A continent of oceans: Latin America’s Blue Economy

Latin America and the Caribbean is a region shaped by and very much of the ocean. All but two IDB member countries have important ocean coastlines, and 25% of the region’s population lives on the coast[1], with the number reaching nearly 100% in Caribbean island countries. But while rainforests, grasslands and rivers have so far stolen our attention, it’s time for our oceans to get their due.

In 2012, approximately 275 million people in the region worked on fishing or aquaculture, contributing around $15 billion to the region’s GDP[2]. Coastal tourism provided an additional $6 billion in the Caribbean alone, making a rough estimate of the ocean’s total contribution to regional GDP $21 billion-plus. Oceans also provide other important value, including coastal protection, biodiversity, and carbon sequestration.

But, increasingly, oceans are under heavy pressure. Unsustainable fishing, increased building, poor wastewater treatment, farmland runoff, and population growth threaten mangroves, whose deforestation rate is 3-5 times higher than that of terrestrial forests.   At the same time, 90% of fish stocks are either fully fished or overfished[3], even as global seafood demand is expected to rise by 50% by 2039. Having absorbed one half of CO2 emissions since the Industrial Revolution, the combination of these stresses and climate change may now compromise their carbon capture ability.

We are at a crossroads. We can continue to try to head off over-exploitation through an uncertain mix of public policies, subsidies, private investments, and small projects. Or, we can take bold actions, like the proposal of advocates to make 2/3 of the ocean a marine protected area, the deployment of disruptive technologies, and the transfer of the best lessons from the climate change and conservation arenas to support our oceans. This path requires investigation, exploration, and investment.

We need investigation in areas like enhancing drone capacity to lower aquaculture costs and surveil marine protected areas; finding successful behavioral “nudges” to change everything from consumer behavior around fresh vs frozen fish to fishermen’s observance of catch limits and fishery restoration, and we need to help coastal communities and governments improve waste management.

With 95% of the oceans unexplored, less than the surface of Mars, we need exploration. We map the sea floor, understand its biodiversity, and use robots and other technology to broader our understanding of this vast and unique ecosystem and what affects it.

And we need public and private investment to drive innovation and sustainable business models. Are grants the key to behavioral change in fishermen? Is that a better use of funds than energy subsidies? What will create private sector opportunities? How can we fund more marine protected areas?

By piloting models, testing innovations and disseminating knowledge, the IDB can connect explorers, investigators, investors, technology providers, and policymakers to seek answers to these questions and more.

One rich area for exploration and investigation is why models around sustainable fisheries are so much less developed than those in land based agriculture. Can we successfully adapt these tools? Can we equate land title models or securitization with fishing concessions or marine protected areas? How about creating trading values from catch limits, using new technologies to develop advanced fish counts to reduce uncertainty and create comfort for lenders and investors, and using technology to shorten value chains? Shellcatch, supported by the IDB, is doing just that by using technology to link fishermen with customers directly, increasing traceability, reducing the need to overfish, and increasing incomes by 50% while reducing cost to consumers by 30%.  We can also use financial tools – like a first-loss guarantee fund we are piloting in Honduras – Where local Banks are increasing the flow of working capital to fishermen who are members of cooperatives and agree to fish sustainably while restoring and preserving mangrove forests.

Rebuilding overfished stocks is essential – through a combination of addressing fishing on the high seas and local actions. Researchers such as Enric Sala are using new technologies to, for the first time, show that without subsidies and forced labor close to 50% of high seas fishing would be unprofitable.  Clearly, there are structural issues around enforcement and subsidies to be addressed.  While dealing with overfishing on the high seas is of utmost importance, countries in the LAC region do not appear among the top in lists of subsidies to high seas fishing, or registration of high-seas fishing vessels.  While the countries in the region may not be critical to tackling issues of high seas fishing, there is much they can do within their territorial waters to support healthy seas, biodiversity, and productive incomes.  These actions could increase global annual output by 16.5 million tons[4], benefiting food security, the environment, investors, and the small-scale fishermen that provide 38% of the world’s ocean catch. The cost to recover fisheries, globally, is $200 billion, whereas annual revenues from production could increase by $53 to $83 billion. It’s a good investment, but it won’t be easy. It requires coordination on policy, governance, community management, and behavioral change, as well as private investment.

There are successful examples in our region. In Baja California, Mexico, NOS, an NGO funded by philanthropy at the outset, supported a cooperative which fished for the acha clam. When the clam population declined, NOS used behavioral change models and other tools to persuade fishermen –  and importantly their wives – to stop fishing. During a seven-year recovery period, NOS employed fishermen in part-time restoration activities and developed other activities like tourism. Fishermen made less money but when the harvest resumed last year, they reestablished their income, selling $4.5M of acha. In two years, they will be self-sustaining and in 3 – 5 years the clam catch should support full employment.

We see four stages to successful, profitable, sustainable fishery restoration:

1. The right regulatory framework, such as Marine Protected Areas, catch limits, or the granting of concessions together with grants or public funding.
2. Restoration (2 – 7 years.) While fishermen focus on re-establishing the richness of their seascape, and buy in to the need to do so, economic support is needed to offset lost income.
3. Limited harvest/production (1 – 5 years) – As the seascape recovers, this is the time to perfect the business model, bring in new partners and open new, higher value markets.
4. Full Harvest. The seascape is vibrant and supports the fisher families fully and better than before. Governance and management are in place and investment to sustainably expand can be attracted.

All of this is possible and happening at the local level, in small areas today – in Mexico, the Philippines, Indonesia. To impact large numbers of fishing communities, however will require philanthropic funding combined with smart government policies and smarter government funding in the early stages. And it will take a commitment from impact investors in the middle years to support the development of sustainable business models and ready these models for fully commercial investment.

Combining actions on the high seas with a local focus on restoration and sustainability is key to restoring the health of our oceans.

 

[1] UNENVIRONMENT statistics, 2017.

[2] UNCTAD, 2014.

[3] FAO, 2016.

[4] “Rebuilding Global Fisheries” in Fish and Fisheries, 2013. Ye, Cochrane, Bianchi, Willmann, Majkowski, Tandstad, Carocci.