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The Future of the "Blue Economy"

John Tobin, Global Head of Sustainability, speaks about the need for a different approach to using the resources of the world's oceans. 

Simon Staufer: The "green economy" has become a well-established term, and investors have been showing increased interest in sustainability topics such as biodiversity and climate change. But what is the "blue economy"?

John Tobin: The "blue economy" is about conducting economic activity in a way that is consistent with the long-term capacity of marine ecosystems to sustain themselves. For the world's oceans to remain resilient and healthy, we need to make sure that the way we use them – for transport, tourism, extractive activities, and especially fishing – is as sustainable as possible. We need to establish an economy that is "blue" in the same sense that the economy on land can be "green". The ocean is becoming a new focal point in the discourse on growth and sustainable development, but there is a great need for development in this area.

Will the blue economy focus chiefly on business in coastal areas, or will opportunities for business in the high seas be pursued as well?

Both are certainly important. However, in terms of fishing, the great majority of economic activity takes place near the coasts. One reason for this is simply that this is where people live and where the ports are – but another is that biological diversity is generally greater in the sea between the shoreline and the edge of the continental shelf, and fish are more abundant there than anywhere else. But there are high-seas fisheries as well, and cargo ships cross huge distances. The "blue economy" will have to take account of these issues as well.

Activities in international waters also pose regulatory challenges. For example, there is little legal protection against overfishing.

Indeed, there are many challenges in this area. There are international treaties in place intended to protect fisheries in international waters. But most fish live near the coasts and overfishing is a big problem in those areas as well. There is a specific growth rate for fish populations that is quite well-known – in an untouched natural environment, the number of fish grows exponentially until the so-called carrying capacity is reached, that is, the population is as large as it can get. If the number of fish caught is small enough for the population never to fall below the inflection point for exponential population growth, fisheries remains sustainable. Unfortunately, we are seeing depletion to a level far below that. And if you keep catching a large percentage of a population that is already very small, it is never going to recover.

It is probably fair to say that this has a serious impact on feeding the growing world population. How can this problem be addressed?

There are reasonably simple solutions that work very well in theory – the challenge is putting them into practice. If we manage to significantly cut back on overfishing, these populations can bounce back and we will have far greater resources a few years down the line. To this end, we need to create economic incentives for people not to overfish. A key concept here is rights-based fisheries management. The idea of this is to incentivize fishing that is sustainable in the long run by assigning rights to particular fisheries and creating a financing model that balances short-term interests with long-term sustainability goals. There is great potential for conservation finance activities that generate both a financial and an ecological return and help us avoid the so-called tragedy of the commons.

So are you saying there may be opportunities for investors to make superior returns in the blue economy compared to business as usual?

Absolutely. I have no doubt that in fisheries, a focus on long-term conservation and sustainability is linked to a number of attractive business opportunities. Emerging industries showcase the potential of new technologies and approaches: aquaculture, the farming of aquatic organisms, is becoming increasingly productive and helps combat the problem of marine resource depletion. Tourism is economically important in many countries, particularly in coastal areas, and the growing ecotourism sector takes account of the need for preservation, while bringing in revenue. Moreover, investments in alternative energy technologies are increasing, and scientific research continuously improves our understanding of these complex ecosystems.

Yet it is often said that we know less about the deep sea than about the surface of the moon. How can we make sure that increased business activity in the world's oceans is conducted in a sustainable manner in spite of the limited knowledge we have about marine ecosystems?

It is true that there are many things we don't know about the world's oceans. And it helps to have knowledge about something, to be able to monitor and measure it. The better we understand our oceans, the more we will appreciate them. At the same time, we cannot wait. What we do know with certainty is that our oceans provide huge resources and that we must be careful about how we exploit these resources. Fish remain the world's main source of protein. And our oceans also play a significant role in absorbing carbon dioxide and regulating global temperature. So even if there is a lot left for us to learn about the complex mechanisms that govern these ecosystems, we are well aware of how important they are.

You have recently discussed these topics at the Economist's World Ocean Summit as well. What are your takeaways?

I had the privilege of sharing the stage with Mark Tercek, the President and CEO of The Nature Conservancy; Sean Kidney, the CEO and Co-founder of the Climate Bonds Initiative; and Justin Mundy, Director of the Prince of Wales's Sustainability Unit on a panel on financing the transition to a blue economy. There is general agreement that financing the transition to an economy that is truly "blue" is a step that politicians, businesses and other institutions will have to take very soon. For the financial services industry, developing scalable solutions and financial instruments capable of funding large commercial operations that are sustainable will be the challenge going forward.

Where do you see the 'blue economy' by 2020?

I think we will see a lot of development in the next few years. There is a much broader discourse on the topic and an increased awareness of the need for an improved approach to managing fisheries. We need to enhance global governance, address the pollution of our oceans and establish a framework for sustainable resource management. If we can move forward in a decisive manner, opportunities will abound.