Toward a Blue Economy: A Promise for Sustainable Growth in the Caribbean Standard Disclaimer: This volume is a product of the staff of the International Bank for Reconstruction and Development/the World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Copyright Statement: The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/ The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978-750-8400, fax 978- 750-4470, http://www.copyright.com/. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522- 2422, e-mail pubrights@worldbank.org. Suggested Citation: Patil, P.G., Virdin, J., Diez, S.M., Roberts, J., Singh, A. (2016). Toward A Blue Economy: A Promise for Sustainable Growth in the Caribbean; An Overview. The World Bank, Washington D.C. Artist Statement We refer to Mother Earth as our blue planet. Have you ever The many images inside the globe suggest how full our wondered why? We grow up looking at maps, and our oceans are. Our global ocean is full of life—coral reefs, eyes fix on the familiar, six continents full of countries with whales and sea turtles that drive tourism; and fish of all people, mountains, forests, and rivers. When we spin our shapes and sizes that feed billions. Yet, as we know, the desktop globes fast, however, a transformation takes ocean—and its underlying value—is under threat from place and the world spins blue! climate change and other human-induced threats. Our world is indeed a blue planet with over 70 percent of The colors associated with each of the seventeen United its surface covered by oceans and seas, our global ocean. Nations Sustainable Development Goals, including the Much of it is unknown and unexplored, a new frontier for one for oceans, SDG14, surround our ocean-centered discovery. Yet many things take place on and within the globe. Our global ocean will likely be vital in their ocean space, ranging from commerce and trade to fishing achievement. and leisure. Through the magnifying glass we invite you to take a Our cover art depicts our planet from the perspective of closer look at our global ocean and in particular at the our major oceans, viewing our world bottom up and Caribbean Sea and its transformation toward a blue centering on the Southern Ocean surrounding Antarctica. economy. What emerges is the shape of the world from our ocean- centered view, which shows just how much blue covers Earth. Cover Credit: Helena Eitel, Pawan Patil, and Ocean Art Hub (www.oceanarthub.org) REPORT NO: AUS16344 SEPTEMBER 2016 Toward a Blue Economy: A Promise for Sustainable Growth in the Caribbean Pawan G. Patil John Virdin Sylvia Michele Diez Julian Roberts Asha Singh A CO L L A B O R AT I V E PA R T N E R SH I P Organisation of Eastern Caribbean States Acronyms and abbreviations CCI  Caribbean Challenge Initiative CLME  Caribbean Large Marine Ecosystem CMSP  Coastal and Marine Spatial Planning CRFM  Caribbean Regional Fisheries Mechanism CRIFF  Caribbean Catastrophic Risk Insurance Facility DOWA  Deep Ocean Water Applications ECROP  Eastern Caribbean Regional Oceans Policy and Action Plan EEZ  Exclusive Economic Zone EIA  U.S. Energy Information Administration FOSP  Future Ocean Spatial Planning GDP  Gross Domestic Product GEF  Global Environment Facility GNI  Gross National Income IEA  International Energy Agency ICT  Information and Communication Technology IUU  Illegal, Unregulated and Unreported MPA  Marine Protected Area MSP  Marine Spatial Planning NPV  Net Present Value OECD  Organization for Economic Co-operation and Development OECS  Organization of Eastern Caribbean States SDG  Sustainable Development Goal SIDS  Small Island Developing States TEU  Twenty Foot Equivalent Units UN  United Nations UNDP  United Nations Development Programme UNEP  United Nations Environment Programme UNFCCC  UN Framework Convention on Climate Change UWI  University of the West Indies WATO  We are the Oceans WTTC  World Travel and Tourism Council TOWARD A BLUE ECONOMY: A PROMISE FOR 4 SUSTAINABLE GROWTH IN THE CARIBBEAN Glossary of terms OCEAN ECONOMY The economic activities that take place in the ocean, receive outputs from the a. Ocean Service ocean, and provide inputs to the ocean (Park and Kildow 2014) b. Economic a. Economic activity of the ocean economy that provides benefit to people Sector/ Industry b. Specific area or group of companies in the ocean economy The total available biophysical stock of natural resources in the ocean, for OCEAN’S NATURAL example, fish stocks, minerals and energy resources, mangrove forests, and so CAPITAL ASSETS on (Narloch, Kozluk, and Lloyd 2016) a. Living Resources a. Renewable stocks of natural resources that are harvested for use, such as b. Nonliving fisheries Resources b. Nonrenewable stocks of natural resources harvested for use, such as c. Ecosystems minerals from the seabed and Ecosystem c. The interaction between the living and nonliving environment as a func- Processes tioning unit (for example, coral reef ecosystems, mangrove ecosystems, and others) (MEA 2005) OCEAN POLICIES The policies that affect the health and wealth of the ocean A sustainable ocean economy, where economic activity is in balance with the long-term capacity of ocean ecosystems to support this activity and remain BLUE ECONOMY resilient and healthy (Economist Intelligence Unit 2015). This report illustrates a. Blue Economy how the Caribbean basin can grow its “ocean economy” into a more sustain- Framework able “blue economy.” b. Blue Economy a. blue economy conceptual framework Indicators b. indicators of ocean sustainability are described in the report, and can be c. Blue Growth used to measure blue growth. c. Blue growth is the means by which an unsustainable ocean economy can transition towards a more balanced and sustainable one An operational policy agenda to foster economic growth and development BLUE ECONOMY in ocean spaces, while ensuring that the ocean’s natural assets continue to POLICY FRAMEWORK provide the resources and environmental services on which human well-being a. Coastal and relies (OECD 2011) Marine Spatial a. A public process of analyzing and allocating ocean uses over space and Planning time to achieve economic, ecological, and social objectives (Ehler and Douvere 2007) 5 Table of contents Acronyms and abbreviations 4 Glossary of terms 5 Foreword 10 Acknowledgments 12 Overview 13 Executive summary 14 CHAPTER 1. THE GROWING OCEAN ECONOMY 18 1.1 The Global Ocean Economy 19 1.2 The Ocean Economy of the Caribbean 25 CHAPTER 2. THE OCEAN’S DECLINING NATURAL CAPITAL 32 2.1 Overview of the Status of the Global Ocean’s Natural Capital 33 2.2 Overview of the Status of the Natural Capital Assets of the Caribbean Sea 35 CHAPTER 3. ALIGNING THE TWO TRENDS - THE POTENTIAL FOR A BLUE ECONOMY IN THE CARIBBEAN SEA 40 3.1 Two trends 41 3.2 The Concept of a ‘Blue Economy’ 42 3.3 A Blue Economy Conceptual Framework 44 3.4 A Caribbean Blue Economy: Aligning Economic Growth and Ocean Health 49 3.5 Case Study: Grenada: Translating Aspiration to Action in Its Transition to a Blue Economy 53 CHAPTER 4. PATHWAY AND APPROACH FOR THE TRANSITION TO A CARIBBEAN BLUE ECONOMY 60 TOWARD A BLUE ECONOMY: A PROMISE FOR 6 SUSTAINABLE GROWTH IN THE CARIBBEAN Annex 1. Summary of OECD Projections for Growth in the Ocean Economy 69 Annex 2. Detailed Description of Proposed Ocean Principles 70 Annex 3. Contribution of the Blue Economy to Selected SDGs and Some of Their Targets 72 Annex 4. Grenada’s Blue Growth Coastal Master Plan 75 Reference List 86 Boxes Box 2.1. Sustainable Development Goal 14 Summary: 34 Box 3.1. Definition of the Concept of the Blue Economy 43 Box 3.2. Position Paper on the Blue Economy for the 2014 SIDS Summit 47 Box 3.3. Tourism and the Ocean Ecosystems 50 Box 3.4. Blue Growth Sector: Marine Renewable Energy 51 Box 3.5. Transforming Governance in Oceans - The OECS Experience 52 Box 4.1. Ocean Principles for Investment in a Caribbean Blue Economy 62 Box 4.2. Proposed Approach to Begin the Transition toward a Caribbean Blue Economy 67 Box A4.1. Three Stages of Development of Phase 1 Planning Process 76 Figures Figure 1.1. The Ocean Economy 22 Figure 1.2. The Portion of the Ocean Economy Measured by Markets 23 Figure 1.3. Ocean Area under Jurisdiction of Low and Lower – Middle-Income Countries (in red) 24 Figure 1.4. The Caribbean Sea 25 Figure 1.5. The (Measurable) Ocean Economy of the Caribbean in 2012 is Dominated by Shipping, Tourism, and Oil and Gas Industries 29 Figure 2.1. Growth in the World Bank’s Portfolio of Investments in the Ocean 34 Figure 2.2. Stock Status of Commercially Exploited Fish Stocks in the Caribbean Sea 35 Figure 2.3. Distribution of Fishing Effort in the Wider Caribbean 36 7 Figure 2.4. Mapping Ocean Wealth Calculations of Caribbean Mangrove Coverage 37 Figure 2.5. Mapping Ocean Wealth Example of Coastal Protection Benefits of Coral Reefs in Jamaica 37 Figure 2.6. Annual Catch (Caribbean Sea) 38 Figure 2.7. Fishing Effort (Caribbean Sea) 38 Figure 3.1. Two Parallel Trends in the Global Ocean 41 Figure 3.2. Global Fisheries: Decoupling growth in economic activity and overexploitation 41 Figure 3.3. Decoupling Economic Growth and Degradation of the Caribbean Sea 42 Figure 3.4. Blue Economy Concept 43 Figure 3.5. A Blue Economy Framework 45 Figure 3.6. Proposed Blue Economy Policy Framework for Aligning Ocean Health and Economic Growth 46 Figure 3.7. Example of the Blue Economy Conceptual Framework: Tourism, Waste Disposal, and Ecosystems 50 Figure 3.8. Eastern Caribbean Regional Ocean Policy 52 Figure 3.9. Map of Grenada 53 Figure 3.10. Growing Tourism Sector 54 Figure 3.11. Grenada Exclusive Economic Zone 55 Figure 3.12. Grenada Underwater Sculpture Park 56 Figure 3.13. Tourism in Grenada 57 Figure 4.1. Potential Policy Framework for a Caribbean Blue Economy 62 Figure 4.2. Summary of Potential Policy Framework for a Caribbean Blue Economy 66 Figure A4.1. Stakeholder Meetings 76 Figure A4.2. Blue Growth Designated Areas 77 Figure A4.3. Potential Projects Within Each Sector 77 Figure A4.4. Marine Tourism 78 Figure A4.5. Blue Growth Economic Opportunties 78 Figure A4.6. Blue Growth Centers of Excellence 79 Figure A4.7. Blue Growth Incentive Zones 80 Figure A4.8. Blue Growth Strategic Projects. 81 Figure A4.9. Blue Growth vision for St. George’s Harbor 81 Figure A4.10. Blue Growth Vision and Architectural Character 82 Figure A4.11. Blue Growth Vision and Architectural Character 82 Figure A4.12. Blue Growth Vision and World Trade Center 83 Figure A4.13. Strategic Projects 83 Tables Table 1.1. The Ocean Economy: Component Parts and Future Trends 20 Table 1.2. Estimates/Citations of the Contribution of the Global Ocean Economy 23 Table 1.3. The Ocean Economy of the Caribbean in 2012: A Snapshot 26 Table 1.4. The Ocean Economy of the Caribbean: Future Trends 30 Table 2.1. Country and/or Island Territory level Estimates of Plastic Marine Debris: 2010 and 2025 39 Table A1.1. OECD Projections of Changes in the Ocean Economy to 2030 under Business as Usual Scenario 69 TOWARD A BLUE ECONOMY: A PROMISE FOR 8 SUSTAINABLE GROWTH IN THE CARIBBEAN Foreword S nce Rio+20 the blue economy has gained momentum across the globe, and the Caribbean region i seems poised to embark on a pathway toward sustainable blue growth. More and more coastal and island nations are looking at the ocean as the next frontier for economic development. By harness- ing the marine and coastal resources, Caribbean countries could not only boost growth, but also tackle some of the key challenges faced by these economies, including high unemployment, low growth, food security, poverty, and resilience to climate change.  ith the region’s growing population, demand for seafood and therefore aquaculture production will in- W crease, shipping traffic and tourism will continue to grow, and new ocean industries will emerge. At the same time, the ecological processes of the sea are changing significantly due to human activities—overfishing, poorly planned coastal development, land-based sources of pollution (plastic entering the sea and untreated effluent), etc. The two overarching trends in the Caribbean Sea, growing ocean economy and declining ocean health, led ministers to inquire about the blue economy concept at last year’s G20 Development Committee dialogue with Caribbean finance ministers and central bank governors. n response, Toward a Blue Economy: A Promise for Sustainable Growth in the Caribbean will serve as a guide to I help Caribbean policymakers plan a successful transition to a blue economy and to socially equitable ‘blue growth.’ This report attempts to quantify the current value of the ocean economy in the region and to sum- marize projections about where we may find new pockets of sustainable growth. It defines the blue economy concepts and possible policy responses that might better align economic growth and environmental health in the Caribbean. At a global level, the transition to a blue economy will significantly contribute to achieving Sustainable Development Goal (SDG) 14 for the ocean and to realizing goals such as poverty reduction, food security, energy security, and climate change mitigation, among others.  he World Bank is supporting this important agenda for the Caribbean. We hope that this report will help T policymakers identify smart approaches to harnessing the ocean and all its natural assets. It can enable the sustainable use of ocean resources for the well-being of Caribbean countries and serve as a model to other regions pursuing the same efforts. Sophie Sirtaine  World Bank Country Director for the Caribbean TOWARD A BLUE ECONOMY: A PROMISE FOR 10 SUSTAINABLE GROWTH IN THE CARIBBEAN T  e world counts 54 ocean-facing coastal and island nations with lower and lower-middle income h levels. For these countries, the ocean represents a significant jurisdictional area and a source of opportunity for future growth. Yet that potential is both under threat, and underutilized.  he impacts of overfishing, coastal development, pollution and climate change are being felt by T coastal communities around the world. The oceans will soon contain a ton of plastic for every four tons of finfish. At the same time, countries are looking to the ocean as a new frontier for food security, poverty reduction, and economic growth. We have a double imperative: to restore ocean health, and adopt innovative, sustainable and inclusive policies for blue growth.  hat dual goal is captured in Sustainable Development Goal 14 on ocean conservation and sustainable use, T which guides our efforts at the World Bank. We see restoring the health of marine and coastal economies as a priority to bolster people’s ability to earn a living, feed their families, protect themselves from extreme weather, and thrive. We provide data and analysis to inform investment in the blue economy, including in the sustainable fisheries, aquaculture, and nature-based tourism sectors. We work with public agencies and fisher cooperatives to design and implement good policies. And we support stronger governance regimes, with a particular emphasis on protecting the rights of small-scale fishers and their supply chains.  he ocean economy is projected to grow rapidly as the global population reaches 9.6 billion, which it is pre- T dicted to do by mid-century, as countries increasingly draw on the sea for food, energy, medicines and other products and services. Unless things change, they will also increasingly use it as the ultimate end-point for waste materials. Putting the ocean economy on a more sustainable footing is particularly vital in Caribbean countries and territories, where people’s culture, livelihoods and very lives are defined by the ocean.  