Economic Update

Published 03 Jun 2021

– Blue economy principles are intended to guide the sustainable use of ocean resources

– Interest in the concept has been mounting in the wake of the pandemic

– Many coastal nations are sketching a “blue recovery” in line with the UN SDG 14

– Growth in the blue economy is driving innovation in a range of sectors

Around the world, emerging nations with significant maritime resources are advancing plans to develop their respective blue economies, with a view to boosting short-term recoveries from coronavirus as well as longer-term economic diversification.

While the concept of the blue economy has been around for some time, it has attracted increasing attention in recent months.

In essence, the blue economy concerns the sustainable management of ocean resources. A blanket term, it encompasses fields ranging from fisheries, to waste management and pollution, as well as maritime transport, tourism and renewable energy.

A watershed moment in the emergence of the contemporary understanding of the blue economy came with the release of the UN’s Sustainable Development Goals (SDGs) in 2015, and specifically SDG 14: “Conserve and sustainably use the oceans, seas and marine resources for sustainable development.”

A World Bank report published in 2017 highlighted the potential benefits associated with the implementation of SDG 14, particularly in the case of small island developing states (SIDS) and coastal least-developed countries (LDCs).

“The ‘blue economy’ concept seeks to promote economic growth, social inclusion, and the preservation or improvement of livelihoods while at the same time ensuring environmental sustainability of the oceans and coastal areas,” the report stated.

Many countries have moved to implement blue economy policies in recent years.

For example, in 2018 the Seychelles launched its Blue Economy Strategic Policy Framework and Roadmap, the avowed aim of which was to develop its considerable ocean space in terms of the three pillars of wealth creation, social equity and environmental conservation.

This policy led in March 2020 to the legal designation of one-third of Seychelles’ ocean territory – an area larger than Germany – as a marine protected area.

On a similar note, the Caribbean SIDS of Grenada increased its marine protected areas from 3% in 2016 to 20% in 2019, in which year the country also banned the import of single-use plastics and Styrofoam.

Grenada’s blue economy drive was funded by the World Bank, which in 2016 published a report titled “Toward a Blue Economy: A Promise for Sustainable Growth in the Caribbean”. Building on Grenada’s experience, in October last year the bank launched the Unleashing the Blue Economy of the Eastern Caribbean project, which aims to help the region fuel its coronavirus recovery through the sustainable development of ocean resources.

Blue economy and recovery

Blue economy principles were thus gaining traction prior to Covid-19, and the OECD expected ocean-based industries to double their contribution to global GDP by 2030.

While the pandemic has dented this growth, it also seems to have accelerated the uptake of blue economy principles.

The High Level Panel for a Sustainable Ocean Economy is an initiative aimed at “building momentum towards a sustainable ocean economy”. It brings together the leaders of 14 nations, namely Australia, Canada, Chile, Fiji, Ghana, Indonesia, Jamaica, Japan, Kenya, Mexico, Namibia, Norway, Palau and Portugal.

In December last year the panel put forward a new ocean action agenda, in the form of a report titled “Transformations for a Sustainable Ocean Economy”.

Each of the panel’s members committed to sustainably managing 100% of their national waters by 2025, a total area of 30m sq km, roughly equivalent to the continent of Africa.

The agenda also contains 74 priority actions, focused on five critical areas: ocean wealth, ocean health, ocean equity, ocean knowledge and ocean finance. 

According to the panel, if the agenda is adhered to, it will allow the world’s oceans to generate six times more food and 40 times more renewable energy, as well as lifting millions out of poverty and contributing one-fifth of the greenhouse gas emission reductions needed to stay within 1.5°C goals.

The report also emphasised the importance of the blue economy to island nations.

As well as being on the frontlines of climate change, many of the world’s SIDS were particularly badly affected by Covid-19.

Many such nations relied heavily on tourism revenues, and their GDPs took a major hit as a result of lockdowns and travel bans. This has brought into sharp focus the need to diversify their respective economies.

Relatedly, with the global travel industry far from recovered, these countries cannot hope to fuel their coronavirus recoveries through even a partial restoration of tourism, and are looking for an economic boost from other quarters.

The blue economy responds to both of these pressing socio-economic needs. Where many nations are cleaving to a green recovery from Covid-19, others are working towards a parallel blue recovery.

Blue economy and innovation

As well as the potential for economic recovery, blue economy principles are driving an exciting range of innovative projects across a number of fields.

For some years both the US and China have boasted their own “blue Silicon Valley” – in Monterey Bay, California, and Qingdao, Shandong – dedicated to driving innovation in the two nations’ respective blue economies.

Other states are increasingly beginning to innovate in this area.

One key focus across the board is stepping up the amount of renewable energy that is generated via the ocean. Around the world, projects are being developed to increase the ocean’s contribution to the energy mix, both through wave and tidal power, and offshore wind farms.

This is particularly crucial in the context of SIDS, which often rely on costly and polluting diesel imports for their energy needs.

Elsewhere, sustainable solutions are being developed in aquaculture.

For instance, French-Tunisian start-up nextProtein – one of the companies showcased at the World Economic Forum’s Virtual Ocean Dialogues 2020 – uses food waste to create insect protein. This is then used to feed fish in place of fishmeal, the production of which can lead to the depletion of ecosystems.

As well as addressing the issue of food waste, nextProtein’s approach employs vertical farming techniques, and requires little energy and almost no water.

Looking towards other impacts, blue economy principles are also driving innovative financial vehicles.

At the end of last year HSBC announced that it was investing in the world’s first “reef credit”. Launched by pioneering Australian company GreenCollar, a reef credit is a tradeable unit that quantifies and values work undertaken to improve water quality flowing onto the Great Barrier Reef.

Similarly to carbon offsetting, the scheme pays farmers for improving water quality resulting from their on-farm actions, thus reducing pollutants that make their way into the ocean.

According to GreenCollar, the Great Barrier Reef contributes $6.4bn to the Australian economy and supports more than 64,000 jobs – a further sign that the blue economy is of huge importance to large, developed nations as well as to SIDS and LDCs.