World Ocean Weekly

A Blue Renaissance

The Value of Ecosystem Analysis in a post-Covid World

 

A contribution to the
Solutions Within Reach
In Pursuit of a Cure

Blog Series on
worldoceanforum.org
 

 

 

In April, Friends of Ocean Action, a coalition of committed and influential ocean activists, convened by the World Economic Forum and the World Resources Institute, published a most welcome report—The Ocean Finance Handbook—with the intent to provide a current overview of the investment landscape in the blue economy, by providing a common baseline of understanding of sustainable finance for all stakeholders. The Handbook aims "to serve as a reference for decision makers within governments, NGOs, the private sector, and ocean-based communities who want to understand where and how blue finance can be raised, how it can best be managed, and the types of activities that it can enable.”

The Introduction continues, “The Report will also seek to serve a similar purpose for financial professionals, offering insight into opportunities and considerations for sustainable investment in the ocean,” to include an overview of the current landscape of ocean finance, available financing options, investable opportunities, and case studies.

The Table of Contents represents an architecture of essential elements to include:

  • Capital types (Impact-only money, Public financing, Official development assistance, Philanthropic grants)
  • Opportunities in the sustainable blue economy (Debt, Loans, Bonds)
  • Capital sources (Government, Development Assistance agencies, Domestic government, Sovereign wealth funds, Philanthropy and non-governmental organizations, Foundations, NGOs, International financial institutions, Other multilateral agencies, Private finance, Equity investors, Impact investors, Venture capitalists, Commercial banks, Pension funds, Crowd funding)
  • Marine and coastal development (Nature-based infrastructure, Coastal and marine ecotourism, Maritime transportation, Ocean-based renewable energy, Offshore wind, Tidal and Wave energy, Floating solar, Waste management)
  • Debt models (Policy frameworks and planning, Political willingness, Monitoring and standards, Public incentives and disincentives, Microfinance loans, Revolving loan funds, Bank loans, Conservation Impact Bonds, Project bonds, Sovereign bonds)
  • Equity models (Impact investing, Seed financing, Crowd investment)
  • Additional Capital types (Private equity, Public equity, Equity investment)
  • Impact-only models (Corporate Social Responsibility investment)
  • Hybrid models (Conservation Trust Funds, Carbon credit schemes, Debt swaps)
  • Ecosystem services  (Carbon Sequestration, Natural Infrastructure)
  • Commodities (Wild-caught marine fisheries, Sustainable aquaculture, Marine bio-prospecting)

There is more. I include this list only to indicate the many possibilities and existing tools that are available and have been used successfully for some projects in some places by some investors with a willingness to explore new avenues for finance, new value propositions, and new calculations of return.
Download the complete report here.

But what is missing? I urge that we expand the notion of ecosystem service to include the active application of analysis, an idea sometimes mentioned in the international meeting hallways and policy web-posts, but which never seems to get traction beyond concept and a few disparate exceptional examples. The subject is included in the Report as a discussion of carbon sequestration and natural infrastructure, specifically mangrove restoration.

But as I understand it, ecosystem service analysis is a much more specific application of the value of Nature as researched, calculated, and entered into financial estimates and projections, as part of the accounting and planning for any transaction or endeavor from carbon offsets to species protection. It is a numerical tool, a measure of what Nature provides as an asset or as part of a system that produces a monetized return. The problem is that historically that value has been ignored, certainly not included in budgets and estimates of profit and loss prospectively or retrospectively. It is a value that lies at the core of exchange, financial and social, but it is never entered into the actuality of transaction.

This omission represents a substantial gap in what passes as comprehensive accounting posted to the balance sheet and cited by executives in management objectives and reports to shareholders and the investment community. To take an obvious example, the asset value of oil is typically calculated as a function of the cost of its discovery, research and development, extraction, distribution, and sale. If one accepts the idea that oil underground is the property of the citizens of the place where it is found, then its transferred value to an energy company is purely the expense of its production against its revenue stream. This is, of course, further complicated by incentives, subsidies, and grants to those companies, additional revenues if you will, that further skew the calculation and constitute an extraordinary transfer of wealth from public to private benefit. Further still, as the oil is a non-renewable resource, the value of its depletion as loss and the cost-benefit of alternative renewable energy technologies are also subverted or ignored. Further still, if there is an accident along the way, such as Deep-Water Horizon, with massive environmental and social damage, the financial consequence is off-set by insurance and costs born again by the tax-payer in the form of the fines to be written off, government bail-out to be sought, and a glib rationalization for any dip in the share price to be promoted the public relations department. It is, by intent, an incomplete presentation of the financial reality into which markets have invested for decades without question.       