oward a Blue Economy: A Promise for Sustainable Growth in the Caribbean proposes a framework to better un- T derstand the magnitude of benefits derived from the Caribbean Sea and discusses policy options to move the region toward a blue economy. By assessing the ocean space’s vast economic potential, this report is a call to better manage the marine and coastal assets on which so many people and economies depend.  he World Bank can help the Caribbean and other regions to unlock ocean wealth in a way that sustainably T contributes to growth and returns long-term benefits to communities and countries. Moving toward a blue economy is a promise for inclusive and sustainable growth for our clients across the Caribbean, and beyond. Julia Bucknall  cting Senior Director, A Environment and Natural Resources Global Practice 11 Acknowledgments T  is report, Toward a Blue Economy: A Promise for Sustainable Growth in the Caribbean was prepared h by a multi-institutional team led by Pawan G. Patil, Senior Economist at the World Bank Group in collaboration with John Virdin, Director of Ocean Policy at Duke University’s Nicholas Institute for Environmental Policy Solutions; Julian Roberts, Advisor on Ocean Governance at Commonwealth Secretariat; Asha Singh, Head of Ocean Governance at Organization of Eastern Caribbean States (OECS) during the preparation of this report and Sylvia Michele Diez, Environmental Specialist, Latin America & Caribbean Region at the World Bank.  he team is grateful to the participants of the G20 Working Group on the Caribbean Blue Economy who were T consulted during the preparation of the report. The team also acknowledges the vision of Ambassador Dr. Angus Friday and the contributions of Ray Moldenhauer, Director of RM Strategies, who organized meetings and brainstorming sessions with the Government of Grenada on visioning their Blue Economy. We also thank participants of Grenada’s Blue Week, whom provided valuable feedback. The report benefited from the re- search assistance from Tibor Vegh and contributions of Sunzhe Cao, Geoffrey Cooper, Julia Lewis and Prof. Jay Golden at the Duke Center for Sustainability and Commerce, as well as Daniel Dunn and Jesse Cleary, all from Duke University Nicholas School of the Environment; Robert Brumbaugh, Mark Spalding, Zach Ferdana from The Nature Conservancy; and to Peter Kristensen, Lead Environmental Specialist, Africa Region, World Bank and Emilia Battaglini, Lead Environmental Specialist, Europe and Central Asia Region, World Bank who served as peer reviewers. The team appreciated valuable insights, inputs, and/or support from Carter Bran- don, Alessandro Legrottaglie, Sabine Hader, Francisco Galrao Carneiro, Cecile Thioro Niang, Kseniya Lvovsky, Raha Shahidsaless, Christelle Chapoy, Flore de Préneuf, Nagaraja Rao Harshadeep, Keiko Ashida, Juliana Isaza, and Helena Eitel, our Dickey Center Summer intern from Dartmouth College, among others who are also acknowledged with thanks.  he work was carried out with the multi-institutional support of Sophie Sirtaine, Country Director for the T Caribbean Region, Paula Caballero and Julia Bucknall, former and Acting Senior Director of the Environment and Natural Resources Global Practice, respectively and Raul Alfaro-Pelico, Practice Manager, Environment and Natural Resources Global Practice, all of The World Bank; Tim Profeta, Director of the Nicholas Institute for Environmental Policy Solutions at Duke University; Dr. Didacus Jules, Director General, Organization of Eastern Caribbean State; and Deodat Maharaj, Deputy Secretary General, Commonwealth Secretariat.  e would like to especially thank Jorge Familiar Calderon, World Bank Vice President, Latin America and Ca- W ribbean Region for launching the full report at the 2016 Annual Meeting during a flagship Seminar specifically designed to share the report's findings with delegations seeking to understand what the blue economy is and why it matters.  he report was formally edited by John Virdin, Duke University and Pawan G. Patil, World Bank. Any errors in T the report, factual or otherwise are the sole responsibility of the core multi-institutional team members and editors. TOWARD A BLUE ECONOMY: A PROMISE FOR 12 SUSTAINABLE GROWTH IN THE CARIBBEAN Overview O ur global ocean covers more than seventy-two percent of the earth’s surface and is respon- sible for providing food, jobs, and recreation for a large portion of the world’s population; it has become a significant driver of global GDP.1 Our oceans drive economic activity, responsible for eighty percent of global trade and thirty-two percent of hydrocarbons extracted for energy needs. Oceans provide for both domestic and international tourism for almost 200 countries and overseas territories. The contribution of the ocean economy to global value added has recently been estimated conservatively in the order of US$1.5 trillion annually, or roughly 3 percent of global value added.2 As more and more countries look to this economic frontier and source of industrialization and growth, the ecosystems upon which many ocean economic activities depend are changing at an unprecedented rate, and not necessarily for the better. While our ocean is responsible for generating the oxygen we need for every second breath we take and can sequester up to five times more carbon than tropical forests, this important function is under threat due to climate change and other human-initiated factors. Maintaining and restoring the integrity of these ecosystems (i.e. ‘ocean health’) are now synonymous with growing ocean wealth. Sustainable development of ocean spaces for a nation’s economic advancement and growth is the cornerstone to deriving benefit from its blue economy. The 2012 Rio+20 conference first raised the notion of a “blue economy” and the need to stimulate “blue growth,” particularly for island nations and developing countries with significant coastlines and maritime areas. The idea progressed further at the 2014 SIDS conference. Just as the green economy and green growth was once on the frontier of development planning and investment, its maritime-based equivalent has cap- tured the imagination of policymakers, the United Nations, OECD, Commonwealth Secretariat, development finance organizations (such as the World Bank), and NGOs alike. How to stimulate economic growth in ocean areas may be understood to many, but it is not clear what a sustainable ocean economy or blue economy should look like, and under what policies, conditions, and pathway is it most likely to develop. Sustainably developing ocean spaces for economic growth while maintaining (or even improving) ocean health could define a new era of economic opportunity for ocean-facing countries. With each promise of ocean-based economic reward, however, comes a real risk to future generations. According to OECD (2016), many ocean-based industries have the potential to outperform the growth of the global economy as a whole, thereby boosting employment. The same report projects that over the next fifteen years through 2030, the ocean economy could more than double its economic contribution to GDP equivalent. The question remains, at what cost, and to whom? Notably, what role will the tens of millions of small-scale fishers throughout the developing world play in this economy? The oceans are in trouble due to a range of man-made factors including overfishing, pollution, and climate-change induced ocean acidification, among other factors; yet their potential for economic ad- vancement is significant—notably for coastal and island developing countries and particularly across the Caribbean. In June 2015, the G7 Science Academies issued a statement of scientific consensus, informing the world that human activities are provoking change in the oceans’ ecosystems with significant impact on soci- eties and well-being. This change will undoubtedly have a direct impact on the current and future economic growth of ocean-facing countries and small island developing states around the world. Better understanding of ocean ecosystems, natural marine assets, ecological processes, and economic activity will help to assess a nation’s ocean wealth and define a pathway to support the growth of a country’s blue economy. 1 According to the World Bank, more than 350 million jobs are directly linked to marine resources such as fisheries, with ninety percent of those jobs coming from the developing world. 2 OECD (2016); The Ocean Economy in 2030. OECD, Paris. 13 Executive summary T his report attempts to demystify and define for Caribbean policymakers the blue economy, a new concept in discussion within development circles that has emerged as a new par- adigm for the sustainable development of our oceans and seas (Sustainable Development Goal 14) and particularly for the economic growth of ocean-facing countries, including Small Island Developing States (SIDS). This report focuses on a better understanding of the challenges and opportunities for a blue economy in countries that share the Caribbean Sea, in response to a series of questions first raised by finance ministers and central bank governors during the inaugural Caribbean Region Dialogue with the G20 Development Working Group in April 2015. The Di- alogue was convened (a) to develop a blue economy across the Caribbean and (b) to mobilize resources in support. Some basic questions were raised during the dialogue, such as What is the blue economy and why is it important for the Caribbean? and left largely unanswered. This report aims to provide the answers, to guide Caribbean policymakers toward the transition to a blue economy and socially equitable ‘blue growth.’ The hypothesis of this report is that the Caribbean Sea’s ecosystems and natural resources form a unique asset for the region’s countries and territories, and that understanding and measuring the economic activi- ty tied to this asset, and dependent upon it, is essential for sustainably growing these economies (blue growth). Better understanding of this new frontier will contribute to more informed decision-making about existing ocean assets and, as a result, greater economic resilience for the region. More importantly, this natural resource, if well managed, has the potential to make a much greater contribution to poverty reduction and shared prosperity for the region’s growing population of 40 million, increasing their resilience to climate change as well. Countries across the eastern Caribbean in particular have been affected by a series of adverse events, including the erosion of trade preferences, the decline in official foreign assistance, turbulence in the business cycles of countries with high tourism revenues and foreign direct investments, and recurrent natural disasters.3 With clarity on how to derive growth from their blue economies, these countries also have an opportunity to build resilience to exogenous shocks. The report also serves as an important first step to reorient the conven- tional wisdom (that largely focuses on costs and benefits of protecting our ocean) to the true potential of the ocean as an economic space and engine for growth, while developing associated policies to better manage their sustainable use. This approach will help ensure that the basic needs of people are met without further adverse effects on the health of the Caribbe- an Sea. Essentially, this report speaks to the contribution of ocean ecosystem services to sustainable and resilient development outcomes. It promotes the blue economy as a new frontier for sustainable and shared economic growth and development derived from well-managed ocean assets. The geographic scope of analysis for this report is the ocean economy of the 37 coastal and island states and territories bordering the Caribbean Sea, plus The Bahamas. The full list is: Anguilla, Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, Bonaire, British Virgin Islands, Cayman Islands, Colombia, Costa Rica, Cuba, Curaçao, Dominica, the Dominican Republic, Grenada, Guadeloupe, Guatemala, Haiti, Honduras, Jamaica, Martinique, Mex- ico, Montserrat, Nicaragua, Panama, Puerto Rico, St. Barthelemy, St. Eustatius, 3 Taming Volatility: Fiscal Policy and Financial Development for Growth in the Eastern Caribbean; Report No: AUS15511, World Bank, 2016. TOWARD A BLUE ECONOMY: A PROMISE FOR SUSTAINABLE GROWTH IN THE CARIBBEAN 15 St. Kitts and Nevis, St. Lucia, St. Maarten, St. Martin, St. Vincent and the Grenadines, Trinidad and Tobago, U.S. Virgin Islands, and República Bolivariana de Venezuela. (The United States is not included as being part of the region, based on the definition of the Caribbean Sea large marine ecosystem.) The report is structured in four chapters that together respond to the fundamental questions raised by decision-makers within finance ministries and central banks across the Caribbean Chapter 1 provides working definitions of the ocean economy and the blue economy. It explains why these terms are growing in global importance, specifically throughout the Caribbean. The chapter cites recent studies, notably from the OECD, that value the global ocean economy conservatively at over one and one-half trillion US dollars in 2010. The same studies suggest that the contribution of the ocean economy to global wealth is growing (notably as a share of national wealth for many coastal and island countries) and likely to continue growing for coming decades (in what has been termed a new wave of ‘industrialization’ in the ocean). Chapter 1 also estimates the value of the ocean economy in the Caribbean at US$407 billion (as of 2012). This is a ball-park estimate of the total value of economic activity in the region, as well as the value of some non-market ecosystem services such as coastal protection and blue carbon. The total value is dominated by the share of global shipping that passes through the Caribbean Sea, together with the value of the region’s tourism and oil and gas. (Note that the economic value generated by these sectors is shared by many coun- tries around the world, and does not represent a share of the Caribbean regional economy.) The chapter concludes with a synthesis of current projections for economic growth in the ocean of the Caribbean, high- lighting potential opportunities in aquaculture, tourism, and coastal carbon sequestration (‘blue carbon’), among others. Chapter 2 deconstructs the ocean economy, showing that the value derived from the ocean’s natural re- sources and ecological systems is significant. The chapter describes this natural ocean capital as consisting of three components: a)  renewable stocks or living resources that are harvested for use, such as fisheries; b)  nonrenewable stocks or nonliving resources harvested for use, such as seabed minerals; and c) e  cosystems and ecosystem processes that consist of interaction between the living and nonliving envi- ronment as a functional unit (e.g. coral reef ecosystems, mangrove ecosystems, etc.). This chapter then synthesizes the current information available to present a snapshot of the status of the Caribbean Sea’s natural capital, which is being depleted, largely due to the anthropogenic drivers of overfishing, coastal development, pollution, introduction of invasive species and climate change. The implication is that declining ocean health means declining ocean wealth. Importantly, chapter 2 does not exclude the intrinsic values of ocean ecosystems or suggest that their economic values are of greater priority than non-living resources, but rather emphasizes the interde- pendence between ecological systems and economic activity. The chapter illustrates that the health of the Caribbean Sea