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What on Earth is the ‘blue economy’?

© Rodolphe Holler

Editor’s note: From “climate adaptation” to “ecosystem services,” environmental jargon is everywhere these days. Conservation International’s blog looks to make sense of it in an occasional explainer series we’re calling “What on Earth? On the first day of the Economist World Ocean Summit in Mexico, we break down the “blue economy,” a concept that has immense importance for the future of our ocean.

What is the “blue economy”?

At its simplest, “blue economy” refers to the range of economic uses of ocean and coastal resources — such as energy, shipping, fisheries, aquaculture, mining, and tourism. It also includes economic benefits that may not be marketed, such as carbon storage, coastal protection, cultural values and biodiversity.

Why are people talking about “blue economy”?

“When we say ‘blue economy,’ says Keith Lawrence, lead economist of Conservation International’s Center for Oceans, “we’re talking about managing the ocean in a way that it’s healthy and continues to benefit people. We used to think of the ocean as this expansive, unknowable, infinite resource that we could never fully exploit, and that we didn’t really need to manage because it’s so massive and it’s out there on its own.”

That’s not the case anymore, Lawrence says, citing industrialized fishing and climate change as just some of the causes.

“The ocean is one of the big economic frontiers right now. Almost all of global trade is moved by shipping. You’ve got offshore oil and gas, and deep-sea mining. As we innovate technologies, we are able to go to — and exploit — places that we weren’t able to go before. There’s enormous potential for the ocean to provide major solutions to help feed the planet and to provide clean energy and jobs.

“But if we do this thoughtlessly, we risk damaging the Earth’s largest life-support system – a system that provides for people, for animals, for ecosystems.”

So where do economics come into play?

Economics is about how we allocate our resources — including ocean resources — and how we make these choices, Lawrence says.

Understanding how people, companies and governments are making decisions about how they use the ocean is the first step toward sustainability. Is profit the biggest consideration? What about the cultural importance of a coral reef? Answering these questions helps define the value placed on the ocean and its resources.

How do you place value on ocean resources? How much, say, is a whale worth?

“Valuation” means economic value, which in this case can be broken down into “use values” and “non-use values,” Lawrence says. Use values are fairly straightforward: These are the traditional ways that markets value ocean resources. A whale was historically worth its blubber and meat; more recently they have generated higher (and far more sustainable and ethical) commercial values through whale-watching. Non-use values, however, are where things get more complicated. Lawrence explains: “Non-use value is the value that people place on something even if they don’t use it. So, even if you never see a humpback whale in the wild, you might think it’s important that the humpback whale exists. It means that you’re placing a value on that, and in fact there are tools to quantify that non-use value, and to incorporate it into decisions.”

This can be a controversial and thorny problem, particularly when you’re looking at quantifying spiritual and cultural values.

While some might be uncomfortable with the idea that everything has to be quantified and reduced to a number, the reality, Lawrence says, is that we are already making those trade-offs every day. “When we make a decision to allow deep-sea mining to happen in a place, and we make a decision somewhere else to protect a place, say for its beautiful coral reefs, we’re implicitly making those decisions that one thing is more valuable than the other. And economics gives you a way to quantify that and to make more informed and rational decisions.”

Mahbubul Alam, research economist for Conservation International agrees with Lawrence. “Nature’s services are valuable — whether we put a monetary value on them or not,” Alam said. “However, giving nature’s services a monetary value is a powerful way to communicate their functional worth, for example, the contribution of whale watching to a local economy. This is not to say that ‘$X’ is the value of the whale itself, but rather that whales contribute to the economy by ‘$X’ amount, thus providing an economic reason to conserve the whales.”

For its part, Conservation International is helping governments give fair attention to all of these types of values, Lawrence says, and advising the private sector on the values their businesses derive from nature, including oceans.

How can all these competing values and interests coexist without destroying the ocean?

The trick to finding balance between the needs of people and the health of the ocean, explains Lawrence, is to flip the way you think about managing it: “We talk about fisheries management a lot, but really, it’s management of fishers that we’re actually doing — we’re managing the people, not the resources. And that’s why it’s so critical to understand what people value the most, how they make decisions, and what incentives they respond to.”

Keith Lawrence is the lead economist at the Center for Oceans at Conservation International. Sophie Bertazzo is a senior editor at Conservation International.

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