Why? Primarily, in my view, because it undermines that balance sheet by introducing not only new financial value calculations, but also by upending a conventional practice that leaves out the deficit side of the consequences. We just don’t put any real value on Nature and natural services beyond commodity value for consumption. It is a false accounting. And until that changes, the old ways, however gussied up, will endure as normal. We don’t appropriately value original value; we don’t give full measure to what is gained/lost in production; we don’t include the depletion value, irreplaceable, when the original value is exhausted. And, finally, we don't calculate the profits of alternative utility in our measures of choice.

Why not? The two most obvious explanations relate to vested interest and fear of change. If the system has proven enormously profitable, it is assumed not to be broken and not in need of fixing. A new system is an unknown, one best left unexplored, or discussed but never implemented. Until now, when a pandemic event brings economic destruction to an interconnected global financial system.

I suggest that this tragic situation seek redress—a  courageous, opportunistic, transformational switch to alternative energy sources; to recovery through the implementation of new technologies; the reconstruction of infrastructure; to any and all other activities designed to mitigate the impacts of climate change and pandemics; and to the application and invention of what, how, and who we want to be on the other side of today.

The risk in doing nothing is astronomical—for the present, the near future, and for future generations. The risk in embracing such change is negligible, as we have all the tools required today if only we transform our pessimism into positive political will.

Ecosystems service analysis applied in the consideration of all this change would assure the additional proactive protection that such actions would contribute to a new paradigm of controlled growth based on principles of conservation, sustainability, and protection of natural resources as the essential foundation for a viable future. As the sea connects all things, from food to cultural traditions, the ocean will contribute its part. To fail in this endeavor is an act of self-destruction in the face of a blue renaissance to come.

 

- - -

 

Peter Neill's "Blue Renaissance" is a response in the Solutions Within Reach series, a new focus for the World Ocean Forum to engage with our network of thinkers, scientists, decision-makers, activists and global citizens to enable a conversation about new ideas to those that are proving ineffectual and unsustainable in the face of the Covid19 pandemic. If you have a contribution answering the question, "Who, what and how do we want to be on the other side of this crisis?" please contact us.

A Blue Renaissance

The Value of Ecosystem Analysis in a post-Covid World

 

A contribution to the
Solutions Within Reach
In Pursuit of a Cure

Blog Series on
worldoceanforum.org
 

 

 

In April, Friends of Ocean Action, a coalition of committed and influential ocean activists, convened by the World Economic Forum and the World Resources Institute, published a most welcome report—The Ocean Finance Handbook—with the intent to provide a current overview of the investment landscape in the blue economy, by providing a common baseline of understanding of sustainable finance for all stakeholders. The Handbook aims "to serve as a reference for decision makers within governments, NGOs, the private sector, and ocean-based communities who want to understand where and how blue finance can be raised, how it can best be managed, and the types of activities that it can enable.”

The Introduction continues, “The Report will also seek to serve a similar purpose for financial professionals, offering insight into opportunities and considerations for sustainable investment in the ocean,” to include an overview of the current landscape of ocean finance, available financing options, investable opportunities, and case studies.