large marine ecosystem is intimately linked to the long term economic growth of the region, whether directly supporting key sectors of the ocean economy in the Caribbean, or the interrelationship between the economic sectors that could constitute a risk to their growth. Chapter 3 attempts to reconcile two global and region-specific trends—a growing ocean economy and declining natural capital asset base—and suggests that reformed and integrated policy packages are necessary for sustainable development of countries’ ocean space and long-term growth. The report points out that two overarching ocean use trends have become clear at both the global level and in the Ca- ribbean Sea: Growing economic activity (see Chapter 1), together with human-driven changes in ecological systems have reduced the ocean’s living natural capital (e.g. decreasing fish stocks, alteration of coastal ecosys- tems, increased pollution, etc., see Chapter 2). The report raises and answers a key question: if all indications suggest that the first trend (growth in the ocean economy) is at an early stage, what are the implications of the second trend (an eroding ocean asset base and therefore declining ocean health)? TOWARD A BLUE ECONOMY: A PROMISE FOR 16 SUSTAINABLE GROWTH IN THE CARIBBEAN Chapter 3 also presents a conceptual framework to better guide policymakers. The chapter proposes a blue economy con- ceptual framework to illustrate the inputs received by the ocean economy from the underlying natural capital (as a factor of production, providing a nonmarket flow to the ocean economy4), and the outputs from that economy that impact or affect the levels of this natural capital and the flows of benefits that they can sustainably provide. On this basis, the chapter proposes a generic blue economy policy framework to guide policymakers in the transition and offers some considerations for both monitoring and financing a blue economy. The chapter then suggests some examples and benefits of applying this policy framework in Caribbean, highlighting discussions around the ‘blue growth’ sectors of aquaculture, marine renewable energy, nature-based tourism, and green infrastructure restoration, among others. Chapter 3 does not purport to model the transition to a blue economy in the Caribbean, though the conceptual framework proposed could be the basis of doing so. The chapter does provide examples of policies to promote ‘blue growth’ as undertaken by the Organization of Eastern Caribbean States (OECS) in 2013 and more recently by the Government of Grenada. These examples illustrate both the benefits of a blue economy approach and the potential risks in failing to account for the ocean’s natural capital. The OECS region (in particular Grenada) has led the transformation to a blue economy in the Caribbean and can offer best practice ‘blue’ solutions for sub-regional and national levels. In global terms, the chapter also describes how a transition to a blue economy could make wide-ranging contributions toward a number of the targets set for at least ten of the Sustainable Development Goals (SDGs), in addition to SDG 14 for the oceans. Chapter 4 offers an approach for consideration by decision-makers to serve as a guide in the transition toward a Caribbean blue economy. The approach calls for consideration three core recommendations: (a) Allow a set of Ocean Principles to help guide direction and needed investment; (b) Review, discuss & adopt a Blue Economy Policy Framework governed by a set of proposed policy priorities, and (c) Consider five key action-oriented Ocean Strategies to sustain the transition. While the proposed Ocean Principles and Policy Framework under which to consider them are discussed in detail in Chapter 4, we conclude this executive chapter summary with a review of these five proposed Ocean Strategies, which may provide policymakers with a more action-oriented lens through which to read this report. The five key strategies (with accompanying actions) which could enable and sustain a transition to a Ca- ribbean Blue Economy include:  Strategy 1: Measure both the region’s ocean economy and natural capital; Action 1.1: Improve the statistical and methodological base for measuring the scale and performance of the ocean economy; Action 1.2: Establish natural capital accounts for the Caribbean Sea at the national and regional level; Strategy 2: Manage the Caribbean ocean space in a more integrated manner; Action 2.1: Create/expand integrated approaches to ocean governance; Action 2.2: Apply marine spatial planning at the scale of EEZs; Action 2.3: Invest in restoration and maintenance of marine ecosystem function and integrity, with a focus on protecting critical ecosystems and ecosystem processes; Action 2.4: Build and strengthen the institutional and human capacity to act; Strategy 3: Invest in sustainable growth and key public goods; Action 3.1: Promote Ocean Princi- ples to guide investment in the blue economy; Action 3.2: Advance key infrastructure investments; Strategy 4: Monitor the transition over time; Action 4.1: Continue to enhance knowledge of the Caribbean Sea; Action 4.2: Expand maritime domain awareness of the Caribbean Sea; Action 4.3: Track key indicators for the transition to a blue economy; and finally, Strategy 5: Repeat steps 1–4, adapting based on experience. This report serves as an important first step to assessing the true potential of the ocean as an economic space and engine for growth, while developing associated policies to manage its sustainable use. At the same time, this report attempts to demystify the blue economy, explaining what it is and why it matters, particularly to Caribbean nations. It is our hope that the report will serve as an important input to an evolving discussion, in which policymakers find ways to harness the ocean and all its natural assets for the betterment of citizens, nations, the region, and the planet as a whole. 4 OECD (2016) The Ocean Economy in 2030. OECD, Paris. Executive summary 17 The Growing Ocean Economy 1.1 The Global Ocean Economy Covering over two-thirds of the planet, the global ocean is fundamental to human well-being, regulating the earth’s climate, absorbing some 30 percent of anthropogenic emissions of carbon dioxide, and providing seafood and nutrition essential for more than a billion people (IPCC 2013; FAO 2014a). The ocean also connects cities and countries around the world, driving economic activity and trade for the 38 percent (and growing) of the global population that lives within 100 kilometers of the sea. Submarine ca- bles cross the ocean’s floor to carry 90 percent of the electronic traffic on which communications rely. Coastal ecosystems such as coral reefs help protect communities and cities from storm surge and wave damage, while mangroves, sea grasses, and salt marshes are significant natural carbon sinks (United Nations 2016). The estimated 1 to 1.4 million different species that live in the ocean also supply a growing number of medicines and drugs known to benefit human health (Costello et al., 2010; Montaser and Luetsch, 2011). The ocean may also be a new economic frontier, driven by a growing pop- ulation in search of new sources of growth and rapid technological advanc- es that make new resources accessible (Economist Intelligence Unit 2015; OECD 2016). For example, global offshore wind capacity has developed from practically nothing twenty years ago to a capacity of more than 7 gigawatts (GW) today, and projections suggest further growth of an order of magnitude by 2050 (OECD 2016). Seaborne trade is expected to continue to grow at an- nual rates of at least 3 percent to 2030, and global tourism at a rate of almost 4 percent annually to 2025­ —with the most growth likely in coastal and ocean tourism (OECD, 2016). The physical context of the ocean shapes this new economic frontier: a fluid, buoyant, three-dimensional environment, where resources can shift or migrate over long distances. Economic activity in this space, traditionally focused on shipping, tourism, fishing, and offshore oil and gas (all of which are undergoing their own changes), is set to shift dramatically in the coming decades, according to the Organisation for Economic Co-operation and De- velopment (OECD). Emerging industries will include offshore wind, tidal, and wave energy; oil and gas exploration and production from previously inacces- sible waters; offshore aquaculture; seabed mining; cruise tourism; and marine biotechnology, among others. The potential benefits from the development of these activities are considerable. They could help address many of the key challenges facing the population in coming decades, from food insecurity to the search for new sources of energy and jobs (OECD 2016). Despite the wide range of economic activity dependent upon and shaped by the ocean as a discrete and unique segment of the global economy, measures of this ‘ocean economy’ have historically not been available. The term has not even been consistently defined, with 14 different countries using 14 different definitions (Park and Kildow 2015). For the purposes of this report, the ocean economy is defined as “the economic activities that take place in the ocean, receive outputs from the ocean, and provide inputs to the ocean.” These economic activities come together in the ocean as a system. Indus- tries in the ocean economy are not developing in isolation, but interact in a number of different ways—similar to other closely interconnected clusters of Photo Credit: OECD TOWARD A BLUE ECONOMY: A PROMISE FOR SUSTAINABLE GROWTH IN THE CARIBBEAN 19 economic activities that function as an economic system or ‘economy’ rather than a fragmented collection of individual sectors. Recent history has shown that once such systems or clusters develop, they benefit from more coherent strategic approaches to their development. For example, the notion of the ‘information economy’ arose with the growth of information and communication technology (ICT) and more integrated infrastructure planning. Similarly, more recently developed segments of the space sector (such as launchers, satellite construction and operations, global communications, and so on) have come to see themselves as the ‘space economy,’ just as the different strands of the relatively young biotechnology sector have come to be perceived as a ‘bioeconomy’ (OECD 2016). Drawing from work by the Economist (Economist Intelligence Unit 2015) and OECD (OECD 2016), respec- tively, one description (among others) of the components of this system - the ‘ocean economy’ - could be proposed as follows: Table 1.1. The Ocean Economy: Component Parts and Future Trends ECONOMIC TYPE OF OCEAN SECTOR/ FUTURE TRENDS ACTIVITY SERVICE INDUSTRY Fisheries Demand for fish and hence seafood continue to grow, requiring aquaculture production to double by 2050 without improved capture fisheries yields. Howev- Seafood Aquaculture er, ending overfishing in the ocean and rebuilding depleted stocks could increase the ocean’s yield by as much as 20 percent (MEA 2005; Waite et al. 2014). Harvesting The first drugs derived from marine organisms were commercialized over of living the past decade, together with considerable growth in nutraceutical and resources other nonmedical uses of marine natural products, and new technologies Marine Pharmaceuti- are fostering renewed interest in marine biotechnology (MEA 2005). As such, biotechnology cals, chemicals the global market for marine biotechnology products and processes is a significant and growing opportunity, projected to grow from US$2.8 billion in 2010 to US$4.6 billion by 2017 (OECD 2016). Interest in seabed minerals is expected to be sustained over the long-term future, given limitations on some land-based mineral resources, though it remains unclear whether deep-sea mining will develop any time soon on a Minerals, sand, Seabed mining commercial scale (notably given uncertainty over environmental impacts) and gravel (OECD 2016). According to one projection, by 2030, 10 percent of the world’s minerals, including cobalt, copper, and zinc could come from the ocean floors (UNEP 2014a). In 1980, offshore oil and gas production provided 20% of consumption needs. By 2014 it rose to 30% and is expected to continue to grow as most of the new discoveries globally are primarily offshore in waters as much as 3 kilometers Extraction deep, as compared to 1 kilometer just 20 years ago (Brakenhoff 2015). The of nonliving coming 15 years could see a significant increase in deep water offshore resources, Energy Oil and gas production, while production from shallow-water fields may decrease (OECD generation 2016). At the same time, gas extraction is expected to grow in both shallow of new and deep waters, from slightly above 17 million barrels of oil equivalent/day in resources 2014 to 27 mboe/d in 2040 (OECD 2016). Total hydrocarbons (gas and oil) from offshore are expected to grow at about 3.5% per year up to 2030 (IAEA 2014). An assessment of the world’s exploitable offshore wind resources has placed the estimates around 22 TWa(a) (Arent et al. 2012) which is approximately nine times greater than the International Energy Agency’s (IEA) 2010 estimate of average global electricity generation capacity (MEA 2005). Global installed offshore wind Energy Renewables capacity has developed from practically nothing twenty years ago to greater than 7 gigawatts (GW) today, while projections suggest there is potential for 40–60 GW by 2020 and growth of a further order of magnitude by 2050 (OECD 2016). Source: Adapted from Economist Intelligence Unit (2015), OECD (2016). Note: (a) TWa = average number of terawatt-hours over a specified time. (b) World Travel and Tourism Council. http://www.wttc.org/-/media/files/reports/economic%20impact%20research/economic%20impact%202015%20summary_web.pdf. (c) http://www.worldwatch.org/global-plastic-production-rises-recycling-lags-0. TOWARD A BLUE ECONOMY: A PROMISE FOR 20 SUSTAINABLE GROWTH IN THE CARIBBEAN Table 1.1. The Ocean Economy: Component Parts and Future Trends ECONOMIC TYPE OF OCEAN SECTOR/ FUTURE TRENDS ACTIVITY SERVICE INDUSTRY Extraction of nonliving Global desalination capacity has been increasing exponentially (Lattemann et resources, Freshwater Desalination al. 2010). The size of the global desalination market in 2025 is estimated to be generation seven times larger than it was in 2000 (Bremere et al. 2001). of new resources Currently some 90% of global trade is carried on the ocean, and by 2050 maritime freight transport is projected to quadruple from 2010 (OECD and ITF Shipping 2015). More specifically, seaborne trade is expected to grow by 4.3% in 2016, Transport and 4.1% per year over the period 2017–19, 4.0% per year on average over 2020–29, trade and 3.3% between 2030 and 2040 (OECD 2016). Port infra- Port infrastructure is projected to increase by 4.7% from 2015 to 2020 (Lucintel structure and 2015), with healthy increase over longer term given the expected rise in freight services transport. Global tourism and travel’s contribution to global gross domestic product [GDP] (already over 10%) is expected to grow at a rate of 3.8% per year from 2015 to 2025(b)—much of the growth occuring in coastal and marine tourism. As populations age and incomes rise in many countries, while transport costs Commerce, Tourism remain relatively low, coastal and ocean locations will become even more tourism and attractive tourist destinations, and recent developments suggest that marine trade tourism is likely to grow at a faster rate than international tourism as a whole (OECD 2016). Tourism and Migration and development of the coastal zone (defined