Blue economy: How marine ecosystem services can benefit coastal countries?

By Somnath Hazra and Rabindra Nath Bhattacharya

The marine ecosystem and the ‘Blue Economy’ is an integral part of any coastal country’s development. How the marine ecosystem services can impact a coastal country’s development through a sustainable blue economy?

Very recently, the concept of “Blue Economy” or “Oceans/Marine Economy” has been extensively promoted by international bodies to make a strategy for protecting and preserving the world’s ocean resources. The concept of the Blue Economy was generated in 2012 at the United Nations Conference on Sustainable Development held in Rio de Janeiro. However, without any clear definition, the term ‘Blue Economic’ is used with some similar terms like”ocean economy” or “marine economy”, etc. In 2014, the United Nations gave a general definition of the “Blue Economy”.

As per the United Nations, the Blue Economy is an ocean economy that aims at “the improvement of human wellbeing and social equity, while significantly reducing environmental risks and ecological scarcities (U.N., 2014, p.2)”.  In 2017, the World Bank characterized Blue Economy as “the sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem (World Bank 2017, p.6).”

Yet the Blue Economy creating the Ocean Mission to improve the use of ocean resources within multiple environmental and social constraints. It is already established that the different bio-resources in our natural marine ecosystems provide many ‘Ecosystem Services’ (like provisioning of seafood and the remediation of wastes). However, till now, we are not well aware of how marine biodiversity provides the delivery of different ecosystem services and associated societal benefits; and how anthropogenic impacts on the marine environment affect the ecosystem services.

In this backdrop, identifying the marine ecosystem and developing measures and societal values of these ecosystem services is required. The identification will also help to understand how human activities influence these ecosystem services. This assessment of ecosystem services will allow us to facilitate innovative decision-making processes on sustainable use of the ocean ecosystem and its services and draw information and wisdom from other branches of ocean science.

Furthermore, it will feed as valuable inputs into international initiatives like Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES), the new TEEB (The Economics of Ecosystems & Biodiversity) for Oceans and Coasts programme and Natural Recourse Accounting (NRA) for SEEA.

In India, there are very few studies on Ecosystem services of ocean resources where the economic value has been assessed. In cases where it has been done, ecosystem services considered are very general (not based on any specific ecosystems) and not considering much the fact that being an ecosystem, the ocean/sea is also subject to influence from various natural and human influences.

The wellbeing of coastal communities depends on the continuous flow of the ecosystem services of this coastal ecosystem.

Though the wellbeing of coastal communities depends on the continuous flow of the ecosystem services of this coastal ecosystem, these services are predominantly public goods in nature with no/few markets and no/fewer market prices. They are, thus, rarely detected by our current economic compass. As a result, the resources are declining, ecosystems are being degraded, and communities suffer the consequences.

Continuous depletion and over-exploitation of available resources lead to loss of the stock of the resource and the flow of economic benefits of ecosystem services; restoration of Coastal resources can restore some of those services and hence deliver immense economic benefits. Given its vast ecological and socio-cultural importance, integrated Ocean resource management is necessary to maintain the rich productivity of this ecosystem. Therefore, the challenge is to conserve the ecological services of the ocean ecosystem while providing sustained benefits to the macroeconomy and the communities’ dependent upon the ecosystem for their sustenance.

Intensive research will help facilitate decision-making based on the sustainable development of ocean resources, which will also clarify the different values of and uses of ocean resources. It will also develop a database and knowledge on the broader perspective and consequences of reducing the degradation of ocean resources. Appropriate and cost-effective ways to identify and ascertain the stock of various economic ocean resources is necessary. It is also essential to develop and use indicators for assessing the marine ecosystem services, adopt and apply suitable valuation methods, and link these values with societal benefits.

Policy and management context

Conservation and sustainable development of ocean resources require integrated planning and resource management of the ocean system. The planning involves understanding every specific ecosystem service of the Ocean to produce desired outputs (goods and services) from a flow out of resource base and achieving equitable quality of life while maintaining the desired environmental quality in the region.

The research on the blue economy will provide information on the conservation status of ecosystem goods and services, which is essential for improving social decisions regarding the sustainable use of ocean resources. Research on the blue economy will also provide valuable and reliable information to policymakers about the biodiversity conservation of ocean resources. Understanding the human attitudes toward ecosystems is also essential to correcting the inherent bias associated with the valuation.

The ocean/ coastal ecosystems provide significant ecological and economic security of the aggregate macro-economy and regional economies. Many populations live in the coastal areas of India and highly depend on the coastal resources for their sustenance. Most of the people directly depend on the coastal resources for their livelihoods. In some cases, the main livelihood activities of the inhabitants are a collection of fish and seafood. In addition, the ocean/sea is the storehouse for many biological resources that maintain the ecological equilibrium of this system. Productivity and food chain, biogeochemical cycling, water purification, and maintaining O2 – CO2 budget is the significant environmental role of biodiversity inhabiting the system.

Ecosystem services and indicators

The blue economy encompasses all types of economic activities directly or indirectly related to coastal and marine resources. These activities are classified into two, namely, ocean-based and ocean-related economic activities. Ocean-based activities are those which are directly related to the marine environment and marine resources like fisheries and aquaculture, offshore oil and gas extraction, maritime transport, maritime tourism, ocean power, isolation, marine construction, communications, etc.

Ocean-related activities, on the other hand, are those which are indirectly related to ocean-based economic activities. Examples of such activities include seafood processing, marine biotechnology, shipbuilding and repairing, ports, tourist resorts, communications, marine insurance and law, marine technology services, etc.

