Leveraging the Blue Economy to tackle the climate crisis and beyond
Investment
Oceans are a vital tool in tackling the climate emergency
Over the last decade, investors and policymakers have focused on the restoration and protection of forests and land, in tackling the climate crisis. Oceans have largely been overlooked, despite covering around 70% of our planet[i] and being a vital tool in addressing the climate crisis, absorbing 30% of carbon dioxide emissions[ii]. Beyond the climate sphere, oceans are hugely important for biodiversity, hosting a wide variety of marine species such as corals, mammals, fish and plankton. These ecosystems are an integral part of our global economy, providing food supplies, as well as jobs within fishing, conservation and tourism.
Our oceans are however at risk. Studies estimate that climate risks pose a $4.3 trillion dollar threat to marine ecosystems [iii], and therefore require our urgent attention.
Oceans in climate mitigation and adaptation
When thinking about ocean-related opportunities, investors can focus on both mitigation and adaption strategies. Below, we have set out some examples.
Mangroves
Mangroves are naturally occurring carbon sinks and so can provide ocean mitigation strategies through coastal conservation projects. These sinks store carbon deep underground, removing carbon emissions from the atmosphere. They can store up to ten times more carbon per unit per area than forests[iv]. These vital carbon sinks are however degrading at a rate of 1-2% a year[v], which has a significant impact on total carbon emissions within the atmosphere, with stored carbon is released throughout the degradation process.
From the adaptation perspective, mangroves are a useful tool in protecting our coastlines. For example, having the ability to slow down and reduce wave heights helping to buffer against thunderstorms, coastal floods and even tsunamis. As the impact of climate change worsens, extreme weather events are expected to become increasingly common. By using mangroves to reduce physical damage caused by extreme weather, coastal areas should be in a much stronger position, both environmentally and economically. They can also protect from coastal erosion in light of sea level rise.[vi]
Blue Carbon
The process of monetising carbon is not a new concept as the carbon credit market continues to grow rapidly. The blue economy has introduced an ocean-based alternative known as blue carbon credits which calculate how much carbon is stored through ocean-based restoration projects. It is expected that this market will grow to $50 billion dollars by 2030[vii]. By restoring carbon sinks such as mangroves, valuable blue carbon credits can be produced that remove significant amounts of carbon dioxide from the atmosphere, while also providing investors with a potentially valuable and tradeable asset.
| Mitigation activities aim to reduce or prevent emissions. For example, switching to tidal energy or investing in kelp forests, as a nature-based solution for absorbing emissions. |
| Adaptation focuses on adjustments to improve our resilience to a rapidly changing climate. For example, investing in flooding infrastructure or investing in mangrove forests, as a form of nature-based coastal protection. |
| Blue carbon refers to carbon dioxide that has been stored within ocean-based carbon sinks. These work much like land-based carbon credits. |
Beyond mangroves, other projects include algae plantations, seagrass management and even turning whales into a carbon-based asset[viii]. While algae plantations and seagrass management would function similarly to forestry, where restoring these carbon sinks would generate carbon credits, the concept of whales is significantly more niche. Whales are a vital part of a marine ecosystem as their waste products enable species such as algae to thrive. Algae can remove significant amounts of carbon dioxide from the atmosphere, therefore, whale population health in turn dictates algae carbon removal. This approach is in early stages of development, however it shows the growing innovation in this space.
Where carbon credits have grown in popularity with many investors, there is no reason why blue carbon credits shouldn’t also be deployed.
The Blue Economy
Beyond climate change and carbon markets, there are a swathe of other investable opportunities available, as part of a blue economy. We provide some examples below, but it is worth noting that this is not an exhaustive list:
| The blue economy focuses on the sustainable use of ocean resources for economic growth, improved livelihoods, and jobs, while preserving the health of ocean ecosystem. |
- Technology: The use of blue biotechnology is growing in popularity, particularly within the pharmaceuticals industry. For example, algae contain valuable properties that can be used to develop antibiotics, potentially combatting the rise in antibiotic resistance. Additionally, the manufacturing industry has sharpened their focus on technological advancements tackling plastic production, to reduce the prevalence of microplastics within our oceans (as by 2060, plastic production could release over 4 billion tonnes of emissions, a nearly twofold increase from 2019[ix]).
- Sustainable fishing: There is a growing focus on sustainable fishing practices, via new technology and improved management practices, to preserve ocean biodiversity.
- Sustainable tourism: Over 80% of tourism takes place in coastal areas[x], making the ocean a significant source of income for local communities, as well as the national economy. If coastal areas were to become increasingly damaged by climate change, this would have a serious impact on local economic opportunities and associated social welfare.
Key takeaways
While the blue economy is a nascent space, not as developed as other nature-based solutions, there are opportunities for investors to integrate ocean-based considerations in their portfolios. For example, setting portfolio objectives on aligning with the Global Biodiversity Framework target to restore 30% of our planet’s ocean and freshwater systems, by 2030[xi]. As well as implementing ocean-based solutions within a natural capital allocation, improving overall diversification beyond a sole exposure to forests. There will also be momentum within collaborative initiatives, for example, the Taskforce on Nature-related Financial Disclosures beginning to engage on ocean-related risks,[xxii] or the United Nations Environment Programme Sustainable Blue Economy Finance Initiative, setting out fourteen principles to support the financing of a sustainable blue economy[xiii].
Regardless of our approach as investors, it is important to recognise our oceans have the potential to play a significant role in our fight against climate change, and this is something we should seek to engage with.
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