as land <100 km recreation from the coast) around the world has increased faster than inland areas since 1970, leading to much higher population densities in most of the world’s ‘mega-cities’ such as Tokyo, New York, Seoul, Mumbai, Shanghai, Jakarta, and Coastal so on. Development is projected to affect 91% of all inhabited coasts by 2050 development and will contribute to more than 80% of all marine pollution as we enter a world with 9.6 billion people. For example in China the growth of coastal urban areas is currently more than three times the national rate (Neumann et al. 2015; World Bank 2012a). Indirect The full social cost of the carbon released into the atmosphere as a result of contribution Blue carbon clearing mangroves has been estimated at between US$3.6 and 18.8 billion to economic Carbon (that is, coastal per year, at a price (that is, the true ‘social’ cost) of US$41 per ton of carbon activities sequestration vegetated dioxide (Pendleton et al. 2012). Blue carbon conservation is expected to and environ- habitats) become a significant portion of reductions in tropical forest emissions. ments Though it varies by habitat and site measured, analysis has shown that coastal habitats (coral reefs, mangroves, salt marshes, seagrass/kelp beds) reduce wave height significantly (between 35% and 71% on average across 69 sites Indirect studied) and thereby help reduce flooding (Narayan et al. 2016). The need for contribution restoration of such habitats will only grow. For example, coastal protection to economic Coastal Habitat protec- from flooding and erosion is the largest economic service provided by man- activities protection tion, restoration grove systems in Thailand, and is a significant function of mangroves in many and environ- tropical countries (Barbier 2012). Yet at the current rates of change, most ments mangrove forests will be lost in the next two decades (Nellemann et al. 2009). As the sea level rises, at least 900 million people could be living in vulnerable low-lying coastal zones (that is, <10 m), mostly in Asia (Neumann et al. 2015). Source: Adapted from Economist Intelligence Unit (2015), OECD (2016). Note: (a) TWa = average number of terawatt-hours over a specified time. (b) World Travel and Tourism Council. http://www.wttc.org/-/media/files/reports/economic%20impact%20research/economic%20impact%202015%20summary_web.pdf. (c) http://www.worldwatch.org/global-plastic-production-rises-recycling-lags-0. chapter 1 21 Table 1.1. The Ocean Economy: Component Parts and Future Trends ECONOMIC TYPE OF OCEAN SECTOR/ FUTURE TRENDS ACTIVITY SERVICE INDUSTRY The demand for use of ocean ecosystems for waste disposal continues to grow. For example, nutrient loads from land to sea are estimated to have increased Waste disposal Assimilation of roughly threefold from pre-industrial levels (UNEP 2012a). Similarly, an estimated for land-based nutrients, solid 275 million metric tons of plastic were produced in 2010, of which 4.8 to 12.7 industry waste Indirect million tons entered the ocean (Jambeck et al. 2015). Subsequently, global plastic contribution production rose to roughly 299 million tons in 2013.(c) to economic activities and environ- Assuming the recent 4.5 percent annual growth rate of the area of the global ments ocean designated for some form of protection could be maintained beyond Protection Existence of 2020, the current target of 10% of the global ocean under protection would of species, biodiversity be reached by 2035 (Boonzaier and Pauly 2016). This does not necessarily habitats imply that all protection designations prevent extraction, or are effectively enforced to protect species and habitats within these zones. Source: Adapted from Economist Intelligence Unit (2015), OECD (2016). Note: (a) TWa = average number of terawatt-hours over a specified time. (b) World Travel and Tourism Council. http://www.wttc.org/-/media/files/reports/economic%20impact%20research/economic%20impact%202015%20summary_web.pdf. (c) http://www.worldwatch.org/global-plastic-production-rises-recycling-lags-0. Importantly the description in Table 1.1, and the definition of the ocean economy suggested in this report, does not include a number of recognized marine ecosystem services(Liquete et al. 2013), such as regulat- ing services for climate and weather or cultural services for cognitive effects, where valuation tools are less developed. Figure 1.1. The Ocean Economy Minerals, Sand, Gravel Transport and trade Seafood Tourism and recreation Energy Ocean Economy Coastal protection Biodiversity Waste disposal Marine biotechnology Carbon sequestration The contribution of the ocean economy to global GDP has rarely been measured, though a number of recent estimates have been made, generally on the order of some US$1.5 to 3 trillion annually, or roughly 3 to 5 percent (see Table 1.2) (Global Ocean Commission 2014a; Hoegh-Guldberg et al. 2015). Subsequent to these estimates, the most extensive effort to date has been the development of an Ocean Economy Database by the OECD, suggesting conservatively a contribution in 2010 on the order of US$1.5 trillion in value added (or 2.5 percent of world gross value added) (OECD 2016). The relative contribution of the ocean economy is much higher in a number of coastal and island states with large ocean areas, provid- ing for example in 2014 an estimated 10 percent of China’s GDP and 20 percent of Indonesia’s (Economist Intelligence Unit 2015). TOWARD A BLUE ECONOMY: A PROMISE FOR 22 SUSTAINABLE GROWTH IN THE CARIBBEAN Table 1.2. Estimates/Citations of the Contribution of the Global Ocean Economy ESTIMATES/CITATIONS OF METHODOLOGY SOURCE ANNUAL CONTRIBUTION (US$) 3–5 trillion ‘global ocean Estimate only - no details provided FAO 2014c economic activity’ 6–21 trillion ‘economic value of Estimate only - no details provided World Ocean Council(a) ocean goods and services’ 3 trillion ‘market value of marine Global Ocean Commission Estimate only - no details provided and coastal resources’ 2014a Averaged a ‘top-down’ analysis extrap- olating the percentage of known ocean economy contributions to GDP, and a 2.5 trillion ‘gross marine product’ Hoegh-Guldberg et al. 2015 ‘bottom-up’ analysis estimating the value of marketed goods and services produced by industries as well as other benefits 1.5 trillion value added of ocean- based industries in 2010 Developed a database of country 33% offshore oil and gas information on value added per industry, OECD 2016 26% ocean and coastal tourism supplemented by literature (note: does not 13% ports include small-scale fisheries) (b) 11% maritime equipment Note: (a) World Ocean Council. http://www.oceancouncil.org/site/faq.php. (b) OECD’s Ocean Economy Database consists of 169 coastal countries and draws heavily on United Nations (UN) and OECD sources to collect industry-specific data on physical capital stock, employment, and value added for those ocean-based industries defined in ISIC Rev.3 (International Standard Industrial Classification of All Economic Activities). However, many of these estimates do not include a number of services provided by the ocean’s ecosys- tems as described in Table 1.1 and for which markets do not exist, but yet contribute significantly to eco- nomic and other human activity —for example, carbon sequestration, coastal protection, waste disposal, and the existence of biodiversity (see Figure 1.2 below). For example, a recent study estimated that in 46 countries containing over 53 percent of estimated mangroves worldwide, these ecosystems reduced the area of the coastal zone subject to storm surge by some 30 percent or 36,061 square kilometers (Blankespoor, Dasgupta, and Lange 2016). As the OECD emphasizes, measures of the ocean economy without such natural stocks and their flows of services will always be incomplete (OECD 2016). Additionally, using GDP to measure the ocean economy only captures the annual economic output, but does not account for changes to the un- derlying natural stocks or capital assets5 in this economy, and the future benefit streams that they can provide (World Bank 2012b). Simply stated, the ocean economy consists of more than just industries, but a number of key services provided by the ecosystems, some of which may not have markets. Figure 1.2. The Portion of the Ocean Economy Measured by Markets Market Goods and Services Non-Markets Goods and Services Private sectors Public Sectors Industry Economy Source: Park and Kildow (2015). 5 Natural capital assets are defined broadly here as the total available biophysical stock of natural resources in terms of land and soil, forest and timber, water, minerals and energy resources, fish stocks, and air and climate (Narloch, Kozluk, and Lloyd, 2016). chapter 1 23 Regardless of the measures of the ocean economy, it is critically important for many of the world’s low-in- come coastal and island states. For 54 lower- and lower-middle-income coastal and island states, almost two-thirds of the national territory is ocean (see Figure 1.3). For small island developing states (SIDS) in partic- ular, the ocean economy and national economy are often indistinguishable. Figure 1.3. Ocean Area under Jurisdiction of Low and Lower – Middle-Income Countries (in red) Exclusive Economic Zones Countries Income Level Income Level Low income Low income Lower-Middle Income Lower-Middle Income Upper-Middle Income Upper-Middle Income High Income High Income Not Available Source: Blue Ribbon Panel to the Global Partnership for Oceans (2013). As indicated in Table 1.1, many components of the ocean economy are projected to grow rapidly this century as the global population reaches 9.6 billion by 2050, and countries continue to look to the sea for the next economic frontier. Demand for seafood will continue to grow, as will aquaculture production. Shipping traffic will multiply several times, and tourism will continue to increase, to name a few. Renewable energy, from wind, waves, and currents, among others, offers the potential to help meet increasing global en- ergy demand while reducing long-term carbon emissions. The Economist (2015) suggests that in this century, the ocean is likely to become an economic force as activity accelerates at a pace reminiscent of the previous industrialization on land (Economist Intelligence Unit 2015). TOWARD A BLUE ECONOMY: A PROMISE FOR 24 SUSTAINABLE GROWTH IN THE CARIBBEAN 1.2 The Ocean Economy of the Caribbean Perhaps nowhere is the ocean economy more relevant than in the Caribbean Sea, where many states and territories are defined by the ocean. The Caribbean Sea covers less than 1 percent of the world’s ocean area (2.75 million square kilometers); nonetheless, it directly supports the economies of 37 coastal and small island countries and territories.6 This natural resource, if well managed, has the potential to make a much greater contribution to poverty reduction and shared prosperity for the region’s growing island population of 40 million, meanwhile increasing people's resilience under climate change. The ocean may indeed be the frontier for growth for these economies in the coming decades, as countries look to the Caribbean Sea for new sources of food, energy, and jobs while diversifying their economies to reduce reliance on a limited number of key exports. Figure 1.4. The Caribbean Sea Gulf of Mexico Caribbean Sea Source: Transboundary Water Assessment Programme 2015. Surprisingly, the region’s ocean economy is not well measured or understood, even as the next frontier for growth. This report includes a review of existing literature and secondary data to generate a first-order esti- mate of the size and composition of the ocean economy in the Caribbean basin. These estimates are meant to be indicative of the magnitude of the ocean economy, and do not represent value-added to accrues to the countries in and around the Caribbean Sea. (For example, much of the value-added from shipping, tourism, and mineral extraction conducted by multinational companies owned outside the Caribbean benefit other countries.) The estimates of market activities are of gross revenues (not value-added) for the most recent year available (2012), and the estimates of non-market ecosystem services are derived from recent literature. 6 As a unit of analysis, this chapter focuses on the potential blue economy of the Caribbean Sea, that is, the ocean economy of the 37 coastal and island states and territories bordering the Caribbean Sea, plus The Bahamas. The full list is as follows: Anguilla, Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, Bonaire, British Virgin Islands, Cayman Islands, Colombia, Costa Rica, Cuba, Curaçao, Dominica, the Dominican Republic, Grenada, Guadeloupe, Guatemala, Haiti, Honduras, Jamaica, Martinique, Mexico, Montserrat, Nicaragua, Panama, Puerto Rico, St. Barthelemy, St. Eustatius, St. Kitts and Nevis, St. Lucia, St. Maarten, St. Martin, St. Vincent and the Grenadines, Trinidad and Tobago, U.S. Virgin Islands, and República Bolivariana de Venezuela. chapter 1 25 Table 1.3. The Ocean Economy of the Caribbean in 2012: A Snapshot INDICATIVE ANNUAL GROSS REVENUES (US$, BILLIONS IN 2012 ECONOMIC U.S. DOLLARS) TYPE OF OCEAN SECTOR/ NOTES/METHODS ACTIVITY SERVICE ISLAND INDUSTRY MAINLAND STATES AND TOTAL COUNTRIES TERRITORIES Estimated based on catch data from Food and Agriculture Organization Fisheries 0.37 4.62 5.0 (FAO) FishStatJ (FAO 2016a), and value Seafood per metric ton from Sumaila et al. (2007) and Swartz et al. (2012). Harvesting Value produced retrieved from FAO Aquaculture 0.04 1.86 1.9 of living FishStatJ (FAO 2016a) resources Data not available to estimate the size of the Caribbean marine biotechnol- Pharma- ogy sector, though a Marine ceuticals, n.a. n.a. n.a. number of drugs (for example, Ara-A, biotechnology chemicals, and AZT, Ara-C) have been developed in so on the past from Caribbean coral reefs (Bruckner 2002). Data not available to indicate seabed Minerals, sand, Seabed n.a. n.a.w n.a. mining occurring currently in the and gravel mining Caribbean Sea. Only offshore oil and gas included. Trinidad and Tobago is the leading producer among Island States and Territories, generating roughly 66% of offshore oil production in island waters (Cuba produces another 29%) Energy Oil and gas 5.64 34.25 39.9 (EIA 2015) and 98% of natural gas (EIA 2016). Both natural gas and oil explo- ration activities have continued at a fast pace in Trinidad and Tobago over the early 2000s (GENI 2003), and in Colombia (PwC 2014) and Venezuela, RB (ENI 2015) more recently. Extraction of nonliving Data not available to disaggregate resources, marine renewables from total renew- generation of ables, which generated some US$1.3 new resources billion in revenues in 2012 according to the U.S. Energy Information Ad- ministration (EIA) (EIA 2016). For total renewables (terrestrial and marine), EIA estimates the Islands States and Territories produced an estimated Renewables 3.66 billion kWh renewable electricity n.a n.a. n.a (marine) in 2012 (EIA 2015). For example, Bo- naire currently generates some 90% of total energy from wind (12 turbines with a total 11 MW capacity) (RMI 2015). To supplement wind-based generation in times of low wind, the island also has 14 MW of diesel generation, designed to be able to run on locally grown algae-based biodiesel (Pei 2010; RMI 2015). Note: * Average of estimated value over the time period from 2000 to 2050 has not been adjusted to 2012 U.S. dollar. TOWARD A BLUE ECONOMY: A PROMISE FOR 26 SUSTAINABLE GROWTH IN THE CARIBBEAN Table 1.3. The Ocean Economy of the Caribbean in 2012: A Snapshot INDICATIVE ANNUAL GROSS REVENUES (US$, BILLIONS IN 2012 ECONOMIC