Oceans can contribute $1.5 trillion/year to the global economy, near about 3% of the global value-added.

In brief, ocean economies provide food and livelihood to a large section of the world’s population. Apart from direct economic benefits, oceans provide us with enormous environmental benefits. Oceans are contributing to the significant share of oxygen in the world, for which oceans are often called the lungs of the earth. 

 Unfortunately, however, the world economy is yet to take account of ocean-based and ocean-related activities in the national income accounting system. However, this requires first a proper development of the evaluation methodology of marine ecosystem services. It also requires an effective administrative structure in this regard. The entire ecosystem services need to be assessed. Till now, nobody has developed the framework of assessment and done the valuation of ocean ecosystem services in India. The government has to estimate all possible ecosystem services So that we can get the total economic value. 

Correlation between blue economic activities and ecosystem services

Contributions of blue economy: Measurement and valuation

Blue Economy encompasses all the economic activities happening in and around the Ocean, obeying sustainability rules. The oceans provide us with various types of ecosystem services. According to the Common International Classification of Ecosystem Services (CICES), these services can be grouped into three general categories: provisioning services,  regulating and maintenance services, and cultural services (Potschin, M., Haines-Young, R. 2011). Provisioning service benefits are obtained directly from the ecosystem (e.g. food, water, minerals, energy etc.)

Regulating and maintenance service benefits are obtained from the regulation of ecosystem processes (e.g. climate regulation, carbon sequestration, coastal protection etc.). Lastly, non-material benefits like cultural service benefits (e.g. aesthetic, recreational, psychological and spiritual benefits, etc.) are obtained directly from the ecosystem (Liquete, C. et al. 2013).

The ocean is responsible for about 80% of economic activity.

Blue economic activities today are accounting for a significant share of GDPs of the island and coastal economies. According to an estimate, oceans can contribute $1.5 trillion/year to the global economy, near about 3% of the global value-added. The Ocean is responsible for about 80% of economic activity. Moreover, blue economy activities have enormous potential to occupy a significant segment of international trade.

In brief, ocean economies are providing food and livelihood to a large section of the world’s population. Apart from economic benefits, oceans provide us with enormous environmental benefits. Proper accounting for these activities is thus the need of the hour.

Size and share of the Blue economy in Asia-Pacific countries and the estimated employment

The System of Environmental-Economic Accounting (SEEA) framework provides a base for Ecosystem Accounting and how Ecosystem Services can be accommodated in National income Accounts. In the spirit of the System of National Accounting (SNA), the ocean economy is measured by the value-added method. However, ideally, the blue economy should be measured in terms of adjusted net value under the assumption of sustainability.

The SEEA framework guides us to construct the adjusted net value-added. In order to measure the contributions of the blue economy on a sustainable basis, one should consider the value of the stock of ecosystem assets and the value of the stock of ecosystem degradation/depletion. Secondly, to estimate the value of ecosystem services, namely non-SNA social benefits, which are not included in the GDP.

The SEEA Experimental Ecosystem Accounting is not a statistical standard, but it is an arrangement for a standard knowledge regarding an accounting approach for the Ecosystem goods/assets (i.e., stocks) and the ecosystem services (i.e., flows). Ecosystem assets and ecosystem services are based on the spatial aspects by which one can separate the forest, wetland, agriculture ecosystem goods and services.

In this framework, the ecosystem accounting covers the contribution of ecosystem goods and services to the GDP and the benefits of human wellbeing from ecosystem goods and services that are not available / traded in the market and not considered in the estimation of GDP. Hence, it can be said that the SEEA Experimental Ecosystem Accounting estimates the contribution of two categories of benefits that accrue for human wellbeing.

These are (i) the items produced by economic units (i.e., SNA benefits), which are considered to measure GDP and (ii) the benefits which are not manufactured by the economic units and not traded in the market (e.g., clean air), which are non-SNA benefits.

With its own ocean resources India can consider royalty of resource use.

It should, however, be noted here that these non-SNA benefits can also be estimated separately to compute the adjusted net value added of a blue Economy. The following table highlights the relationship between the blue economy and ecosystem services. The blue economy is divided into functions and activities that contribute to SNA benefits and which are not. In this regard, we also like to mention that different international organizations recommend various ecosystem services to be included in the National IncomeAccounting framework.

The state of India owns ocean resources, and hence we may have to consider royalty of resource use as the shadow price and use the present value of that for valuation in some instances. Due to a lack of information, no specific study on Total Economic Valuation (TEV) of Ocean ecosystem services has been conducted. Studies on direct use values, indirect use values, option use-values, and non-use values are needed to minimize the information gap on ocean resources.

On this backdrop, we should identify the direct and indirect use values and non-use values that we are getting from the Ocean. Then to conserve the ecosystem services and policy development, estimation of economic values are essential. Hedonic and Travel Cost (TCM) can be used to estimate the economic values of some ecosystem services, which are non-marketable or whose market substitutes cannot be found. We may have to consider a stated preference approach like choice experiments, depending on the problem at hand.

*Only fisheries and aquaculture

^Only fisheries, aquaculture and marine tourism

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(Somnath Hazra is Consultant Climate Economist, IIED, London and attached with School of Oceanographic Studies, Jadavpur University, Kolkata India. Rabindra Nath Bhattacharya is faculty of the School of Oceanographic Studies, Jadavpur University, Kolkata India.)

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