The Table of Contents represents an architecture of essential elements to include:

  • Capital types (Impact-only money, Public financing, Official development assistance, Philanthropic grants)
  • Opportunities in the sustainable blue economy (Debt, Loans, Bonds)
  • Capital sources (Government, Development Assistance agencies, Domestic government, Sovereign wealth funds, Philanthropy and non-governmental organizations, Foundations, NGOs, International financial institutions, Other multilateral agencies, Private finance, Equity investors, Impact investors, Venture capitalists, Commercial banks, Pension funds, Crowd funding)
  • Marine and coastal development (Nature-based infrastructure, Coastal and marine ecotourism, Maritime transportation, Ocean-based renewable energy, Offshore wind, Tidal and Wave energy, Floating solar, Waste management)
  • Debt models (Policy frameworks and planning, Political willingness, Monitoring and standards, Public incentives and disincentives, Microfinance loans, Revolving loan funds, Bank loans, Conservation Impact Bonds, Project bonds, Sovereign bonds)
  • Equity models (Impact investing, Seed financing, Crowd investment)
  • Additional Capital types (Private equity, Public equity, Equity investment)
  • Impact-only models (Corporate Social Responsibility investment)
  • Hybrid models (Conservation Trust Funds, Carbon credit schemes, Debt swaps)
  • Ecosystem services  (Carbon Sequestration, Natural Infrastructure)
  • Commodities (Wild-caught marine fisheries, Sustainable aquaculture, Marine bio-prospecting)

There is more. I include this list only to indicate the many possibilities and existing tools that are available and have been used successfully for some projects in some places by some investors with a willingness to explore new avenues for finance, new value propositions, and new calculations of return.
Download the complete report here.

But what is missing? I urge that we expand the notion of ecosystem service to include the active application of analysis, an idea sometimes mentioned in the international meeting hallways and policy web-posts, but which never seems to get traction beyond concept and a few disparate exceptional examples. The subject is included in the Report as a discussion of carbon sequestration and natural infrastructure, specifically mangrove restoration.

But as I understand it, ecosystem service analysis is a much more specific application of the value of Nature as researched, calculated, and entered into financial estimates and projections, as part of the accounting and planning for any transaction or endeavor from carbon offsets to species protection. It is a numerical tool, a measure of what Nature provides as an asset or as part of a system that produces a monetized return. The problem is that historically that value has been ignored, certainly not included in budgets and estimates of profit and loss prospectively or retrospectively. It is a value that lies at the core of exchange, financial and social, but it is never entered into the actuality of transaction.

This omission represents a substantial gap in what passes as comprehensive accounting posted to the balance sheet and cited by executives in management objectives and reports to shareholders and the investment community. To take an obvious example, the asset value of oil is typically calculated as a function of the cost of its discovery, research and development, extraction, distribution, and sale. If one accepts the idea that oil underground is the property of the citizens of the place where it is found, then its transferred value to an energy company is purely the expense of its production against its revenue stream. This is, of course, further complicated by incentives, subsidies, and grants to those companies, additional revenues if you will, that further skew the calculation and constitute an extraordinary transfer of wealth from public to private benefit. Further still, as the oil is a non-renewable resource, the value of its depletion as loss and the cost-benefit of alternative renewable energy technologies are also subverted or ignored. Further still, if there is an accident along the way, such as Deep-Water Horizon, with massive environmental and social damage, the financial consequence is off-set by insurance and costs born again by the tax-payer in the form of the fines to be written off, government bail-out to be sought, and a glib rationalization for any dip in the share price to be promoted the public relations department. It is, by intent, an incomplete presentation of the financial reality into which markets have invested for decades without question.       

Why? Primarily, in my view, because it undermines that balance sheet by introducing not only new financial value calculations, but also by upending a conventional practice that leaves out the deficit side of the consequences. We just don’t put any real value on Nature and natural services beyond commodity value for consumption. It is a false accounting. And until that changes, the old ways, however gussied up, will endure as normal. We don’t appropriately value original value; we don’t give full measure to what is gained/lost in production; we don’t include the depletion value, irreplaceable, when the original value is exhausted. And, finally, we don't calculate the profits of alternative utility in our measures of choice.

Why not? The two most obvious explanations relate to vested interest and fear of change. If the system has proven enormously profitable, it is assumed not to be broken and not in need of fixing. A new system is an unknown, one best left unexplored, or discussed but never implemented. Until now, when a pandemic event brings economic destruction to an interconnected global financial system.

I suggest that this tragic situation seek redress—a  courageous, opportunistic, transformational switch to alternative energy sources; to recovery through the implementation of new technologies; the reconstruction of infrastructure; to any and all other activities designed to mitigate the impacts of climate change and pandemics; and to the application and invention of what, how, and who we want to be on the other side of today.