U.S. DOLLARS) TYPE OF OCEAN SECTOR/ NOTES/METHODS ACTIVITY SERVICE ISLAND INDUSTRY MAINLAND STATES AND TOTAL COUNTRIES TERRITORIES The regional Caribbean Desalination Association has been active in pro- Extraction moting the growth of the industry of nonliving (CaribDA 2016), and the 2012 value of resources, Freshwater Desalination n.a n.a 0.2 production reported at US$0.53 per generation of m3 (US$2 per 1,000 gallons) for a total new resources of approximately US$230 million (EPA 2016). In the container shipping industry, US$311.3 represents the share of the total global shipping revenues that flow through the Caribbean, Shipping n.a n.a 311.3 including through the Panama Canal. Specifically, 8.2% of global container shipping volume in 2012 was estimated to flow through the region (Rodrigue and Ashar 2015). Transport and trade Commerce, The estimate above includes the full tourism, and cost of shipping in the region, and the Port infra- trade value of port services are included as structure and n.a n.a n.a part of shipping costs. Therefore, to services avoid double-counting, this row is left blank. Total marine and coastal tourism revenues for Island States and Terri- tories (WTTC 2015), though revenues Tourism and are not available for coastal tourism Tourism 47.1 n.a 47.0 recreation in mainland countries. Tourism in the Island States and Territories projected to increase to over US$70 billion per year by 2024 (WTTC 2014). Note: * Average of estimated value over the time period from 2000 to 2050 has not been adjusted to 2012 U.S. dollar. chapter 1 27 Table 1.3. The Ocean Economy of the Caribbean in 2012: A Snapshot INDICATIVE ANNUAL GROSS REVENUES (US$, BILLIONS IN 2012 ECONOMIC U.S. DOLLARS) TYPE OF OCEAN SECTOR/ NOTES/METHODS ACTIVITY SERVICE ISLAND INDUSTRY MAINLAND STATES AND TOTAL COUNTRIES TERRITORIES The estimated value of this ecosystem service is a non-market economic benefit. Assumed that the mangrove loss rates remain constant at 0.08% per year; r = 6%; carbon price US$5 per tCO2e. Total man- Blue carbon grove coverage used as baseline, for Carbon (that is, coastal Island States and Territories was 2,417 0.02 0.07 0.09 sequestration vegetated km2, (10,305 for mainland countries) habitats) for a regional total of 12,722 km2 (Hamilton and Casey 2016). Assumed carbon storage of 200 (biomass) and 400 Mg C per ha (top meter of soil) (Bhomia et al. 2016), where carbon is emitted with a half-life of 10 years (Pendleton et al. 2012). Indirect contribution to economic activities and environments The estimated value of this ecosystem service is a non-market Habitat Coastal economic benefit. Protection value protection, n.a n.a 1.5* protection of Caribbean coral reefs, estimated restoration by World Resources Institute in 2004 (Burke and Maidens 2004). Waste disposal Assimilation of for land-based nutrients, solid n.a n.a n.a Data not available industry waste Protection Data not available for any payments Existence of of species, n.a n.a n.a to protect Caribbean Sea biodiversity, biodiversity habitats nor global willingness-to-pay These totals are likely conservative given that many ocean sectors have TOTAL 53.17 407.0 not been measured, or disaggregat- ed at the level of the islands. Note: * Average of estimated value over the time period from 2000 to 2050 has not been adjusted to 2012 U.S. dollar. TOWARD A BLUE ECONOMY: A PROMISE FOR 28 SUSTAINABLE GROWTH IN THE CARIBBEAN Figure 1.5. The (Measurable) Ocean Economy of the Caribbean in 2012 is Dominated by Shipping, Tourism, and Oil and Gas Industries 2nd Tourism 11.5% 3rd Oil and gas 10.0% 4th Fisheries 1.2% 5th Aquaculture 0.5% 6th Carbon sequestration, desalination, and coastal 1st Shipping protection 0.4% 76.4% Source: Park and Kildow (2014). The annual economic value of the ocean economy in the Caribbean in 2012 was on the order of US$407 billion. This consists almost entirely of market-based activities, since the non-market values of many ecosys- tem services are not easily valued monetarily. The value of the ocean country is dominated by the estimated value of the volume of cargo shipped through the Caribbean Sea, together with tourism and oil and gas in the Island States and Territories. (Note: this number should not be compared with the GDP of the Caribbean Basin countries, since not all of this economic value accrues to those economies. Rather, much of the value of shipping, fishing, tourism, and off-shore energy production accrues to the countries that are home to the companies involved, or the source of Caribbean imports used in those sectors.) Focusing just on the Caribbean Island States and Territories, where disaggregated estimates of shipping activity and values are not available, the gross revenues generated in 2012 are estimated on the order of some US$53 billion. This estimate is likely conservative and even low, given that reports have not measured or disaggregated at the level of the islands a number of sectors, such as ports and shipping, the protection value of coastal ecosystems (‘green infrastructure’), or nonmarket values that the global community places on the existence of biodiversity in the Caribbean Sea. In one sense, the ocean economy currently measured in the Caribbean Island States and Territories is dominated by tourism (88 percent), as tourism is indeed as large as many other segments of the region’s non-ocean economy (such as wholesale/retail trade). Globally, current trends point to a future of what has been termed a new wave of ‘industrialization’ in the ocean, driven by population growth to 9.6 billion by 2050, advances in technology, and increasing con- sumption (Economist Intelligence Unit 2015). The OECD modeled the development of the ocean economy to 2030, projecting many ocean-based industries to outperform the growth of the global economy—indeed doubling its contribution to global value added from 2010. In the Caribbean, these global trends are expected to drive growth in a number of sectors of the ocean economy, as shown in Table 1.5. The ‘horizon scan’ below shows expectations in a number of individual sectors in the region’s ocean econ- omy —for example, aquaculture production growth of 30 percent, blue carbon revenues from zero to some US$700 million annually (at a carbon price reflecting the estimated social cost), exponential growth in global shipping combined with expanded traffic through the Panama Canal, and more than 3 percent annual real growth in tourism to name a few. These trends in the aggregate would likely effect significant change in the Caribbean Sea and its ecosystems over the coming years and decades. In conclusion, even with conservative methods, the size of the Caribbean ocean economy is large and growing. In fact, following a global trend projected by OECD (2016), all indications are that the ocean econo- my is likely to grow faster than overall rates of economic growth in coming decades. Therefore, the challenge will be to manage and direct this growth in such a way as to foster more sustainable “blue growth” in the ocean economy. This is the topic of the remainder of this report. chapter 1 29 Table 1.4. The Ocean Economy of the Caribbean: Future Trends OCEAN ECONOMIC TREND SECTOR/ INDUSTRY Globally, by 2030 aquaculture will supply two-thirds of fish production, including seafood (World Bank 2013). Assuming current capture fisheries production can be maintained, projected population growth will require aquaculture production to double in or to sup- port current per capita consumption levels (Waite et al. 2014). In the Caribbean, capture Seafood fisheries production slightly decreased over the 2010–2014 period (FAO 2016b). Similarly, over this same period aquaculture production did not grow as fast as it has in other regions around the world, but with good governance FAO suggests that production has the potential to grow by 30% by 2025, equivalent to a rate of 3% annually (FAO 2014d). Globally, technological progress for production of offshore oil and gas has been signif- icant over the last two decades, such that fields at depths of up to 3 km are accessible, whereas 20 years ago it was not possible past 1 km. Experts believe that this trend will continue, and globally offshore production growth is likely to exceed onshore growth (Brakenhoff 2015). However, in the Caribbean Sea, while Colombia and Venezuela will continue offshore exploration and production, overall growth may slow relatively to terrestrial sources (Rystad Energy 2016b). 2 Oil and gas 1 0 2015 2020 2025 2030 2035 2040 O shore NG O shore Oil Onshore NG Onshore Oil Globally, investment in renewable energy production has grown significantly over recent decades, certainly for marine renewables (for example, offshore wind). Through- out the Caribbean, a number of renewable energy options have been identified from Renewables the ocean, and the costs associated with the technologies have fallen dramatically over the past decade. In the coming decade, marine renewable energy may increasingly be a viable option for many islands in the region. Currently some 90% of global trade is carried on the ocean, and by 2050 maritime freight transport is projected to quadruple from 2010 (OECD and ITF 2015). The trade significance of the existing Panama Canal is clear as a key conduit for international maritime trade for Shipping decades, and it is currently undergoing expansion. This project, as well as other efforts such as the planning of the Nicaragua Canal, suggest a significant future role for the Caribbean region in international maritime shipping. Developing economies currently hold some 72% share of world container port Port Infra- throughput, and with ship sizes and traffic volumes expected to grow, existing ports structure in the Caribbean will likely expand capacity, while new ports are constructed. Such and Services transport infrastructure investment needs have been estimated at 6.2% of GDP in the region annually between 2012–2020 (UNCTAD 2016). Note: (a) World Travel and Tourism Council. http://www.wttc.org/-/media/files/reports/economic%20impact%20research/economic%20impact%202015%20summary_web.pdf. TOWARD A BLUE ECONOMY: A PROMISE FOR 30 SUSTAINABLE GROWTH IN THE CARIBBEAN Table 1.4. The Ocean Economy of the Caribbean: Future Trends OCEAN ECONOMIC TREND SECTOR/ INDUSTRY Globally, tourism (already over 10% world GDP) is expected to grow at a rate of 3.8% per year from 2015 to 2025(a)—much of it coastal and marine tourism. By 2025, the annual real Tourism growth in tourism’s total contribution to GDP is projected at 3.3% for the Caribbean region (excluding mainland countries), and 4.5% when including mainland countries. The blue carbon sector is expected to grow as carbon prices at the voluntary or compliance markets grow, and as financial mechanisms are created to incentivize the protection of mangroves and coastal grasses. Current market prices are about one- Blue Carbon eighth of the estimated social cost of carbon value, which can be used as an indicator of the long-term carbon prices in an efficient market that prices carbon according to its climate-related damages (when emitted due to conversion). Note: (a) World Travel and Tourism Council. http://www.wttc.org/-/media/files/reports/economic%20impact%20research/economic%20impact%202015%20summary_web.pdf. chapter 1 31 The Ocean’s Declining Natural Capital 2.1 Overview of the Status of the Global Ocean’s Natural Capital Underpinning the global ocean economy are the natural resources and ecological systems that function as the ocean economy’s natural capital asset base. Natural capital includes: (a) living resources (renewable stocks) harvested for use, such as fisheries; (b) nonliving resources (nonrenewable stocks) harvested for use, such as seabed minerals; and (c) ecosystems and ecosystem processes that consist of interaction between the living and nonliving environment as a functional unit (coral reef ecosystems, mangrove ecosystems, and so on). With the expected growth of the ocean economy in the coming decades, the potential change to its natural capital asset base may be significant. The baseline is already low. For example in 2015 the G7 Science Academies is- sued a statement warning that human activities were causing changes to the ocean’s ecosystems that will profoundly affect human well-being. In 2016 the UN Secretary General wrote that the findings of the first world ocean assess- ment “indicate that the oceans’ carrying capacity is near or at its limit,” and “urgent action on a global scale is needed to protect the world’s oceans from the many pressures they face” (United Nations, 2016). Among others, four anthropogenic drivers of change in the ocean’s natural capital are notable: a) overfishing,  as some 29 percent of the world’s ocean fisheries that have been assessed are considered overfished, up from 10 percent in 1970 (FAO 2014b), while an estimated 11 to 25 million tons of fish are captured via illegal, unreported and unregulated (IUU) fishing each year (Agnew et al., 2008); b) coastal development,  such as filling wetlands or hardening coast- lines for construction, whichhas significantly altered ecosystems and ecosystem processes, as the world has lost some 20 percent of its sea grass and mangrove habitats since 1970 and 1980, respectively, while coral reefs have declined by 38 percent since 1980 (Spalding, Kainuma, and Collins 2010; UNEP 2012b); c) pollution, largely in the form of excess nutrients from sources such as agriculture and untreated sewage, which have increased roughly threefold from pre-industrial levels (UNEP 2012b) to create ‘dead zones’ covering 245,000 square kilometers of ocean by 2010 (Doney, 2010), together with an estimated 4.8 to 12.7 million tons of plastic entering the ocean each year (Jambeck et al. 2015), with the volume of plastic in the ocean projected to exceed the volume of fish by 2050 (WEF, 2016); and d) climate change and ocean acidification,including higher surface water temperatures and rising sea levels, together with more acidic waters owing to the uptake of carbon dioxide from the atmosphere – with the mean surface ocean pH already decreasing from 8.2 to 8.1 and projected to continue to 7.7 or 7.8 by 2100 (UNEP, 2012b). In response to these recent changes to the ocean’s ecosystems, one of the 17 Sustainable Development Goals (SDGs) adopted by the UN General Assembly in September 2015 focuses on ocean conservation and sustain- able use (see Box 2.1). Governments and stakeholders in countries around the world have increased efforts and investments in policy reforms and rule TOWARD A BLUE ECONOMY: A PROMISE FOR SUSTAINABLE GROWTH IN THE CARIBBEAN 33 Box 2.1. Sustainable Development Goal 14 Summary: “to conserve and sustainably use the oceans, seas and marine resources for sustainable development” ■■ Preventand significantly reduce marine pollution of all kinds by 2025; and protect marine and coastal ecosystems by 2020, including resto- ■■ Sustainably manage  ration, to achieve healthy and productive oceans; and end overfishing, illegal, unreported and ■■ Effectively regulate harvesting of fish stocks  unregulated fishing by 2020 (including prohibiting subsidies that contribute to overfishing), to restore fish stocks in the shortest time feasible to levels that can produce the maximum sustainable yield; ■■ Conserve at least 10 percent of coastal and marine areasby 2020; & ■■ Increase the economic benefits to SIDS  from sustainable use of ocean resources by 2030. changes to better safeguard and/or restore functionality in ocean ecosystems. For example, the World Bank has increased its active investment portfolio in projects directly or indirectly aiming