June 9, 2021
Study identifies major barriers to financing a sustainable ocean economy
Significant increase in sustainable ocean finance required
A study published yesterday, World Ocean’s Day, by an international team of researchers has outlined how the future of the world’s ocean economy is at risk.
According to the study, published in Nature Communications, financing a sustainable global ocean economy may require an effort similar to the Paris Agreement on climate change. A significant increase in sustainable ocean finance will be required to ensure a sustainable ocean economy that benefits society and businesses in both developing and developed countries.
The report identifies the major barriers to financing a sustainable ocean economy, which includes all ocean-based industries, such as seafood production, shipping and renewable energy and ecosystem goods and services, such as climate regulation and coastal protection.
University of Wollongong (UOW) PhD candidate Dominique Benzaken, from the Australian National Centre for Ocean Resources and Security (ANCORS), is one of the contributing authors of the report.
Ms Benzaken is a Blue Economy and Ocean Governance specialist and says the study carries important messages highly relevant to our region given Australia and our Pacific nation neighbours' custodianship of a large track of the global ocean.
“Pacific nations are highly dependent on a healthy ocean for their economy, wellbeing and identity,” Ms Benzaken said.
“Financing a sustainable ocean economy is a major challenge for those nations who often lack the necessary capacity and infrastructure to attract the investment they need to effectively and sustainably manage their large ocean estates,”
The research team includes authors from Australia, Brazil, Canada, China, Denmark, France, Ghana, Indonesia, Japan, Philippines, Seychelles, Singapore, Sweden, UK and USA.
“Understanding what global finance can do to support a sustainable ocean economy can help countries strategically position themselves to attract global finance and build resilience in the context of changing climate,” Ms Benzaken said.
The report lead author, Dr. Rashid Sumaila, is a professor at University of British Columbia’s Institute for the Oceans and Fisheries and the School of Public Policy and Global Affairs and Canada Research Chair in Interdisciplinary Ocean and Fisheries Economics.
“The size of the ocean economy was estimated at around USD $1.5 trillion in 2010, and prior to the COVID-19 pandemic, was projected to increase to USD $3 trillion in 2030,” said Dr. Sumaila,
“But a sustainable ocean economy requires healthy and resilient marine ecosystems, which are being severely threatened by anthropogenic and climate pressures. There are many opportunities for governments, financial institutions and other players to make financial gains in this type of sustainable economy, but there are also many barriers that need to be overcome.”
A significant ocean finance gap exists. Currently, there is a large shortfall in the amount of money that goes towards financing a sustainable ocean economy.
The major barriers identified in the study include: a weak enabling environment for attracting sustainable ocean finance; insufficient public and private investment in the ocean economy; limited ability of people developing projects that are attractive to investors; and the higher risk profile of ocean investments.
According to the researchers, to mitigate the barriers governments and public institutions may be a good place to start to close the gap. This would lead to financial institutions being incentivised to invest, and enable the private sector to become interested in green ventures that foster ocean development.
For Australia, Ms Benzaken believes as a major donor to the Pacific region development aid “can be put to good effect to fund enabling activities such as policy and regulatory reform or the development of bankable projects at scale to reduce the risk and mobilise private sector investment in the region”.
The report warns the cost of inaction regarding the conservation and sustainable use of the ocean are high.
“If we carry on with ‘business as usual’ we still face the cost of coastal protection, relocation of people and loss of land to sea-level rise – a cost that is projected to rise from USD $200 billion to a trillion USD annually by 2100,” Dr. Sumaila added.
ABOUT THE RESEACH
‘Financing a sustainable ocean economy’ by Rashid Sumaila et al. is published in Nature Communications.
The paper was produced with the support of the Secretariat for the High-Level Panel for a Sustainable Ocean Economy. The High Level Panel for a Sustainable Ocean Economy (Ocean Panel) is a unique initiative by 14 sitting world leaders who are building momentum for a sustainable ocean economy in which effective protection, sustainable production and equitable prosperity go hand in hand. Co-chaired by Norway and Palau, the Ocean Panel represents nations of highly diverse oceanic, economic and political perspectives. Members include Australia, Canada, Chile, Fiji, Ghana, Indonesia, Jamaica, Japan, Kenya, Mexico, Namibia, Norway, Palau and Portugal. It is supported by the UN Secretary-General's Special Envoy for the Ocean.
Funding was also obtained from the World Resources Institute and the OceanCanada Partnership, which is sponsored by the Social Sciences and Humanities Council of Canada (SSHRC).