Following the UN Ocean Conference in Lisbon last week, Vala’s Investment Director Lian Michelson shares her thoughts on the Blue Economy, and the myriad ingenious ways the ocean supports life on Earth.
The ocean covers the majority of our planet’s surface, holding 97% of all water and 80% of all life forms. Arguably, it’s our greatest asset. We see the ocean’s value everywhere – in the food we eat, the holidays we take, the transportation of the goods we use, the air that we breathe, and the capture of carbon waste we create. The ocean is also central to the climate crisis – it absorbs one-third of the human population’s climate emissions.
But its true potential is far greater – for example, the ocean could provide six times more food than it does today, and two-thirds of the animal protein required to feed the global population by 2050 . The value of the ‘blue’ economy was estimated by the OECD to be US$1.5tn in 2010 and to grow to $3tn by 2030, with some ocean industries set to grow faster than the global economy. However, the ocean is heating faster than scientists had predicted, according to a 2019 study published in Science magazine – its value is tied to ecosystems in steep decline, ravaged by poor management, exploitation and pollution. Damage is already widespread, severe, and in some cases permanent. So protecting the ocean isn’t just a broad moral obligation – the ocean will play an increasingly important role in many important factors that influence our very existence, in some really fascinating ways.
Digital technologies hold great promise for ocean sustainability, however in many areas their uptake has been slow – that is, until now. There are strong signs that the page of digital innovation is set to accelerate in the ocean economy:
More than 3bn humans depend on marine sustenance for their livelihoods. However 90% of marine fish stocks are now exploited or depleted, and more than 50% of the world’s fisheries are collapsing. Ocean aquaculture fills this critical gap in supply and demand. It already provides the majority (52%) of the world’s fish for human consumption.
The High-level Panel for a Sustainable Ocean Economy projects the oceans have the potential to sustainably produce nearly 6 times more food, depending on investment and innovations in marine aquaculture, the reduction of fishmeal as an ingredient in animal feeds and the optimisation of wild fisheries. These strong trends translate into an enormous need for capital.
Marine habitats and wildlife are already suffering the consequences of rising sea temperatures, plastic pollution and acidification, as are the coastal communities that depend on them. 35% of the world’s mangroves, 60% of coral reefs, and 38% of sea forests have already been destroyed.
8m tons of plastic enters the ocean annually, and only 15% of the 400 million tons of plastic produced annually is recycled.
The ocean is one of the planet’s most abundant sources of renewable energy. Its power can be captured and transformed into clean energy – enough, potentially, to power the world twice over. Because this energy is carbon free and infinite, it’s a critical weapon in the fight against climate change and ocean acidification.
As we’ve seen, the Blue Economy is demonstrating massive steps forward in innovation, but it’s still arguably a comparative blind spot for both investment and philanthropy – of all the UN’s 17 Sustainable Development Goals, SDG 14 (Life Below Water) is the least-funded, while ocean philanthropy accounts for less than 1% of all charitable giving. Halting ocean ecosystem decline and unlocking its true economic, social and ecological value requires at least an estimated additional $150bn per year of dedicated funding.
Even at scale, philanthropic funding cannot provide the long-term solution; sustainable solutions require the development of thriving economic ecosystems capable of generating a consistent flow of value and capital – I’m really excited about the opportunities I’m seeing in the Blue Economy, and delighted to see that events such as the UN Ocean Conference are providing more of the momentum needed for this fascinating sector to realise its true potential.
If you found this blog interesting, you might want to check out some of the portfolio companies we work with in the Ocean space – whether that’s beneath the water, or on it: FlexSea, Honuworx, Arksen, RAD propulsion and Ring.
Lian Michelson, Investment Director.