Harnessing Benefits of the Blue Economy: Key Factors for IORA Countries

The Indian Ocean region is rich with diversified marine ecosystems, fisheries and aquaculture resources. It is also a source of renewable ocean energy, ports, shipping, manufacturing and other services and seabed exploration and minerals. The availability of such resources as well as other services in oceans has made ‘Blue Economy’ a much discussed, vital topic. While, the ocean resources are of innumerable use for the countries in the Indian Ocean Rim Association (IORA), these benefits are now under threat. The reasons for this include over-exploitation / extraction, limitations in technology transfers, violation of international maritime laws, lack of research and development and climate change.

 

A regional dialogue and collective action is vital to identify policy actions to ensure the sustainability of ocean resources and services in the IORA region. To be successful, it is essential that such a dialogue concentrates on the aspects of an accounting framework for the blue economy, fisheries and aquaculture, renewable ocean energy, ports, shipping, manufacturing and other sectors, including seabed explorations and minerals.

 

The blue economy in the IORA region lacks a comprehensive accounting framework. The countries in the region do not have a well-defined measure of the blue economy. Without a proper account of blue economy activities in national accounts, it is difficult to formulate and implement strategies in national development policies that focus on the “sustainable development of the blue economy”.

 

“There is substantial potential in renewable ocean energy, which is highly underutilized”

 

It is important to cover all sectors of the blue economy and activities and take an account in accordance with existing international macroeconomic statistical systems. This will help set operational targets for indicators and their systematic monitoring. The task is not simple as it appears to be, especially in view of the diversity of fish and plant species, conflicts over ownership in Exclusive Economic Zones and beyond, valuation of non-market blue resources, level of dependence of coastal communities, etc. The existing classifications do not provide a clear distinction between the ocean economy and the blue economy. As a result, activities recorded based on International Standards International Classifications (ISIC) for production would be misleading and grossly underestimate the potential of the blue economy in a country.

 

Sustainability of fisheries and aquaculture resources are in question. All IORA member countries are well-endowed with fisheries and aquatic plants, which could be harnessed for the growth of the blue economy.Besides wild catch, there has been phenomenal growth in fish farming worldwide.  Capture fisheries face the problem of overfishing and low fertility in most fishing areas of the world. Both raw and processed sectors in aquaculture would require greater application of modern technology. Fish prices and fish products are a contentious aspect of fisheries in the context of the blue economy. In the absence of a comparable global database on fish prices, it is hard to estimate the contribution of fisheries to the national output and the nature of pricing. Furthermore, there are issues of unsustainable fishing, mainly using illegal methods, which threatens the growing stock of fish and increases fishing efforts, resulting in the “tragedy of commons”.

 

“Blue economy may warrant a significant transformation of conventional fishing practices and regulations in IORA countries”

 

There is substantial potential in renewable ocean energy, which is highly underutilized. As the future demand for energy remains high among growing economies, focusing on alternative non-conventional renewable energy sources appears more feasible. Diverse marine based renewable ocean energy generated from wind, solar energy, wave, tidal cycles, salt concentration and thermal power, best suits the blue economy model as it emphasizes sustainability through renewability of energy sources. IORA countries have already taken measures to harness renewable energy resources to meet the region’s growing energy demand.

 

Ports and their related services are a valuable component of the sea-borne trade; however IORA region faces many limitations. Sea-borne trade provides a valuable opportunity for IORA region countries to maximize their returns through industries such as manufacturing but these opportunities are threatened. Ports should be treated as shared infrastructure, which would lower transaction costs and facilitate a smoother flow of goods in the region. However, necessary action should be taken to minimize environmental problems such as the management of waste water from ships. While regional cooperation can support activities of ship making and ship breaking, there are many environmental impacts that arise from such activities that need to be carefully mitigated.

 

Seabed of the IORA region is an unexplored area of metals and minerals. Exploration of metals and minerals on the seabed is viewed as an emerging sector of blue economy in the Indian Ocean region. Many believe that the current advancement in exploration technology for offshore and deep-sea minerals could soon make it a reality. Among the seabed resources, the most precious metals are comprised  of cobalt, nickel, manganese, iron, etc; copper, lead, zinc, gold, silver, titanium, thorium and other rare earth metals. In particular, the Central and South Western parts of the Indian Ocean are rich in copper, lead, zinc and other minerals.

 

In the blue economy paradigm, more attention should be given to harness the unexploited rich endowment of precious seabed resources. The experience on deep-sea mining and its economic viability is scant (or not available) so the IORA countries may have to undertake selective experimentations. At the same time, the environmental impact of such activities on the seabed is not clearly known. Since the technical know-how for deep-sea exploration is likely to be asymmetric across the Rim, this particular sector of the blue economy needs specific attention to avoid unintended consequences on sustainability and the ecological balance.

 

The Way Forward

 

Given the difficulty in tracing, there needs to be a suitable coding and tracking system for coastal and marine activities. The proposed accounting framework should be viewed from the perspective of its coverage, utility and transparency in objective identification of production, and trade and services in different segments of the blue economy. In addition to output, this framework should cover other important macroeconomic data such as value addition, employment, capital formation, foreign investment flows, etc.

 

Blue economy may warrant a significant transformation of conventional fishing practices and regulations in IORA countries. This may need changes in legal and institutional structures to ensure that blue economy goals are smoothly achieved. Data availability on fish prices and quantities will help determine and stabilize market prices, not just in the region, but also other parts of the world. In addition, a cross-country database on prices will be useful to determine fair and remunerative prices for fish products.

 

Since both raw and processed sectors in aquaculture requires greater application of modern technology, it is necessary to establish suitable mechanisms for technology transfer in fisheries among the countries. The countries should open up their fisheries sectors and institute necessary reforms that can unlock market opportunities in the region. In that light, the fishing nations in IORA should negotiate for higher access to each other’s markets and take measures aimed at developing region-wide standards for processing, certification, labelling and marketing of fish products within the region and the world.

 

Macroeconomic instruments such as Generation-based Incentives (GBI), tax holidays, and 100 per cent FDI are essential to promote renewable ocean energy generation. Countries such as Singapore already explore ways to generate renewable energy from ocean waves, and most such technologies are developed and patented by Indian researchers. As such, it is a matter of regional sharing of these necessary technologies and expertise that exist in the IORA region.

 

Instead of limiting to existing sea ports for trade purposes, it is also important that the region looks at establishing advanced high capacity ports. Sri Lanka has already built a seaport in the country’s southern region with a higher potential for trade facilitation. In addition, seabed exploration for minerals is a constrained activity for most of the developing nations in the region, and a majority of these resources are not yet properly mapped. Therefore, it is vital to conduct research to identify seabed minerals; and the involvement of the public sector is necessary for funds and technology transfer to execute exploration activities in the IORA region.