The risk in doing nothing is astronomical—for the present, the near future, and for future generations. The risk in embracing such change is negligible, as we have all the tools required today if only we transform our pessimism into positive political will.

Ecosystems service analysis applied in the consideration of all this change would assure the additional proactive protection that such actions would contribute to a new paradigm of controlled growth based on principles of conservation, sustainability, and protection of natural resources as the essential foundation for a viable future. As the sea connects all things, from food to cultural traditions, the ocean will contribute its part. To fail in this endeavor is an act of self-destruction in the face of a blue renaissance to come.

 

- - -

 

Peter Neill's "Blue Renaissance" is a response in the Solutions Within Reach series, a new focus for the World Ocean Forum to engage with our network of thinkers, scientists, decision-makers, activists and global citizens to enable a conversation about new ideas to those that are proving ineffectual and unsustainable in the face of the Covid19 pandemic. If you have a contribution answering the question, "Who, what and how do we want to be on the other side of this crisis?" please contact us.

It’s Time for Our Blue Energy Future

 

The fossil fuel era is over. It’s time to look toward ocean energy: wind, hydropower, salinity gradient power, and further inventive blue energy technologies newly and not yet discovered to get on toward our clean energy future.

 

Never have we needed more alternative energy than we do today. It has become finally clear that the harvest and burning of fossil fuels has cause massive damage to land, air, sea and global health and that continued reliance on the cause to meet the crisis of the effect is suicidal. The financial markets, major investors, some governments, some of the big energy companies, and even some of the producing nations almost totally reliant on oil revenues, have realized that the fossil fuel era, for all its positives, is now over, done, and we need get on to our future.

The ocean will play an enormous part. We know the value of offshore wind, and finally, despite opposition by industry and some environmentalists, wind energy will be a significant source for power. Scandinavian and other European countries are well advanced. In the United States, permit applications for offshore wind in the areas of five north Atlantic states: New York, Connecticut, Rhode Island, Massachusetts, and New Hampshire exceed in projected production volume the generation of more than 20 modern nuclear power plants. In Maine, the potential exceeds the total of those five states combined. After vested interest and political opposition, Maine’s new governor Janet Mills has raised offshore wind generation to a primary premise on which the state’s future is to be based.

There are also other technologies — hydropower is well established, various projects for wave energy, tidal, and current generation underway, and renewed interest in geothermal energy linked to coast-based desalination plants. We have discussed all these in numerous editions of our World Ocean Radio podcast, and finally it seems that what were outlier, even radical, suggestions over time, now approach conventional wisdom. All good.

But not yet good enough. We are going to need further invention, capital investment, and new application of energy technology to augment, even replace and render those methods described as interim. One such is based on salinity gradient power, the concept of energy generated by exchange of ions between freshwater and saltwater through membranes, with resultant heat or pressure build-up applied to drive turbines for electricity generation. In a recent article, Tim Smedley, a British journalist who writes most interestingly about climate issues and solutions, describes projects for this technology previously constructed in Sicily and Norway; both lapsed as difficult to scale and cost ineffective. But the Norwegian prototype has been revived, as a new pilot in Denmark, using much more efficient membranes, with an upscale potential of 1 Megawatt generation by 2022 — and a project similar to Sicily has opened in the Netherlands at the Afsluitdijk dam with freshwater on one side, saltwater on the other, now generating up to 50 kilowatts of power. Smedley also cites a study by Wageningen University in the Netherlands, identifying some 123 rivers worldwide that “have the technical potential for blue energy power generation exceeding 1 gigawatt to include the Zaire, Orinoco, Ganges, Niles, Mississippi, St. Lawrence, Parana, Zambezi, and Mekong rivers.”

The coast as a locus for innovation: the energy edge!