to increase the ocean’s natural capital to some US$6.4 billion by 2015, with support for sustainable fisheries and aquaculture increas- ing from practically zero in 2004 to almost US$1 billion by 2015 (see Figure 2.1 below). Figure 2.1. Growth in the World Bank’s Portfolio of Investments in the Ocean Sustainable Fisheries, Aquaculture and Active Sustainable Fisheries & Aquaculture Portfolio, incl. ICZM (IBRD/IDA/GEF) Habitat Conservation 800 US$1 billion 700 600 500 (Million USD) 400 300 200 100 0 US$5.4 billion FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Pollution Reduction E.g. watershed GEF Fisheries Governance & mgt, marine Fisheries Other management, coastal infrastructure Aquaculture Integrated coastal zone mgt & planning TOWARD A BLUE ECONOMY: A PROMISE FOR 34 SUSTAINABLE GROWTH IN THE CARIBBEAN 2.2 Overview of the Status of the Natural Capital Assets of the Caribbean Sea The Caribbean Sea and its living and nonliving resources together with the ecosystems that they form, can be considered a tremendous natural capital asset, often undervalued and even poorly defined, yet determinant of a number of the benefits generated by the ocean economy. Throughout the literature (for example, a ‘Transboundary Diagnostic Assessment’ of the marine ecosystems and a ‘Transboundary Water Assessment’ both funded by the Global Environment Facility [GEF]) there is strong evidence that the Carib- bean Sea’s natural capital is being depleted, largely due to the anthropogenic drivers of overfishing, coastal development, pollution, introduction of invasive species, and the impacts of climate change (CLME Project 2011). Such depletion represents a significant risk, both to the economic benefits of the ocean economy and likely to future growth prospects. The Caribbean Sea’s Natural Capital Assets. Current information available on the status of the region’s natu- ral capital includes: ■■ Living resources (for example, fisheries):  The Caribbean includes a wide array of living resources that support fisheries, including the spiny lobster, the queen conch, panaeid shrimps, reef fish, bot- tom-dwelling fish on the continental shelf, deep slope and bank fish, coastal large pelagic species (such as king mackerel, Spanish mackerel, amberjack, and dolphinfish), and offshore large pelagic species (such as yellowfin tuna, skipjack tuna, Atlantic blue marlin, and swordfish). Uncertainty about the biological status of many of the region’s fish stocks has remained high, but available data sug- gests that nearly 60 percent of commercially exploited fish stocks in the Caribbean Sea are either overexploited or have collapsed—contributing some 50 percent of the fish landed (TWAP 2015). This status is consistent with FAO’s data for the wider fishing area that includes the Gulf of Mexico together with the Caribbean Sea, where some 55 percent of the assessed fish stocks commercially harvested are considered overexploited, and another 40 percent are considered fully exploited (FAO 2014e). In particular, large pelagic stocks throughout the region have been heavily exploited, in many cases by distant water fishing nations (CLME Project 2011). Figure 2.2. Stock Status of Commercially Exploited Fish Stocks in the Caribbean Sea Stock Status Catch by Stock Status 80 400k 60 300k 40 200k 20 100k 0 0k 1960 1980 2000 1960 1980 2000 Years Exploited Overexploited Source: TWAP, 2015. ■■ Nonliving resources (for example, minerals, oil and gas in the seabed):  To date there has been little indication of significant deposits of commercially valuable minerals in the Caribbean seabed that could be mined.7 With regard to oil and gas resources, significant reserves are known to be found in the waters under the jurisdiction of Colombia and República Bolivariana de Venezuela, though 7 See for example: https://www.isa.org.jm/contractors/exploration-area. Chapter 2 35 Figure 2.3. Distribution of Fishing Effort in the Wider Caribbean Source: TWAP, 2015. production from these sources is projected to decline over the coming years in comparison to ter- restrial sources (WTTC 2015). Additionally, a number of countries are actively pursuing oil exploration activities (The Bahamas and Barbados, for example). ■■ Ecosystems and ecosystem processes (for example, coral reefs, mangroves, sea grass beds, beaches, and so on): The Caribbean Sea has the highest level of species diversity in the tropical Atlantic and is considered a global hotspot of marine biodiversity, supported in particular by the region’s coral reef ecosystems (notably the 220-kilometer long MesoAmerican Reef system) (Roberts et al. 2002; Milo- slavich et al. 2010). According to the U.S. Geological Survey, some 0.35 percent of the entire Caribbe- an Sea large marine ecosystem is covered by mangroves; and according to the Global Distribution of Coral Reefs in 2010 ,some 0.64 percent is covered by coral reefs (TWAP 2015). There is evidence for overall ecosystem degradation in the Caribbean Sea, notably in coral reef and mangrove systems (Burke et al. 2011; Burke and Maidens 2004; CLME Project 2011). Caribbean mangrove coverage has declined steadily over the past decades at the rate of approximately 0.08 percent per year (Hamilton and Casey 2016). Coral coverage in the region has dropped significantly in recent decades, with some 75 percent of all Caribbean reefs considered to be at risk from anthropogenic impacts (Burke and Maidens 2004). Anthropogenic Drivers of Change in the Status of the Caribbean Sea’s Natural Capital Assets. In the con- text of climate change and ocean acidification, there are at least three significant and mutually reinforcing anthropogenic drivers of the declining status of the Caribbean’s natural capital that are shared widely: (a) overfishing, (b) coastal development, and (c) pollution (CLME Project 2011), all occurring in the context of the effects of increasing greenhouse gas emissions and climate change, such as ocean acidification and increas- ing sea surface temperatures. ■■ Overfishing:  According to FAO, growth in the capture fishing industry in the region has stagnated since 1990, in conjunction with trends in declining stocks and increasing overexploitation (Burke and Maidens TOWARD A BLUE ECONOMY: A PROMISE FOR 36 SUSTAINABLE GROWTH IN THE CARIBBEAN Figure 2.4. Mapping Ocean Wealth Calculations of Caribbean Mangrove Coverage Source: Mapping Ocean Wealth http://oceanwealth.org/ Figure 2.5. Mapping Ocean Wealth Example of Coastal Protection Benefits of Coral Reefs in Jamaica Source: Mapping Ocean Wealth http://oceanwealth.org/ 2004). The overall volume of fish landed in the Caribbean declined from a peak of 430,000 metric tons in 1998, to below 300,000 tons by 2010 (TWAP 2015). This trend is reflected in FAO’s data on the broad- er fishing area that includes both the Caribbean Sea and the Gulf of Mexico, where between the late 1990s (1.75 million tons) and 2009 (1.3 million tons) (FAO 2011). At the same, total aggregate fishing effort increased steadily in the Caribbean Sea, following the global trend in the expansion of fishing activity in the 1950s, to a peak in the mid-2000s (TWAP 2015). This growth in fishing effort has led to biological overfishing in some fisheries, where the level of fishing exceeds what would be required to catch the maximum sustainable yield. Such overfishing has also had a notable impact on the region’s coral reef ecosystems, with annual landings of reef resources from the capture fisheries generally declining since the mid-1970s and most considered either over or fully exploited (World Bank 2016). Commercial fishing on deep-water reefs has caused extensive damage to corals, and more broadly fishing has depleted certain herbivore species—leading to overgrowth of algae on coral reefs throughout the Caribbean (World Bank 2016). Chapter 2 37 Figure 2.6. Annual Catch (Caribbean Sea) Figure 2.7. Fishing Effort (Caribbean Sea) Fishing e ort (Caribbean Sea) Annual Catch (Caribbean Sea) 250M 500k 200M 400k E ective e ort (Kilowatt) 150M 300k Tons/Year 100M 200k 50M 100k 0M 0k 1950 1960 1970 1980 1990 2000 1950 1960 1970 1980 1990 2000 2010 Years Years Source: TWAP, 2015. ■■ Coastal development: Coastal population density has grown throughout the region in recent de- cades, with over 41 million people living within 10 kilometers of the coast, and some 166 million within 100 kilometers (Burke and Maidens 2004). This growth has placed tremendous pressure on the coastal ecosystems as natural habitats are cleared for construction, waterways are dredged for increased sea transport, and the number of visitors and users of the reefs increases (to name a few threats among others). For example, about 25 percent of the region’s coral reefs are considered at threat from growing coastal development, and just over a third are located within 2 kilometers of inhabited land areas (Burke and Maidens 2004; Burke et al. 2011). These threats can directly impact the tourism sector of the region’s ocean economy, given the role that coral reef ecosystems play in visitation throughout the Caribbean. ■■ Pollution:  The ecosystems and the water quality of the Caribbean Sea have been significantly impacted by growing levels of pollution from untreated sewage, agricultural runoff, and marine trash (plastics, for example) (GPO 2014; CLME Project 2011). In particular, increasing volumes of untreated sewage generat- ed by growth in coastal development has impacted water quality and public health, as an estimated 85 percent of wastewater entering the Caribbean Sea is untreated (with a higher percentage in many urban areas) (UNEP-CEP 2010; Corbin, Daniel, and Vogeley 2014). Again, this damage can constitute a significant risk to the tourism sector of the region’s ocean economy, among others. With regard to marine debris, the Caribbean Sea is estimated to have relatively high levels of plastic concentrations compared with many other large marine ecosystems (TWAP 2015). More specifically, an estimated 0.16 to 0.42 million tons of plastic entered the Caribbean Sea in 2010 from the region’s coastal population, with projections gradually increasing to 0.29–0.79 million metric tons (MMT) per year by 2025 as the population grows (see Table 2.1) (Jambeck et al. 2015). Lastly, other drivers of change in the status of the Caribbean Sea’s natural capital assets include the intro- duction of invasive species such as the Indo-Pacific lionfish, which is competing with native species and changing coral reef ecosystems (FAO 2011). As mentioned previously, many of these drivers are expected to continue to be exacerbated by the effects of climate change, resulting largely from greenhouse gas emissions in the terrestrial economy. In conclusion, these drivers of change in the status of the Caribbean Sea’s natural capital assets constitute an important constraint and significant risk to the potential growth of the region’s ocean economy, sim- ilar to the risks to the global ocean economy (OECD 2016). In some cases the decline of these assets may prevent sectors and industries from reaching their potential in the region; for others it may create regulatory uncertainty that also presents a significant risk. For example, impacts of coastal development and pollution on coral reef ecosystems can directly impact the tourism sector of the region’s ocean economy, and reduce the net benefits that it can generate for poverty reduction and economic growth. TOWARD A BLUE ECONOMY: A PROMISE FOR 38 SUSTAINABLE GROWTH IN THE CARIBBEAN Table 2.1. Country and/or Island Territory level Estimates of Plastic Marine Debris: 2010 and 2025 PLASTIC PLASTIC PLASTIC PLASTIC MARINE MARINE MARINE MARINE COUNTRY/ ISLAND COASTAL DEBRIS IN DEBRIS IN DEBRIS IN DEBRIS IN TERRITORIES POPULATION 2010 - LOW 2010 - HIGH 2025 - LOW 2025 - HIGH ESTIMATE ESTIMATE ESTIMATE ESTIMATE (MMT) (MMT) (MMT) (MMT) Anguilla 14,561 8 21 11 29 Antigua and Barbuda 66,843 188 501 208 554 Aruba 137,910 56 149 71 190 Bahamas 341,145 200 533 258 687 Barbados 276,784 522 1,393 558 1,488 Belize 202,429 584 1,557 906 2,417 British Virgin Islands 29,674 8 22 12 31 Cayman Islands 51,864 14 38 20 54 Colombia 7,498,563 13,826 36,869 26,996 71,989 Costa Rica 2,479,298 6,314 16,836 11,384 30,358 Curacao 143,784 40 107 57 151 Dominica 70,138 117 313 214 571 Dominican Republic 8,232,586 17,734 47,290 34,301 91,468 Guatemala 2,392,442 13,734 36,625 23,655 63,079 Haiti 9,155,693 22,108 58,956 48,627 129,671 Honduras 3,324,144 14,346 38,255 28,375 75,668 Jamaica 2,820,558 1,503 4,008 8,936 3,830 Martinique 402,257 112 300 143 382 Mexico 22,647,771 15,201 40,537 35,009 93,357 Montserrat 5,173 6 15 11 29 Netherlands Antilles 227,165 62 166 55 147 Nicaragua 3,482,653 12,662 33,766 25,416 67,775 Panama 3,249,531 5,158 13,755 10,614 28,303 Puerto Rico 4,249,848 2,478 6,607 3,072 8,193 Saint Kitts and Nevis 36,102 107 286 111 297 Saint Lucia 163,227 1,006 2,684 1,292 3,444 Saint Maarten, DWI 37,429 10 28 15 39 Saint Vincent and the Grenadines 120,149 337 898 449 1,198 Trinidad and Tobago 1,358,433 14,110 37,626 11,027 29,405 Turks and Caicos Islands 22,570 7 20 10 28 USVI 134,219 37 100 44 118 Venezuela, RB 16,094,897 15,350 40,933 23,136 61,697 Total 89,469,840 157,948 421,195 294,994 786,650 Source: Data from Jambeck et al. 2015. Chapter 2 39 Aligning the Two Trends - The Potential for a Blue Economy in the Caribbean Sea 3.1 Two trends S ince the ‘great acceleration’ in global economic output and pop- ulation growth beginning in the 1950s, at least two overarching trends in the use of the ocean have become clear at both the global level and in the Caribbean Sea. These trends are growing economic activity (see Chapter 1) together with human-driven changes in ecological systems that have reduced the ocean’s natural capital (for example, decreasing fish stocks, alteration of coastal ecosystems, in- creased pollution, and so on—see Chapter 2). The question arises: If all indica- tions suggest that the first trend (growth in the ocean economy) is at an early stage, what are its implications for the second trend? Conversely, will changes in the ocean’s natural capital affect, and potentially slow, growth in the ocean economy in the Caribbean? What is the risk to the future ocean economy and therefore to ocean-facing developing countries in particular? Figure 3.1. Two Parallel Trends in the Global Ocean Growth in Ocean Economy Declining Health of Ocean Environment Figure 3.2. Global Fisheries: Decoupling growth in economic activity and overexploitation 3.5 140 Decked vessels (number) 3.0 Fleet capacity index (fishing power) 120 Catch per vessel/ Catch per unit capacity Catch per vessel (tons) Fleet capacity index ( shing power) 2.5 Catch per unit capacity (tons) Number of decked vessels/ 100 2.0 (million) (tons) 80 1.5 60 1.0 0.5 40 0.0 20 1970 1980 1985 1990 1995 2000 2005  orld Bank and FAO (2009) Source: W TOWARD A BLUE ECONOMY: A PROMISE FOR SUSTAINABLE GROWTH IN THE CARIBBEAN 41 Figure 3.3. Decoupling Economic Growth and Degradation of the Caribbean Sea 8 Plastic marine debris 7 GDP Wider Caribbean Region 6 Island tourism 5 4 3 Shoreline protection lost due to coral reef degradation 2 Cumulative mangrove loss 1 0 2010 2011 2012 2013 2014 2015 2016 Source for GDP growth: (World Bank 2016); projected growth based on 2005–2014 period; Plastic marine debris projections based on Jambeck et al. (2015); past and projected Island Tourism (WTTC 2015); trend in shoreline loss due to reef degradation (Burke et al. 2004) and cumulative mangrove loss (Hamilton and Casey 2016). Units for the data were adjusted so that all of the line graphs would be between 0 and 10 in the period. Note: Plastic marine debris is measured in units of 100,000 tons; GDP is measured in trillions of current U.S. dollar; Island tourism is measured in 10s of billions of U.S. dollars; Shoreline protection is shown as an index; Cumulative mangrove loss is measured in 100 square kilometers; The above graph illustrates that as with the global trends, the Caribbean economy (represented by GDP for the region and tourism for the islands) has exhibited a growth trend over recent years, just as a number of indicators of the loss of natural capital have shown similar increases over that time frame. Essentially, economic growth and environmental degradation have occurred concurrently in the Caribbean Sea during this time period, illustrating the challenge of introducing policies that promote the ‘decoupling’ of the trends, so that economic growth continues and even accelerates, while environmental degradation reverses. 