We need to deep clean the oceans. Here’s how to pay for it

fish 2019.jpg

(David Clode, Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Ingrid van Wees, Vice-President for Finance and Risk Management, Asian Development Bank


The world’s oceans are running out of breath. In the past 50 years, we have lost nearly half our coral reefs and mangrove forests and the size of marine populations has halved. A third of global fish stocks are already depleted.

If these trends continue, it is estimated that there will be no stocks left for commercial fishing by 2048 in the Asia-Pacific region alone. By 2050, the oceans might contain more plastic than fish by weight and 90% of coral reefs may be lost.

The “blue economy”, which includes livelihoods and other economic benefits derived from oceans, is estimated at between $3 trillion to $6 trillion per year globally. The oceans contribute significantly to the gross domestic product of many developing countries – as much as 13% in Indonesia and 19% in Viet Nam.

Thirty-four million people in the Asia Pacific region are engaged in commercial fishing. In Southeast Asia alone, the export value of the fish caught in 2015 was $19.5 billion. But the cost of overfishing far exceeds this amount. Overfishing reduced the aggregate net benefit of global fisheries by $83 billion in 2012, with two-thirds of this loss occurring in Asia.

A ‘source to sea’ rescue plan

With the future viability of so many economies and livelihoods at stake, saving our blighted oceans is a key development challenge. The declining health of the world’s oceans is an issue that does not just affect a single industry, country or sector; it is a threat to the entire planet and all of its residents. The solution, therefore, must be broad and far-reaching as well.

This involves strategies that cut across multiple sectors and countries of the region in a holistic ‘source to sea’ approach. Governments, NGOs, businesses and other stakeholders all need to do their part. This includes reducing marine pollution at the source while protecting and restoring coastal and marine ecosystems and rivers.

Alternative livelihood and business opportunities need to be created. Port and coastal infrastructure is overdue for modernisation. There is an urgent need for ocean-friendly infrastructure, including integrated solid waste management, ecologically-sensitive port facilities, and municipal and industrial wastewater and effluent treatment. Equally crucial are sustainable agribusinesses that reduce runoff from fertilisers, agrochemicals, waste and soil erosion, as well as a sustainable aquaculture sector.

Attracting the scale of finance needed

The key challenge to implementing these far-reaching solutions is financing. Large-scale investment is required to support these projects and the private sector is the only source with the vast financial resources needed. However, attracting private investors can be tricky for ocean health-related projects.

The private sector needs a return on its investment, which is usually achieved through charges to a ‘user’ base – either a beneficiary or a polluter. As with other global public goods, however, it is often impossible to ascribe direct charges for a project (such as those addressing coastal erosion) given the lack of an identified user base. Moreover, when user charges can be applied, their level is constrained by affordability considerations, such as in municipal wastewater projects. This results in a volatile or at least uncertain revenue model, compromising bankability and constraining the flows of private capital.

The oceans provide us with far more than fish

Image: Partnerships in Environmental Management for the Seas of East Asia

‘Blue funds’ have huge potential to help overcome these challenges. Arranged by governments or development finance institutions, they could provide much-needed credit enhancement to projects in the form of ‘blue credits’. These credits are similar to carbon credits, as they provide revenue support based on the value of the avoided costs from undertaking a high-impact project. Such funds could also support issuance by underlying project sponsors of more creditworthy blue bonds to raise competitive long-term capital from the markets.

Multilateral development banks can help by developing blue project selection criteria and policy frameworks, creating financial instruments and products, blue funds or similar financial mechanisms, mobilising concessional finance, and preparing bankable project pipelines.

Green financing has already beaten a path for blue financing to follow. Green instruments aim to pool projects together to diversify risks and enable wider access to financing by tapping the capital markets through green equities and bonds. By enhancing the bankability of a project, these instruments can encourage a scaling up of investments in renewable energy, reforestation, watershed management, air quality and clean transport.

Blue finance investments can make the difference

The Asian Development Bank (ADB) has issued $2.2 billion of Green Bonds since 2010. With additional support, blue investments can be similarly successful. Given the urgency and scale of the problem, these investments need to gain traction rapidly. They are not yet well understood and are currently perceived as slow and risky, so it may take decades to realise, verify, and capitalise on their conservation benefits.

But there is hope that it won’t take that long. Blue funds offer a way to work with governments to improve the risk-return profiles of projects and to structure pooled investment products that can unlock private capital. For blue finance to become mainstream, governments and the general public need to be convinced of the urgency of financing projects that support ocean health. Development partners like ADB can help quantify the real costs and benefits of blue investments for both governments and the private sector. As these benefits are better understood, we expect more willingness to finance the related costs.