An article published by the Electrochemical Society also discusses the further potential of blue energy, what it calls osmotic power, a process that if harnessed, Dr. Andrew Herring of the Colorado School of Mines, a Society advisor, describes as “free energy.” As an example of such innovation, the Society also cites the work of Taek Dong Chung, a professor at the Korean National University in Seoul, who envisions the technology applied to salt-water powered computers, accelerated patch-based drug delivery, and water-splitting applications, the salt-water gradient powering semi-conductors to separate hydrogen and oxygen as a new source of energy transfer and delivery. The Society article concludes “Blue Energy is just the tip of the iceberg when it comes to the energy/water nexus. In other areas of the field, researchers are working on developing membranes for more efficient water treatment, creating electrochemical devices to recycle dangerous fertilizer run-off to prevent algae blooms, processing urine to produce clean water with hydrogen as a by-product, and much more.”

So there you have it, the ocean, from wind to waste, serving our future.

PETER NEILL is founder and director of the World Ocean Observatory and is author of The Once and Future Ocean: Notes Toward a New Hydraulic Society. He is also the host of World Ocean Radio upon which this blog is inspired.

People of the Water

Moken is a Thai word meaning sea people, people of water, sea nomads or sea gypsies. The Moken are a group of Austronesian people of an archipelago claimed by both Myanmar and Thailand. Their way of life is under pressure by assimilation, subversion, suppression, climate change, and corporate greed.
 

The Moken are a group of Austronesian people of the Mergui Archipelago, some 800 islands claimed by both Myanmar and Thailand, their population comprising two to three thousand people who live and make their living in and on the ocean, a way of life that seems totally primitive to our modern view, but that contains certain values and behaviors that might be exemplary for us all.

I am not going to propose here that we all return to what many would consider a backward, primitive life, deprived of all the modern comforts of life, the benefits of consumerism, the security of what we call civilization. But there is a movement among us for a much simpler life: some opting out of the consumer matrix, some defining comfort and safety in different value terms that are not just romantic or idealistic fantasy, but are rather another form of modern engagement with land and sea in the context of sustainability and community.

Where I live I am surrounded by young farmers and fishers engaged in organic agriculture or the harvest of marine species, gathering and hunting if you will, in a simpler world that is not primitive at all. The Moken have accumulated a vast knowledge of the sea, and while they harvest with spears and nets, dry and prepare products on the decks of their floating homes, bartering and selling at local markets, these habits are not so much removed from what occurs in my local farmers’ market of a Saturday throughout the year: farmed meats and dairy, fish and shellfish, winter vegetables, prepared foods, baked goods, sea salt distilled from out local waters, and other unique products for which I gladly exchange for value.

Of course the Moken are under extreme pressure from government policies of assimilation, language suppression, relocation, and subversion of cultural traditions. Why is it that governments fear the other? There are such consistent attempts to suppress freedom to live apart, with art and tradition that is nothing more dangerous than a continuity of personal expression and collective belief. We see it everywhere that minorities dwell, especially when these communities rise up to protect what is to them both worldly and sacred value. Look at religious conflict in Arabia, tribal conflict in Africa and China, racial and ethnic conflict in Europe and the United States: you’ll discover the same, underlying opposition to diversity and identity, be it by dictators, monolithic governments, corporate dominance, religious uniformity, and all the other structures that work — sometimes together — to oppress, suppress, even eradicate these last vestiges of cultures.

If we are paying attention, these cultures may provide us wisdom by which to transcend ourselves, our consumption, our need to reduce the world to one simplistic structure over which centralized authority presides.

If you look at the reasons for government attempts to relocate and domesticate the Moken, you need look only to offshore oil discoveries in the surrounding waters by Unocal, Petronas, and other international energy companies to understand the political pressure to relocate the Moken to the alien mainland, out of sight, out of mind, out of the way of the environmental impact of drilling and mining and all the other morally bankrupt financial enterprise of the past, proven so destructive on land and now to be so comparably destructive at sea. If the new definition of civilization is to repeat the corrosive and corrupting behaviors of the past, this small event in a place far away is but another example of that decline.

Various anthropologists and scientists have studied the Moken as some kind of vestigial leftover from the past. Interestingly, they discovered that Moken children have superior underwater vision to European children, an hypothesis theorized and confirmed by a comparative study of physiology and visual acuity by a Swedish scientist. The explanation posited was constriction of pupils and accommodation of visual focus to the specific conditions. Moken children see differently than we do, a behavior conditioned by the circumstances of survival — gathering mollusks, marine plants, and fish for protein. The European children were further debilitated by sustained temporary red eye that left them blind to the harvest.

