The term “Blue Economy” has been widely used over the course of the last few years, as island communities have sought sustainable ways to boost their economic resilience while placing an emphasis on conserving the natural beauty of their ecosystems and biodiversity. Indeed, the United Nations Sustainable Development Goal #14, “Life Below Water”, pledges to conserve and sustainably use the ocean, seas and marine resources for sustainable development, and address the various threats to marine ecosystems.
This post will seek to explore a meaningful definition of the term “Blue Economy”, as well as examine the role that it plays in reducing economic inequalities, promoting a comprehensive approach to building resilience, and the adoption of innovative financial structures to underpin conservation efforts in island communities all over the world.
What is the Blue Economy?
For island communities, the ocean can be regarded as a veritable treasure trove of resources, opportunities, and cultural affirmation. These are all play a part in the creation of cultural identity, combating hunger and unemployment, as well as securing economic success and growth. If the health of the ocean is threatened by increasingly severe levels of human-induced climate change, growing levels of pollution, and overfishing, this will represent a direct threat to the island inhabitants who rely upon its well-being.
Generally, The principle of the Blue Economy seeks to address the need to foster economic development while promoting ocean health and human well-being. The Center for the Blue Economy defines it as the overall contribution to economies, the need to address the environmental and ecological sustainability of the oceans, and the ocean economy as a growth opportunity for both developed and developing countries. Although there is no one, single definition of the Blue Economy, a common theme exists between the interpretations: preserving the health of the ocean globally and achieving a sustainable future for humanity and Earth.
The main concerns of the Blue Economy can be summarised as follows:
- To be inclusive and improve the lives of all
- To harness renewable energy
- To Use smart shipping to lessen the impacts on the environment
- To be based on sustainable fisheries
- To create jobs, reduce poverty and end hunger
- To take action against illegal fishing
- To conserve marine life and oceans
- To protect coastal communities from the impacts of climate change
- To tackle marine litter and ocean pollution
Exploring the Ocean’s Resources and Opportunities
According to the United Nations, the ocean, seas and coastal areas cover more than two-thirds of the earth’s surface and contain 97% of the planet’s water. They therefore form an intertwined and essential component of the Earth’s ecosystem and are crucial to sustainable development. The ocean helps to contribute to poverty eradication by creating sustainable livelihoods and decent work. More than three billion people depend on marine and coastal resources for their livelihoods, and the ocean is a vital component of global food security and human health. Some of the most crucial functions of the ocean are to provide a sink for greenhouse gasses, water and the oxygen we breathe, not to mention the vast quantities of biodiversity.
This is exceedingly true in the case of island communities, which usually have strong ties to the ocean. The seas form an indelible connection of people to families and neighbors, provide sustenance, drive economies, and inspire art, cultural values, and a sense of identity.
The ocean also provides an opportunity to increase scientific knowledge, develop research capacity and transfer marine technology. This will provide the benefit of improving ocean health and enhancing the contribution of marine biodiversity to the development of island communities.
The Role of Aquaculture in Sustainable Fisheries
Aquaculture is breeding, raising, and harvesting fish, shellfish, and aquatic plants. While traditionally not regarded as sustainable, if modelled on established indigenous practices it can actually be carried out in a manner that is environmentally responsible, and can provide a nutritious source of food as well as commercial products. In the context of the Blue Economy, it helps to create healthier habitats, and can be used to rebuild stocks of threatened or endangered species.
Pacific Island communities have been striving to develop aquaculture in such a way to preserve ecosystems, and affirm the unique traditions of this region. Hawaii has a traditionally rich aquaculture history dating back for centuries, when communities cared for and harvested a variety of fish and shellfish from large coastal fish ponds known as “loko i‘a.” To this end, there have been collaborative efforts between the public and private sectors, as well as NGOs, to work together to restore these fish ponds in the Hawaiian Islands.
In the Republic of the Marshall Islands, training is taking place to further knowledge of hatchery techniques for giant clams, which are then released into community-managed open water areas. This enhances community economic empowerment, as clams are either harvested for local consumption or used for aquarium trade as a means to increase community/individual income. In the Federated States of Micronesia, some villages are now adept at bath sponge-farming technology, and pearl oyster seeds have also been distributed to be cultivated, harvested, and provide profits for villagers.
Palau has also introduced giant clam hatchery technology, and local researchers have successfully established a mangrove crab hatchery to supply crablets to farmers. Plans are underway to establish a rabbitfish and milkfish hatchery, and this resulting production helps meet consumer needs as well as replenish natural stocks in lagoons throughout the region.
The fisheries sector is fundamental for enhancing healthy diets, as fish are a valuable source of nutrients and micronutrients in islands around the world. It also accounts for about 17 per cent globally of animal protein consumption, so it is important that fisheries are sustainably developed and maintained.
