Natural Resources & Conservation

Why Sustainability Is Critical to the Multifaceted Blue Economy

The world’s oceans account for 97% of the water on the planet. According to the United Nations (UN), marine and coastal resources and industries are collectively worth $3 trillion, which would rank as the fifth-largest economy on the planet, ahead of nations like the United Kingdom and India.

Viewed through such a lens, the so-called blue economy is a valuable driver of economic activity, employment opportunities, and environmental vitality worldwide. Yet it remains a fragile powerhouse, threatened by human-inflicted damage within as much as 40% of its reach, according to the UN.

This economy is so important that the United Nations Development Programme (UNDP) has assigned its 14th Sustainable Development Goal to life below water. And at the first Sustainable Blue Economy Conference last November in Nairobi, Kenya, more than 16,000 participants heard pledges from leaders of 70 countries to harness the potential of the world’s seas and waterways to improve the lives of all.

Here’s a look at how impact investors are getting involved.

Contributions at Many Levels

As with any large economic entity, the blue economy is a multifaceted enterprise. Although it’s defined by its core element rather than national boundaries, its impact may be categorized into five broad themes.

1. Protein Provider

According to Knowledge@Wharton, 3 billion people worldwide consume a diet rich in fish, yet 90% of the fisheries that produce the staple are on the verge of becoming unsustainable. Sustainability is critical—not only does it support the continued availability of the food source, but it also ultimately allows for greater production volumes, according to the World Bank.

2. Gateway to Far-off Markets

The world’s seas provide key lines of transport for global commerce. The UN reports that about 80% of international trade occurs over the sea, and the World Bank projects that shipping volumes will double by 2030. The relationship between ships and the seaways is precarious, however, and the UN stresses the value of developing the man-made side of the equation—the freighters and ports—with consideration for the environmental impact.

3. Nature’s Playground

There’s fun to be had on the world’s coastlines as well, and the urge to play in the waves, explore the world beneath the surface, or simply relax on sandy beaches translates into a large economic driver. The Nature Conservancy found that coral reef tourism alone is worth $36 billion.

4. Environmental Filter

Even if their primary exposure to water is through taps or pumps, billions benefit from the natural absorption capabilities of the world’s seas. Through coral reefs, mangroves, and salt marshes, the power and height of potentially damaging waves can be significantly mitigated as they approach the shore. Furthermore, mangroves, salt marshes, and seagrasses naturally act as carbon sinks to absorb carbon dioxide and defend against global warming.

5. Lifeline to Livelihoods

The UN’s Food and Agriculture Organization reports that nearly 60 million people worldwide work within the aquaculture or fisheries industries. The World Bank adds that tourism is a key source of employment on many small island states. The sustainability of these industries determines the fate of millions’ day-to-day lives.

While these impacts are myriad, many of those who benefit have been less than hospitable, damaging the earth’s waters with pollution and waste. Most notably, plastic trash and oil spills have directly harmed sea life. Nitrogen and nutrient runoff from land-based activities has also degraded water quality, according to the UN.

The extensive reach of the world’s blue economy makes it difficult to ignore.

Tackling the Issues through Impact Investing

Multinational corporations can easily tap the world’s financial markets. Players within the blue economy, on the other hand, can struggle to access capital. Impact investors have stepped in with their own creative approaches to solve the problem.

Sovereign Blue Bond

The government of Seychelles partnered with the World Bank and the Global Environment Facility to raise money for projects such as fishery management plans and education awareness programs.

Community Ownership Initiatives

The Meloy Fund for Sustainable Community Fisheries directs investments to villages in Indonesia and the Philippines to encourage sustainable fishing methods.

Extensive Collaborations

Partnerships in Environmental Management for the Seas of East Asia marries investor and donor funds with the efforts of governments, companies, researchers, international agencies, and others to develop effective solutions for managing the seas and coasts of East Asia.

Insurance

The InsuResilience Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions and the Insurance Development Forum are public/private efforts working to improve resilience to coastal disasters.

The extensive reach of the world’s blue economy makes it difficult to ignore. Sustaining its breadth, depth, and health through constructive and protective measures supports long-range prospects across several industries and secures a future for billions around the globe.


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