Ocean Economy vs. Blue Economy

What is the blue economy, and why I'm looking at the whole ocean

Definitions. 

They usually clarify and focus our understanding of a word or topic.  But when definitions get politicized they can also muddle the conversation. 

When I first started writing under the ESG banner, I often found myself struggling to define what ESG actually was and what fit that conversation.  

The shifting goalposts and inconsistent view points end up dominating the conversation.  Meanwhile, companies and innovators ignore the noise and just get on with the business of doing their changing-the-world thing. 

There are true structural issues with ESG, but ow that the term has become completely politicized, forget it.

The idea of working to understand the ocean economy can be the same way.

I came across this document the UN keeps on file on definitions of the term “blue economy.” You don’t often find one-pagers when it comes to UN docs, so I appreciated the fact that someone pulled this concise resource together.

+Blue Economy Definitions - UN

However, the fact that a little “quick guide” to various organization’s definition of what the blue economy entails is telling. I can envision bureaucrats at the UN reviewing this quick guide to get their terminology straight before heading into a meeting.

According to the UN reference:

According to the World Bank, the blue economy is the “sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem.” 

European Commission defines it as “All economic activities related to oceans, seas and coasts. It covers a wide range of interlinked established and emerging sectors.” 

The Commonwealth of Nations considers it “an emerging concept which encourages better stewardship of our ocean or ‘blue’ resources.” 

Conservation International adds that the “blue economy also includes economic benefits that may not be marketed, such as carbon storage, coastal protection, cultural values, and biodiversity.” 

The Center for the Blue Economy says, “It is now a widely used term around the world with three related but distinct meanings - the overall contribution of the oceans to economies, the need to address the environmental and ecological sustainability of the oceans, and the ocean economy as a growth opportunity for both developed and developing countries.” 

A United Nations representative recently defined the Blue Economy as an economy that “comprises a range of economic sectors and related policies that together determine whether the use of ocean resources is sustainable.”

Defining what is sustainable and what isn’t, what is green or blue, is often subject to interpretation. You can feel the political nature of the definitions above.  Meetings were had to work out the verbiage.

The Ocean Economy

Alternatively, the OECD defines the ocean economy as:

“the sum of the economic activities of ocean-based industries, together with the assets, goods and services provided by marine ecosystems.”

That’s better.

It’s a better definition because ‘ocean economy’ is easier to define.

When it comes to understanding the economy, as with anything, it doesn’t help to exclude certain realities just because you don’t like them - like the fact that offshore oil and gas production makes up the largest economic sector of the ocean economy.

This isn’t to say you have to invest in certain segments, or that work shouldn’t be done to minimize these destructive industries.  It’s just that they can’t be ignored. 

They are integrated into our global economic system and mitigating them requires understanding of their scope to begin with.

As economist Mohamed El-Erian states in his new book on central banks:

“Correct predictions about the future involve what is likely to happen rather than what should happen. The difference can be quite big…”

The goal here is to understand the future of our oceans by digesting the technologies, companies, policies, and geopolitics that will shape that future. 

This is where active investing versus passive investing or divesting can make a big difference.  You have to be at the table to have a say in the future.

A perfect example is the work of Engine No.1, the activist investor, to change the composition of Exxon’s board vs. how investor Jeffrey Hildebrand has made a fortune buying the dirtiest oil assets from companies pressured by ESG activists to divest them.  

+Engine No. 1 Transform 500 ETF - Emerging Oceans
+How a Houston oilman confounded climate activists and made billions - WSJ

Talk about unintended consequences.

The only way to understand the ocean’s future is to include activities of the entire ocean economy, not just those in an ill-defined and rapidly evolving subset labeled the blue economy (by some).

The Ocean Economy

So what is included in the ocean economy? 

Key Ocean Economy Sectors

The ocean economy entails the following five industrial sectors. The sixth is growing in importance as nations are increasingly in conflict over the first five:

• Seafood (both aquaculture and capture fisheries)

• Energy (offshore oil and gas production and offshore renewables)

• Ports

• Shipping

• Marine & Coastal Tourism

• Plus: Ocean Monitoring and Security

Other industries to watch include marine biotechnology and deep-sea mining.

Here are some quick statistics about the ocean economy:

• World ocean economy valued at about $1.5 trillion annually and could grow to $3 trillion by 2030 

• 80 percent of global trade carried by the sea

• 40 million jobs in 2030 tied to ocean economy

• by 2025, 34% of oil production could come from offshore fields

• Aquaculture is the fastest-growing segment of the global food supply chain

• Coastal tourism is between 50-80% of global tourism industry

A Sustainable Ocean Economy

While I believe it is essential to understand the ocean economy as a whole, that doesn’t mean that it isn’t critical to push all ocean industries toward a more sustainable future.  

Kites are being attached to cargo ships leading to over 90% emission reductions. The power of tides and currents is being harvested for electricity. Blockchain technologies are tracking everything from seagrass restoration to shrimp farming.

The sustainable ocean economy exists at an intersection of traditional, sometimes ancient industries and new technologies. The fun part is trying to figure out where it is all going.