According to the Food and Agriculture Organisation (FAO), fisheries are a key pillar in the attainment of food security and proper nutrition, and the sector plays a major role in national Small Island Developing States (SIDS) economies. The unique set of challenges SIDS need to face, such as shifting market access conditions of key markets as well as the legal and policy frameworks which must adapt to the unique nature of these countries, continue to undermine the growth in trade of SIDS fishery products to the regional and international markets.
The FAO has created a project called The Sustainable Fish Value Chains for Small Island Developing States (SVC4SIDS), currently underway in Barbados and Kiribati. This project builds on the fundamental principles of the Blue Economy by closely working with stakeholders to develop sustainable fishery value chains, and identifying inefficiencies and opportunities in relation to social, economic and environmental dimensions. This will be complemented by actions and investments by the public and private sectors.
Inclusive Recovery and Regenerative Coastal Tourism
Many island communities rely on tourism to generate a strong economic foundation, with some tourism-dependent territories relying on the sector for as much as 45% of their GDP, along with the accompanying levels of employment. This reliance became even more apparent in the wake of the COVID-19 pandemic, when tourism-dependent economies were decimated by the dearth of travel-related activities and spending.
Currently, with the ease in some travel restrictions, island economies are seeking ways to recover by once again focusing on more sustainable types of tourism products, such as creating special visas to encourage digital nomads and remote workers to take advantage of more friendly climates and tropical biodiversity. Examples of such visas are seen in Montserrat, Dominica, Malta, and Barbados.
The tenets of the Blue Economy have a role to play in this regard by focusing on the conservation and protection of coastal areas that are seen as most attractive to tourists who wish to experience an island’s natural beauty. It has become of primary importance to engage all stakeholders to facilitate the protection of the natural environment, biodiversity, and cultural and historical heritage of coastal communities. This type of regenerative tourism is characterised by a mission to not just avoid damage, but actually create a positive impact on destinations and communities. Island governments can therefore contribute to the strengthening of marine ecological resources by managing access to marine protected areas, and this can be starkly contrasted with more invasive, traditional forms of tourism. The primary goals of regenerative coastal tourism should be to decrease activities with negative environmental impacts, and to include local residents and the indigenous community when evaluating potential ecotourism development.
Blue Bonds and Conservation Financing
It has become increasingly apparent that adequate access to conservation financing can amplify the positive impact of the Blue Economy, and establish conservation finance in mainstream investment markets. Generally, conservation financing seeks to activate cash flows generated by the sustainable management of an ecosystem. Previously, such financing was largely centred around Green Bond Principles. Green bonds are financial instruments primarily designed to catalyse the transition to a low carbon and more sustainable economy by financing green property, renewable energy, new and efficient factories, and clean cars. The Green Bond Principles are a set of voluntary guidelines, which have been drafted by several large financial institutions and environmental groups to provide assurance to investors about the quality of the green projects being funded.
These principles have been adapted to create the exciting concept of Blue Bonds, which are defined by the World Bank “as a debt instrument issued by governments, development banks or others to raise capital from impact investors to finance marine and ocean-based projects that have positive environmental, economic and climate benefits.” A report by the World Wildlife Fund has established that the annual gross marine product (GMP)—equivalent to a country’s annual gross domestic product—is at least $2.5 trillion; the total “asset” base of the ocean is at least $24 trillion. Therefore, when compared with GDPs of nations, the “ocean economy” emerges as one of the top ten largest economies in the world.
In 2018, the Seychelles launched the world’s first sovereign Blue Bond, which eventually raised US$15 million from international investors. Then-Vice-President, Vincent Meriton, stated at the time, “We are honored to be the first nation to pioneer such a novel financing instrument. The blue bond, which is part of an initiative that combines public and private investment to mobilize resources for empowering local communities and businesses, will greatly assist Seychelles in achieving a transition to sustainable fisheries and safeguarding our oceans while we sustainably develop our blue economy.”
Following this example, similar bonds were launched by Nordic Investment Bank, The World Bank in collaboration with Morgan Stanley, and The Nature Conservancy, an international not-for-profit group. Financial instruments such as this are particularly relevant to island communities, where an inclusive approach creates the opportunity for much-needed private sector capital to be mobilized to support the blue economy.
Call to Action
We invite you to register for the upcoming Island Finance Forum, being held on April 18th and 19th, 2023, where you can participate in sessions which explore the Blue Economy! There will be interactive sessions, including networking opportunities to meet and exchange ideas face to face or in small groups.
Registration is free, and there will be six major content tracks: The Blue Economy, FinTech & Innovation, Risk & Insurance, Climate Finance, Renewable Energy Finance, and Start-Up Ecosystems.
The Island Finance Forum brings together brings together stakeholders, financiers, regulators and development partners from around the world to discuss sustainable and inclusive financing in islands. We look forward to seeing you there!