 

The local knowledge of development organisations, as well as their strong relationships with national and municipal governments and other development partners, will be critical to ensuring that the right blue investments are made in the region. This is why ADB has launched a new Action Plan for Healthy Oceans and Sustainable Blue Economies.

Deep-cleaning our oceans is a massive undertaking, and the price tag will be similarly large. Blue finance offers a way to share the funding of these initiatives – but we must act now, while there is still time.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Worldwide terror attacks have fallen for the third year in a row

China dazzles the world with her Silk Road plan to connect, Asia, Europe and Africa

Yes, together we can make a change! YO!Fest and EYE 2016

UN food agency appeals for access to key storage facility amid fight for Hudaydah

Central African Republic: UNICEF outlines key actions so fresh peace deal can make real difference for children

80 million Chinese people no longer pay income tax

France is bringing back national service

The success story of a Chinese investment in the Greek port of Piraeus

Court of Auditors: MEPs back five members

These are the world’s most future-proof cities

Human rights are everyone’s business, amid relentless crises around world: UN’s Bachelet

In Christchurch, UN chief calls for tolerance, solidarity to extinguish ‘wildfire’ of hate speech

Escalation in Syria fighting cause for ‘great concern’ says UN chief, dozens more civilians dead or injured

IMF to teach Germany a Greek lesson

EU Trust Fund Bêkou for the Central African Republic extended until 2020

Why rich countries are seeing more poverty

US and China in painstaking efforts to conclude trade talks

2030 development agenda: Major breakthrough for world of work

Eurozone: There is a remedy for regional convergence

World’s human rights watchdog spotlights Afghanistan, Yemen and 12 others: Here’s the scoop

The battle for the 2016 EU Budget to shake the Union; Commission and Parliament vs. Germany

‘Amid stormy global seas, UN charter remains our moral anchor’, says Guterres on United Nations Day

Commission offers discount on fines to banks for competition infringements

How can we regulate disruptive technologies?

Hiring is broken. Here’s how to fix it

Let us keep ‘their spirit of service alive’: Guterres leads tributes to UN workers who died in Ethiopia crash

Facebook-Cambridge Analytica: MEPs demand action to protect citizens’ privacy

UN, global health agencies sound alarm on drug-resistant infections; new recommendations to reduce ‘staggering number’ of future deaths

What the future holds for the EU – China relations?

Hot air behind your cold fridge? Why the future of cooling must be sustainable

UN Security Council urged to act against ‘worst-case scenario’ Syria’s war-battered Idlib

A conceptual approach to Violence Against Healthcare in Turkey from SDG’s

The age of influence: why digital platforms must come clean about political ads

Is Europe misjudging its abilities to endure more austerity and unemployment?

School closures triple in Central and Western Africa as education comes under fire

Out with the old: Young People transforming Humanitarian Action

‘Dire consequences’ for a million children in the Middle East, North Africa, as funding dwindles

EU to gain the most from the agreement with Iran

Banks promise easing of credit conditions in support of the real economy

India’s future as a world power depends on 4 key relationships

Why are the Balkans’ political leaders meeting in Geneva this week?

Australia wildfires: communities must stay vigilant, urges UN weather agency

Mental health at stake: A silent epidemic of 21st century

Landmine casualties high for third consecutive year despite record funding, latest monitor reports

Safer products: EP and Council close deal to beef up checks and inspections

Protect women’s rights ‘before, during and after conflict’ UN chief tells high-level Security Council debate

Tsipras doesn’t seem to have learned his “almost Grexit” lesson and Greece faces again financial and political dead end

Amid Venezuela exodus, UN refugee envoy Angelina Jolie visits camps on Colombian border, appeals for humanity, more support

Passwords should become a thing of the past. Here’s why

ECB should offer more and cheaper liquidity if Eurozone is to avoid recession

Quantitative easing: how Mario can tackle low inflation in Eurozone

Erdogan vies to become Middle East Sultan over Khashoggi’s killing

Governments should renew efforts to reform support to agriculture

COP21 Breaking News_08 December: Cities & Regions Launch Major Five-Year Vision to Take Action on Climate Change

European Parliament backs CO2 emissions cuts for trucks

Can cybersecurity offer value for money?

UN chief condemns deadly attacks in Afghanistan

Hiring more female leaders is good for profits. Here’s the evidence

Germany’s fiscal and financial self-destructive policies

Why Commissioner Rehn wants us all to work more for less

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s