Economic Update

Published 23 Mar 2023

− UN High Seas Treaty marks the first international treaty on ocean protection in 40 years

− Funding pledges and sharing of genetic resources to ensure equal distribution of benefits

− Ocean conservation poised to attract increasing share of climate-tech investment

− Regional cooperation sets a precedent for conservation efforts in emerging markets

As the international community reaches a landmark agreement to protect ocean resources, emerging markets are looking to balance conservation and the exploitation of marine resources.

In the first week of March 2023 UN delegates in New York finalised the text of an international treaty outlining the sustainable use of marine resources beyond national jurisdiction. Popularly known as the UN High Seas Treaty, the document is the result of two decades of talks and represents the first international treaty on ocean protection since the 1982 UN Convention on the Law of the Sea.

The treaty seeks to govern the exploitation and conservation of the high seas, defined as marine areas that lie outside of national boundaries, which account for approximately two-thirds of the world’s oceans.

In line with the so-called 30×30 pledge – the goal to protect 30% of the planet’s lands and inland waters by 2030, outlined at the 2022 UN Biodiversity Conference in Montreal, Canada – the treaty will act as a legal framework for the establishment of vast marine protected areas to preserve ocean biodiversity.

Ocean resources

Once seen as a virtual wasteland, the high seas are a treasure trove of marine genetic resources, as the study of marine life such as sponges, coral and seaweed reveal potential medical and commercial applications.

For example, ziconotide, a compound isolated from the venom of a marine cone snail in 2004, has since been approved by the US Food and Drug Administration for pharmaceutical use to treat chronic pain. Access to such resources, as outlined in the treaty, could help fuel innovation and share the eventual profits stemming from their use.

Another key issue is funding to support the realisation of the treaty’s goals. To help facilitate ratification and implementation, the EU has pledged €40m via the Global Ocean Programme, a move that could benefit emerging markets looking for increased financing to support conservation efforts. That the same week the US announced approximately $800m in international commitments to protect the oceans.

While the treaty has yet to be ratified, its writing marks a milestone in global efforts to protect marine ecosystems. Propelled by the twin aims of supporting sustainable economic growth and meeting environmental objectives, both private and public actors in emerging markets have launched pioneering ocean conservation efforts.

Ocean tech

In the race to preserve marine resources, a number of start-ups in emerging markets are working to tackle problems ranging from coral bleaching to plastic pollution by leveraging new technology.

Coral reefs provide an estimated one-fourth of the total fish catch for developing countries, while also attracting tourism and yielding compounds used for medical purposes. With a 2020 study reporting that over 14% of the world’s coral reefs died off in the 2009-18 period, coral preservation has become a central part of protecting ocean environments.

Since launching its first farm in 2019, Coral Vita has employed a for-profit model to regrow depleted reefs in the Bahamas. The start-up, which funds its operations via customers such as hotels that rely on reefs, secured a $2m seed round in 2021 to scale up its business model and expand into land-based facilities.

Marine aquaculture represents another space for sustainable development as emerging markets work to feed growing populations. Mexico’s MicroTERRA uses wastewater from existing fish farms to grow microalgae that both cleans and oxygenates the water and produces protein, which is in turn recycled as fish feed. Founded in 2018, the start-up had attracted $2.8m in funding as of early 2023.

In early 2022 Indonesia’s eFishery raised $90m in what it claimed was the largest funding round for an aquaculture tech start-up to date. The firm, which offers products such as smart feeders, software for monitoring operations and credit lines to fund supply purchases, plans to use the funds to expand to the top-10 countries for aquaculture, including China and India.

Marine waste

Companies are also searching for solutions to marine waste, with the UN working to develop a global plastics treaty. UK-based NotPla has developed biodegradable packaging from seaweed, while other companies use seaweed in cattle feed to reduce methane burps. Seaweed production has expanded by 75% in the past decade, as companies beyond East Asia explore the product’s non-culinary applications.

Founded in 2012, Mexico’s BIOFASE uses polymers from avocado pits to produce biodegradable plastics. The start-up exported its products to more than 25 countries as of early 2023.

Investors are increasingly drawn to the space, as the economic benefits of ocean conservation become clear. In October 2022 climate-tech venture capital firm Propeller launched with a total funding of $100m to support ocean-tech start-ups. Meanwhile, the 1000 Ocean Startups coalition, hosted by the World Economic Forum, aims to back 1000 ocean-focused start-ups by 2030.

Government-led initiatives

Amid efforts to preserve marine resources, a number of emerging markets have launched public initiatives to support the so-called blue economy. Regional strategies and new funding schemes have become central to ocean conservation, as have plans that integrate the coastal communities that benefit most immediately from marine resources.

Some emerging markets have turned to debt-for-nature swaps, working with global investors to restructure their debt given that some of the savings are earmarked for nature conservation projects. Notably, Belize secured a $364m swap in 2021 to help the Caribbean country protect its coral reefs.

Countries in the Western Indian Ocean region − most notably Kenya, Mozambique, Tanzania and the Seychelles – form the basis of the Great Blue Wall initiative, a planned network of marine protected areas aiming to support a regenerative blue economy. The initiative was officially launched at the 2021 UN Climate Change Conference in Glasgow, Scotland, and benefits some 70m people in the region by generating employment and protecting vital marine resources.

Elsewhere, the Coral Triangle initiative consists of a multilateral agreement between the governments of Indonesia, Malaysia, Papua New Guinea, the Philippines, the Solomon Islands and Timor-Leste to protect the region’s marine resources. Formed in 2009, the initiative focuses on ensuring food security and reducing poverty by working with local communities to protect vital fisheries.