The development of ocean accounts provides an unprecedented opportunity to showcase the value of the ocean and with it the prospect of long-term sustainability

WORLD OCEAN INITIATIVE

This Article first appeared in The Economist Group’s World Ocean Initiative (WOI) featuring  Glenn-Marie Lange, senior environmental economist at the World Bank, SEP 1ST 2020, https://www.woi.economist.com/the-wealth-of-oceans-new-research-highlights-importance-of-ocean-accounting/

 As the UN Decade of Ocean Science for Sustainable Development (2021-30) beckons, attention is rapidly turning to the value of the ocean economy. The latest “Blue Paper”, National Accounting for the Ocean and Ocean Economy, published by the High Level Panel for a Sustainable Ocean Economy, explores the underlying principles for ocean accounting.

Designed as an extension to existing national accounting systems and statistical standards, ocean accounts should also include sustainability indicators. Reliance upon GDP, based on “1930s technology” according to the report, is only useful up to a point. After all, the structure of economies around the world has changed immeasurably since the second world war.

 It’s all about wealth

Going “beyond GDP” is thus one of four key principles of accounting for a sustainable ocean economy. The principles outline approaches to adding ocean-related services and assets to national balance-sheets. With this in mind, the Blue Paper highlights three high-level indicators that must be considered when evaluating policies for the ocean economy: 1) ocean production, 2) changes in the value of ocean assets and 3) ocean income.

One of the lead authors, Ben Milligan from the University of New South Wales, explains the significance of the ocean balance-sheet as a key sustainability indicator: “The changes in an ocean balance-sheet bring together both produced (eg ports, ships) and non-produced assets (eg fish populations, coastal wetlands) into aggregate indicators. These capture the status of the environmental assets in the ocean that provide us with critical goods and services”.

There are significant potential benefits from this exercise from a statistical and policy-making perspective. It can enable governments to calculate the return on investment of fixing ocean governance (reforming fisheries or conducting marine spatial planning, for instance). In addition, the Blue Paper highlights the opportunity to “strengthen productivity, create jobs and reinforce food security and regional stability”. That is why, according to Eli Fenichel, another lead author of the Blue Paper who is the Knobloch Family Professor of Natural Resource Economics at Yale School of the Environment, “understanding the ocean is as much a social objective as it is an environmental objective—it is about the long run, it is about wealth and changes in wealth”.

However, before this can happen, Dr Milligan notes, a “structural change in policy around the ocean economy” will be required in order to focus upon “growing wealth, not just increasing growth”. 

Opportunities for action

Work is still very much in progress on this initiative to develop ocean accounts, which brings together countries with significant coastlines. Different countries are at different stages of development and implementation; in some, UN-backed pilot schemes are well under way. According to the Blue Paper there are 11 “opportunities for action”, including the use of interactive dashboards for ocean accounting by national statistical offices; greater collaboration between national accountants, economic analysts and marine scientists; and investment by governments worldwide in “data architecture”.

But there are practical challenges in realising these opportunities, starting with the need to agree on an accounting framework. “How do you measure the ocean, what are the spatial units, what is the short-list of ecosystem types and classifications, and what are the important indicators of [ocean health]?” asks Glenn-Marie Lange, senior environmental economist at the World Bank.

Nevertheless, there are grounds for optimism, as Dr Lange explains. “We are in a good spot—people have focused on the ocean in a way that they haven’t before.” Dr Milligan concurs: “Better accounting is highlighting some historic choices between different development pathways for the ocean”.

Demonstrating the use case

Raising awareness of ocean accounting will be critical. For a start, international instruments for sustainable development, such as the UN’s Convention on Biological Diversity, will play a key role in moving forward, as will the UN’s System of Environment Economic Accounting. But of equal importance will be the voice of world leaders. After all, they require ocean accounts to make better-informed decisions about long-term sustainability goals.

“The biggest problem we face,” says Professor Fenichel, is that “our world leaders, the people who are setting the conversation, continue to ask about GDP—it is a myopia.” Policymakers “have to deal with hard trade-offs,” he acknowledges, “but it seems to me that they do not know to ask for and look at the balance sheet, which is also a problem.” . Encouraging heads of government to ask the “right questions” will most likely start at the grassroots level, as countries and NGOs share best practice and knowledge in areas like data collection and capacity-building for ocean accounting.

The way forward

“The effectiveness of decision-making about the ocean economy could be dramatically increased,” according to Dr Milligan, “by asking three key questions for every decision made about the ocean: how a decision benefits growth, how it benefits different groups of people in a country, and how it changes environmental assets as measured on a national balance sheet”.

Even though the present climate is hardly ideal, the Covid-19 crisis may present new opportunities to build the policy use-case for ocean accounts by focusing attention on immediate priorities. Apart from an agreed methodology for ocean accounts and a wealth of country-level experience to share based on active implementation, Dr Lange explains, “In five years from now, we would have also learned from this terrible disaster about what are our priorities and how to prioritise data collection”. Overall, the outlook can be considered bright.