Some look at the ocean and see oil and gas; these are the red-eyed ones. Others look at the ocean and see community and sustainability; these are the clear-eyed ones — sea people, shaped by the past, reacting to the present, and looking at what must soon come to be. We are among them; we are all Citizens of the Ocean; we are all people of the water.

PETER NEILL is founder and director of the World Ocean Observatory and is author of The Once and Future Ocean: Notes Toward a New Hydraulic Society. He is also the host of World Ocean Radio upon which this blog is inspired.

Adversity and the Ocean

Recently in San Francisco, I attended the exhibit “Soul of a Nation – Art in the Age of Black Power 1963 -1983” at the de Young Museum -- art made by black artists during two pivotal decades when issues of race and identity dominated and defined both public and private discourse in the United States. It was a heady time for politics, an explosion of black voices – Martin Luther King, Malcolm X, Eldridge Cleaver, and many more – and a comparable exposure of black artists whose visual language expressed the anger and protest against suppression, racism, and injustice. The exhibit was powerful and provocative, art beyond propaganda, palpable outrage and creative declaration that the adversity felt and lived within the black community could be endured no more.

Adversity. It’s an odd word: a shape shifter, ranging from hard luck to hard times, from a difficult set-back to a permanent, oppositional state of being. There were very few African or Asian visitors in the galleries. The audience was people like me who, in truth, have known very little adversity at all. Africans and Asians and Latinos continue to face the situation every day, still; they don’t need to come to an art museum to feel or understand.

The ocean is a scape for adversity.  W hen humans intrude, leave the certainty of the known, they step into a world that is contradictory, unpredictable, and unwelcoming to the intrusion of a small craft attempting to get from one place to another in such an adverse medium. The winds are adverse. The tides are adverse. The waves are adverse. In such a situation, survival demands order, cooperation, knowledge, experience, and the subversion of any fixed terrestrial ideas or social prejudices, any inhibition to getting from here to there. Ship’s crews were united in the face of adversity or they did not survive. Seamen came from all parts of the world, all races, and still do, and they are unified by proven means of discipline, harmony, cooperative work, and patterns of behavior that have proven to overcome adversity, even its most violent expression, without bias, without exclusion, without a necessary integration of strength, skill, determination, and respect for those alongside, aboard.

It would be silly to say that there was no racism at sea. But the accounts of accord, shared culture and traditions, and the certainty that no single force can better the collective force of many, no matter what their origin or color of their skin was an operative paradigm. But what has always struck me about sea experience, however limited mine might be, is that the ship is both reality and symbol for education: the captain teaches the mate, the mate teaches the crew, the crew teaches each other, in a continuous curriculum of experience inclusive of what we today call physics, biology, chemistry, engineering, history, politics, sociology, economics, psychology, literature, and art.   Thus, on a ship, as in successful society, opportunity, commitment, and work counter adversity, the entire crew working together toward successful passage through any challenge.

A ship where adversity reigns is a slave ship, an inequitable imposition of one system on another, an involuntary engagement, and a social tyranny with inevitable physical and spiritual distress and disruption. The cargo, being racially discriminated, is subject to the most adverse conditions, dehumanized, commodified, all the aspirations and values of civilization for them abandoned, and resultant, discriminatory cultural conditions established to be continued on shore, human beings relegated to exclusion by race and to a reality of social injustice. Who would not be angry and outraged and politically motivated to protest and bring such violence to an end?

The lessons of the ocean are not just a metaphor. They are real, and they are being lost as we continue to permit and condone racism on land, contemporary events that are a sad continuum with terrible consequence for civility and harmony today. We are building walls. We are separating by origin. We are excluding by race. These are terrestrial behaviors that must not endure. We cannot forget the wisdom of the ocean. We cannot segregate the crew. We must not give in to adversity.

PETER NEILL is founder and director of the W2O and is author of The Once and Future Ocean: Notes Toward a New Hydraulic Society. He is also the host of World Ocean Radio upon which this blog is inspired.