulations coming up that can be very different from one base to another. These differences become problematic during international and intercontinental activities of shipping.
There is limited access to finance. I think it's extremely important to develop a blue economy to have access to significant investments. Another aspect that is extremely important is coordination and cooperation. No single company has all the competencies required to enable the blue economy. You need to bring together different players and build on coordination and cooperation among them.
The IFC estimates that by 2030, the ocean economy will grow to 3 trillion USD and provide 40 million jobs. Are we investing enough in the blue economy?
Martin: If we just look at the UN Sustainable Development Goals (SDG), we know that most of them are clearly under invested in, particularly the one about the ocean and life below water (SDG 14). It has consistently attracted the least attention from investors and that's really undermining ocean health. But it also means that policymakers and investors have not even started to harness the full potential of the ocean economy. This is really one of those enormous opportunities for impact investors, social enterprises, accelerators, venture capital, and private equity funds.
There are some innovative financing mechanisms and collaborations like the blue bonds of Seychelles and Belize that bring together different stakeholders including the government, the private sector. The Poseidon principles are also an innovative way to finance shipping decarbonisation and incentivise decarbonisation for shipping portfolios of banks. It's these kinds of innovative financing mechanisms that kind of starting to turn the tide.
The maritime industry needs to decarbonize at speed. There is a demand to do that from different stakeholders and areas including regulation, financing, and end customers. How can marine decarbonisation contribute to the blue economy?
Andrea: Decarbonisation is central for any company working in the marine business. It is certainly the cornerstone of our strategy. We have seen it picking up speed and getting to the top of the agenda very quickly in one to two years. The outcome of such interest is extremely important for because it contributes contribute tangibly to the blue economy by reducing emissions and essentially mitigating the impact of climate change, ocean acidification and coastal communities.
While decarbonisation technically refers to the reduction of CO2 equivalent emissions, it also supports the continued effort to improve air quality. It opens up opportunities for new investments, because it connects very well with the need for new sources of energy. And at a more holistic level then you see investments coming in for renewable energy generation, which also helps create jobs locally and regionally and benefits more people. It also leads to more innovation.
SDG 14 reducing marine pollution and acidification, restoring, and protecting ecosystems, conserving coastal and marine areas and ending subsidies contributing to overfishing. Not only that we also need to increase economic benefits from sustainable use of marine resources. What are the top 3 things that we can do in the short term to get closer to reaching these targets?
Tune in to know the answer to this question and more.
This conversation is abridged.