3.2 The Concept of a ‘Blue Economy’ With the simultaneous growth of the ocean economy and disruption to the ocean’s ecological systems, the perspective emerging worldwide over the last decade on a ‘green economy’ and ‘green growth’ has become a more widely used lens for viewing the risks and opportunities in the ocean. The term was featured prominently for example in the outcome statement by countries at the Rio+20 Earth Summit in 2012, as a tool for policymaking that provides a lens for looking at economic and environmental policy together—focusing on economic growth without a reduction in aggregate natural capital, and the link be- tween poverty reduction and conservation of ecological commons (UNEP 2011; Bowen and Hepburn 2014; Smulders et al. 2014). Common policy recommendations for green growth, such as those included in the OECD’s global green growth strategy, often focus on: ■■ Enhancing efficiency  in the use of resources and natural capital, and reducing waste (embracing ‘circular economy’ strategies for example); ■■ Spurring innovation of new technologies  to simultaneously increase economic growth as measured by GDP and enhance natural capital, with a focus on the energy system; ■■ Creating new markets by stimulating demand for green technologies, goods, and services; ■■ Measuring natural capital part of the economy, thereby incorporating considerations of the envi- as ronment into broader economic decision-making; and ■■ Boosting investor confidence through greater predictability and continuity in addressing environ- mental issues, while better understanding the scale of risks (for example, through application of environmental, social, and governance principles such as the Equator Principles) (UNEP 2011; OECD 2011; Jouvet and de Perthuis 2013). TOWARD A BLUE ECONOMY: A PROMISE FOR 42 SUSTAINABLE GROWTH IN THE CARIBBEAN Metrics of green growth have included increased GDP for growth, along with measures of natural cap- ital (OECD 2011), or GDP and wealth measures adjusted for natural capital, as well as process-oriented measures (Jakob and Edenhofer 2014; Narloch, Kozluk, and Lloyd 2016; UNEP 2014b; UNEP 2015a; UNEP 2015b). In 2014, the OECD proposed tracking a set of green growth indicators (maintained on the Green Growth Knowledge Platform), grouped according to (a) environmental and resource productivity (for ex- ample, more efficient, low-carbon economy); (b) the natural asset base; (c) environmental quality of life (for example, health and risks such as air pollution); and (d) economic opportunities and policy responses (for example, new technology and innovation) (OECD 2014). Reviewed policies that support transitions toward green growth have generated increases in wealth and a higher rate of GDP growth, and over time the jobs created in the transition exceed losses in the ‘brown economy.’ These policies focus, for example, on renew- able energy, energy efficiency, public transportation, sustainable agriculture, ecosystem and biodiversity conservation, and land and water conservation, among others (OECD 2011). The United Nations Environment Programme (UNEP) (Sukhdev, Stone, and Nuttal 2010) has featured a number of diverse ‘green economy success stories’ worldwide, including urban planning in Brazil, organic agriculture in Uganda, green infra- structure in rural India, and ecosystem service payments in Ecuador, among others, though few examples to date have been given for SIDS. As the green economy concept gained prominence before Rio+20, UNEP together with a group of part- Box 3.1. Definition of the Concept of the ners proposed to apply this concept to the ocean Blue Economy economy—envisaging a ‘blue economy.' The focus was on policies to ‘green’ the ocean economy, sector by “A sustainable ocean economy emerges sector. At the Rio+20 Summit, the blue economy con- when economic activity is in balance with the long-term capacity of ocean cept emerged in a number of different and competing ecosystems to support this activity and discourses on human-ocean relations, including: (a) the remain resilient and healthy.” Essentially, the oceans as natural capital, (b) the oceans as ‘good busi- blue economy concept is a lens by which ness,' (c) the oceans as integral to Pacific SIDS, and (d) to view and develop policy agendas that the oceans as a source of small-scale fishing livelihoods simultaneously enhance ocean health and (Silver et al. 2015). Subsequently, a number of national economic growth, in a manner consistent strategies and international summits were held on the with principles of social equity and inclusion. subject of the blue economy broadly, as featured in FAO’s 2014 State of World Fisheries and Aquaculture report (FAO 2014b). Drawing from these efforts, the Economist Intelligence Unit defined the concept of the blue economy as shown in Box 3.1 below (Economist Intelligence Unit 2015). The blue economy concept considers the ecological systems that provide so many of the services linked Figure 3.4. Blue Economy Concept to the ocean economy as underlying and sometimes invisible natural capital assets. These assets include, Ocean for example, fish stocks, coral reef systems, beach and water quality, mangroves, and so on), which help sup- port the more visible produced capital (machinery and structures) and intangible capital (skills, expertise, and so on, with which labor is applied) (World Bank Enviromental Health Economic Bene ts 2012b, 2006). This analysis is not intended to exclude intrinsic values that these ecological systems may have or to suggest that their economic values are of greater priority, but rather to emphasize the connec- tion between the ocean’s ecological systems and the economic activity defined in the ocean economy. The Blue Economy blue economy concept recognizes that while only some activities in the ocean economy depend on the status of the underlying ecological systems (such as fishing), all have the potential to degrade them (such as shipping, off-shore oil production and seabed mining). Therefore, the impact of all ocean economy ac- tivities on the underlying ecosystems need to be minimized or else jobs and economic growth depending on the living resources will be put at risk. Increasingly, policy frameworks and industries are emerging that can simultaneously enhance or expand a more sustainable ocean economy, that is, grow the blue economy Chapter 3 43 3.3 A Blue Economy Conceptual Framework A conceptual framework explains graphically the main key factors, constructs, or variables to be studied and the presumed relationships among them. The approach essentially creates intellectual ‘bins’ containing a lot of discrete events and behavior (Miles and Huberman 1994). Alternatively, such frameworks have been defined as a network or a ‘plane’ of interlinked concepts that together provide a comprehensive understanding of a phenomenon or phenomena (Jabareen 2009). To better illustrate the complex relationship between economic activity and ecological systems in the Caribbean Sea, a concep- tual framework for the blue economy is proposed here (see Figure 3.5). This Blue Economy Conceptual Framework aims to illustrate the inputs received by the ocean economy from the underlying natural capital (as a factor of production, providing a nonmarket flow to the ocean economy (OECD 2016), and at the same time the outputs from that economy that affect the levels of this natural capital and the flows of benefits that they can sustainably provide. If properly managed, many of these natural capital assets are renewable and capable of yielding a sustained flow of benefits. For example, fish stocks are a living resource that provides a flow of inputs into the production of seafood in the ocean economy. Alternatively, ocean economic activities may provide outputs or impacts on the ecosystems and ecosystem processes. For example, coastal development leads to the construction or expansion of ports, marinas, harbors, or channels for shipping that change or convert ecosystems such as sea grass beds and mangroves. This framework aims to capture the value of changes in the natural capital assets together with changes in economic activity, to measure the net benefit to society from this integrated blue economy, con- sistent with OECD’s recent work characterizing the ocean economy as well as widely established concepts of a ‘circular economy’ where material flows to and from industry are circular (OECD 2016). Such interactions happen horizontally between different sectors of the ocean economy, and between different ecosystems of the ocean, as well as vertically between the economic sectors and ecosystems, which in aggregate affect the outcomes of the blue economy. While no two cases or contexts are the same, there are a number of examples of a transition toward a blue economy within various sectors of the ocean economy that may be instructive, for example:  an in some instances be rewarded with an eco-label that brings a price ■■ Sustainable fishing practices c premium; aquaculture  ■■ Shellfish can both enhance coastal water quality and produce valuable seafood that supports employment and contributes to GDP;  an ■■ Offshore wind and other marine renewable energy technologies c generate new jobs and signifi- cant additional energy according to some estimates; and ■■ Green infrastructure along the coast can both create jobs and protect coastal development. Governments that introduce policies to enhance or encourage the transition to the blue economy could help their countries capture the potential benefits, measured as the net present value (NPV) of the in- crease in the entire blue economy, with costs being charged to the inputs from or outputs to the natural capital. This framework allows one to consider whether the economic returns from the transition to a blue economy justify the initial investment costs in a given context, in contrast with business-as-usual to grow the ocean economy. Figure 3.5 represents a graphic illustration of the entry points for policy reforms to change the flow of inputs from natural capital assets to the ocean economy over time, or conversely to reduce its outputs (such as pollution) to the ocean’s natural capital. The conceptual framework allows for con- sideration of the ocean economy and ecological systems together in policy design. For example, the costs of a policy reform to reduce the output from one industry in the ocean economy to the underlying natural capital assets (for example, to reduce impacts of shipping or port services on coastal ecosystems) might be far less than the inputs over time that this natural capital can provide to other industries (for example, tourism). Figure 3.5 provides a conceptual framework for governments to: TOWARD A BLUE ECONOMY: A PROMISE FOR 44 SUSTAINABLE GROWTH IN THE CARIBBEAN Figure 3.5. A Blue Economy Framework The Ocean Economy Seafood Marine Energy Transport Tourism and Carbon Coastal Waste Biodiversity’s biotechnology and trade recreation sequestration protection disposal existence value Inputs Outputs Policy Flow of Material Flow of Materials Reforms & Services over Natural capital assets & Impacts over time time = Change Ecosystems &Ecosystem Living Resources Non living Resources Processes a) think about economic activity  in the ocean as a discrete and unique segment of the larger econ- omy, with shared risks and opportunities (including cluster opportunities within the ocean space); and nto accounting and supporting policies for this b) measure and incorporate natural capital assets i ocean economy. The blue economy conceptual framework translates OECD’s global green growth strategy to the sea, supporting an operational policy agenda to “foster economic growth and development in ocean spaces. It also ensures that the ocean’s natural assets continue to provide the resources and environmental services on which our well-being relies” (OECD 2011). The OECD breaks this policy agenda down into two broad sets of policies: (a) broad ‘framework’ policies that mutually reinforce economic growth and conservation of nat- ural capital, such as tax, competition, and innovation policy to increase efficiency and reduce waste, and (b) incentives that put a price on overexploitation of natural resources and on pollution, including a mix of market-based instruments such as environmentally related taxes, together with well-designed regulations and technology support policies, depending on the context (OECD 2011). Similarly, the World Bank’s 2012 environment strategy also focused on ‘green growth’ objectives applicable to the ocean, to support policies that are: (a) ‘clean’—that is, reducing pollution; (b) ‘green’—that is, supporting natural resource stocks and ecosystems to maintain the goods and services that depend on them; and (c) ‘resilient ’—that is, strengthening the ability of economies to bounce back from natural disasters and more volatile weather patterns (World Bank 2012a). Many coastal nations have already introduced a mix of sector and industry-specific policies for economic activities in the ocean. Increasingly countries have undertaken efforts to develop more integrated policies reflecting the underlying ecosystems, including coordinating the actions of various government agencies (OECD 2016). Building from these experiences, a blue economy policy framework, to increase the value of the entire system in a given ocean space, would include the following components: Chapter 3 45 Figure 3.6. Proposed Blue Economy Policy Framework for Aligning Ocean Health and Economic Growth Policy Instrument Design Instrument Delivery Ocean Economy Sectors (Objectives, strategies) (Rules + Organizations) Green: sustainable management of Fisheries management regulations Fisheries renewable resource stocks, e.g. and enforcement Aquaculture Ecosystem-based fisheries management Protection for marine/coastal species Marine biotechnology Clean: reducing (a) environmental impacts Minerals & Energy Seabed mining of nonrenewable resource use and (b) Permitting and licensing Oil and gas pollution from land-based sources (such as Monitoring and enforcement untreated sewage, plastics, etc.), e.g. Renewables Risk mitigation Coastal and marine spatial planning Business environment for ocean activities Extractive industries transparency Shipping and port regulations Shipping Ease of doing Tourism and Recreation business Port infrastructure & services Government commitment Corruption to sustainability in coastal perception Waste disposal for land-based industries tourism development (e.g. sewage, plastics) Effectiveness of Reg. of env. impact of dispute resolution coastal development mechanisms Tourism Waste disposal Quality of coastal infrastructure Coastal development Agency capacity Regulatory standards for water pollution Blue carbon sequestration Monitoring and enforcement Coastal protection via habitat protection and restoration Resilient: enhancing the ability of coastal Prevalence of coastal protected economies to bounce back from natural areas disasters and volatile weather and plan for adaptation to the effects of climate change, Natural disaster risk mitigation e.g., Green infrastructure along the coast National strategy to adapt to climate change Source: Adapted from World Bank (2012), Economist (2015). The policy framework in Figure 3.6 highlights the role of coastal and marine spatial planning (CMSP) in the transition toward a blue economy, whereby considerations of natural capital are integrated into the regulation of various economic activities, while oceans are envisaged as ‘development spaces.’ CMSP is defined here as a public process of analyzing and allocating ocean uses over space and time to achieve economic, ecological, and social objectives (Ehler and Douvere 2007). Following long traditions of regu- lation of conflicts between different land uses through zoning, CMSP has in many cases resulted in ocean plans and zoning, whereby maps categorize the ocean space for a particular use or array of uses, taking into account ecosystem processes (Agardy 2009). A recent review of CMSP noted 59 ocean plans in preparation or completed as of mid-2014, and outlined case studies for 5 of these plans, which in aggregate created an estimated US$310 million in new economic value, largely through offshore wind developments in the north- ern United States and in Belgium. The study of these plans not only helped to reduce conflicts between different ocean users, such as wind developers and fishers, but also expanded ocean area under protection (with fishers gaining protection of key fishing grounds from wind farms or other uses in some cases) (Blau and Green 2015). TOWARD A BLUE ECONOMY: A PROMISE FOR 46 SUSTAINABLE GROWTH IN THE CARIBBEAN Putting the blue economy conceptual framework into action would measure both the ocean economy and the natural capital that underpins it, combined as the blue economy. Tracking metrics or indicators of growth in this economy together with the sustainability of its natural capital (for example, in a blue econo- my index), together with clear principles for investment, could help leverage greater investment in the blue economy with increased benefits for the global economy over the long term. Such a set of indicators could be used in the blue economy conceptual framework shown in Figure 3.5, to track the transition to a blue economy over time. For example, while it may be time-consuming and difficult to construct a full model predicting changes to these indicators over time in various scenarios, more narrative or qualitative scenarios might suggest the future direction or magnitude of change in the indicators for a blue economy, or specific components. Additionally, the measures of sector output at a given point in time from each of the sectors of the ocean economy could be aggregated into an ‘Ocean Economy Index’ Similarly, clear ‘investment principles’ that essentially screen all investments in the ocean economy, could help ensure that economic and environmental objectives are simultaneously met, consistent with interna- tionally agreed principles on equity and social justice, and with a priority on poverty reduction. For example, over 70 percent of international project finance debt in emerging markets is provided by 83 banks and organiza- tions that have committed to follow the Equator Principles for incorporating environmental and social consid- erations into finance8. This process has helped spur the development of more specific practices in the financial sector and banking industry, such as the Carbon Principles,9 and could be the basis for a set of ‘Ocean Principles’ for the blue economy. For example, the Seychelles recently highlighted the role that capital can play in helping to drive the transition to a blue economy, with agreement on a debt swap to allow the country to redirect a portion of current debt payments from Paris Club creditors to fund ocean conservation (including creation and manage- ment of over 400,000 square kilometers of new marine protected areas [MPAs]), together with the NatureVest arm of The Nature Conservancy.10 Coastal and island states have championed the blue economy in a number of international fora, for exam- ple putting forward a position paper for the Summit in Apia in 2014.11 Seychelles has focused on the blue economy and created a Ministry of Finance, Trade, and the Blue Economy; neighboring Mauritius developed a ‘roadmap’ for the ocean economy in 2013, orienting the country’s growth strategy around the development and use of its 2.3 million square kilometers of ocean space (Mauritius Prime Minister’s Office 2013). The Mauri- tius roadmap focuses on development of seven components of the ocean economy: (a) seabed exploration for hydrocarbon and minerals; (b) deep ocean water applications (DOWA) to draw deep water for cooling systems and other applications; (c) seafood from both fisheries and aquaculture; (d) port services and related activities; (e) ocean renewable energies; (f) other ocean-related activities linked to tourism and ICT for exam- ple; and (g) ocean research and innovation (Lattemann et al. 2010). In late 2014 Indonesia’s President proposed a policy for the country as a ‘global maritime axis,’ focusing on growth in the ocean economy based on four main objectives: (a) strengthening sovereignty over the country’s waters and resolving maritime border dis- putes; (b) sustainably managing the natural resources and protecting the marine environment (notably by stepping up efforts to combat illegal fishing, developing aquaculture, and growing public revenues from the sector exponentially by 2019); (c) increasing tourism (doubling visitors by 2019) by building marinas along Box 3.2. Position Paper on the Blue Economy for the 2014 SIDS Summit The Blue Economy conceptualizes oceans as “Development Spaces” where spatial planning inte- grates conservation, sustainable use, oil and mineral wealth extraction, bio-prospecting, sustain- able energy production and marine transport. The Blue Economy breaks the mold of the business as usual “brown” development model where the oceans have been perceived as a means of free resource extraction and waste dumping; with costs externalized from economic calculations. The Blue Economy will incorporate ocean values and services into economic modelling and decision-making processes. The Blue Economy paradigm constitutes a sustainable development framework for developing coun- tries addressing equity in access to, development of and the sharing of benefits from marine resources; offering scope for re-investment in human development and the alleviation of crippling national debt burdens (OECD 2016). 8 http://www.equator-principles.com/. 9 http://www.theclimategroup.org/who-we-are/our-members/our-member-principles/. 10 http://www.nature.org/newsfeatures/pressreleases/debt-swap-to-finance-marine-conservation-in-the-seychelles.xml. 11 Small Island Developing States, Blue Economy Concept Paper, www.sids2014.org/content/documents/275BEconcept.pdf. Chapter 3 47 yacht routes for example; and (d) building science and research capacity for a blue economy, for example through construction of three marine science technology parks by 2019.12 Similarly, the Commonwealth is supporting developing countries to pursue four interrelated objectives: (a) diversifying the existing economic base and increasing the proportion of GDP derived from ocean sectors; (b) focusing on strategies to create higher value jobs; (c) addressing the achievement of food security through marine sources of protein; and (d) supporting developing countries in sustainably managing ocean development (Roberts 2015). The Blue Economy and the SDGs. As mentioned in Chapter 2, the international community has agreed on an SDG aimed at the conservation and sustainable use of the oceans (SDG 14), toward which the transition of the ocean economy to a blue economy would make a significant contribution. However, the ocean provides food, jobs, economic growth, carbon storage, and protection from natural disasters among others, and hence can make a significant contribution toward achieving many more of the 17 SDGs than just SDG 14. For example, a quick scan of all 17 goals shows at least 10 other SDGs where the transition to a blue economy would be expected to contribute toward meeting some or all of the targets (see Annex 3). 12 http://www.thejakartapost.com/news/2014/12/30/maritime-axis-development-boost-ri-s-gdp.html#sthash.ifwdCRi8.dpuf. TOWARD A BLUE ECONOMY: A PROMISE FOR 48 SUSTAINABLE GROWTH IN THE CARIBBEAN 3.4 A Caribbean Blue Economy: Aligning Economic Growth and Ocean Health A growing number of Caribbean states have expressed their desire to explore policies for a blue econo- my in the region, notably during the inaugural Caribbean Region Dialogue with the G20 Development Working Group held in Washington, D.C. on April 13, 2015 at the International Monetary Fund headquar- ters. The dialogue was attended by the region’s finance ministers and central bank governors and covered the opportunities and challenges around two interrelated themes: (a) ‘Developing the Blue Economy in the Caribbean’ and (b) ‘Mobilizing Resources’ in support. As the background document to the meeting stated: “by applying a blue economy approach many new opportunities arise for the region, which can create new jobs, achieve a higher rate of growth, reduce poverty, and secure international biodiversity and sustainability obligations” (Roberts 2015). The participants considered that the transition to a blue economy would contrib- ute toward a number of broader policy objectives captured in the SDGs, including poverty reduction, food security, energy security, disaster risk reduction, climate change mitigation, and ocean conservation. As the Outcome Statement from the Caribbean Regional Dialogue notes, “developing the Caribbean Blue Economy offers strong potential for the Caribbean region and its member countries to help broaden output, exports, employment and revenue and to benefit from the array of assets and opportunities offered by the Caribbean Sea.” The fundamental hypothesis upon which this effort rests, is that the future growth and opportunity of the ocean economy in the Caribbean Sea for the region’s states and territories would be increased by transitioning to a blue economy in the region—with investments simultaneously in both natural and produced capital, and integrated policies that target the interrelationships between economic sectors Chapter 3 49 in the water. The Blue Economy Conceptual Framework proposed in Figure 3.5 aims to help illustrate this hypothesis. For example, the waste disposal sector of the region’s ocean economy, where the Caribbean Sea provides implicit or explicit services of disposal of wastes and particularly excess nutrients, provides a flow of outputs in the form of pollution to the ecosystems and ecosystem processes that in turn reduces their ability to provide critical inputs or factors of production for the tourism and recreation sector of the ocean economy. One specific example of the circular interaction between different Figure 3.7. Example of the Blue Economy sectors of the ocean economy and the natural capital of the Carib- Conceptual Framework: Tourism, Waste bean Sea is the above depiction of the waste disposal function of Disposal, and Ecosystems the ocean and its impact on ecosystems and ecosystem processes such as coral reefs, beaches, and water quality, all of which are inputs or factors of production for the tourism sector. While the The Ocean Economy value of the waste disposal segment has not been quantified, the Tourism and Waste tourism sector in the waters of the islands alone generates some recreation disposal US$47 billion in annual revenues (see Table 1.3), and depends heavily on the ocean ecosystems and ecosystem processes as an input (for Inputs Outputs example, Box 3.3). Ha of Flow of ecosystems Pollutants Using the proposed Blue Economy Conceptual Framework (e.g. coral Natural capital over time assets to consider the ocean’s natural capital and economic sectors reefs), water quality together requires opportunities to test the hypothesis and de- Ecosystems & Ecosystem termine its effects on the overall economic value for the region. Processes The hypothesis posits that benefits would be greater with the development of those sectors of the ocean economy that main- tained or enhanced the natural capital—that is, ‘blue growth.’ For example, emerging blue growth opportunities in the Caribbean have been proposed in aquaculture, marine renewable energy, tourism, and marine biotechnology, among others (Roberts 2015). Box 3.3. Tourism and the Ocean Ecosystems  or the region’s tourism industry after large blooms of sargas- In 2015, there were significant concerns f sum seaweed washed up on beaches from Mexico to Barbados, fueled in part by untreated sewage discharged into the Caribbean Sea. https://www.washingtonpost.com/news/morning-mix/wp/2015/08/14/paradise-lost-caribbean-beaches-face-a-massive-seaweed-invasion-ahead-of-winter-tourism-season/ Marine renewable energy is one example of a sector often regarded as a model for the transition to a blue economy, where the ocean provides increased jobs and energy without drawing down the natu- ral capital. The aim of blue growth is to find new sectors of the ocean economy (or promote changes to ex- isting ones) that simultaneously enhance both economic benefits and natural capital. Green infrastructure along the coast is an example that can both create jobs and protect coastal development—enhancing the ecosystem processes. A recent meta-analysis of various studies of coastal habitat restoration/engineering projects to increase defenses against storm surge and flooding showed significantly improved protection at lower costs than constructed alternatives such as breakwaters (Narayan et al. 2016). Depending on the water depth, mangrove projects in Vietnam can be three to five times cheaper than a breakwater, and salt-marsh projects across Europe and the United States vary from being just as expensive, to around three times cheaper (Narayan et al. 2016). These are examples of ocean economy sectors that fill the venn dia- gram of a blue economy, where economic growth and environmental health overlap. Another sector that has this potential in the region is aquaculture, depending on the policy and regulatory framework in place. TOWARD A BLUE ECONOMY: A PROMISE FOR 50 SUSTAINABLE GROWTH IN THE CARIBBEAN Box 3.4. Blue Growth Sector: Marine Renewable Energy Currently, imported oil provides 90 percent of the energy consumed in the Caribbean, with electricity costs of up to US$0.20 and US$0.50 per kWh (World Bank 2015). For this reason CARICOM adopted a regional energy policy in 2013 calling on states to increase the use of commercially viable and sustainable renewable energy sources (CARICOM 2013). Efforts to date have focused on terrestrial renewable energy, for example in Bonaire where 12 wind turbines with a total of 11 MW of wind power capacity (backed by batteries and an additional 14 MW of diesel generation for peak loads and low wind) were constructed after a fire destroyed the diesel power plant in 2004 (Bunker 2015). In this case, the price of electricity in Bonaire dropped from US$0.50 per kWh to US$0.22 per kWh (Bunker 2015). While the ocean could be a source of additional renewable energy—for example, from wave, tidal, and ocean thermal energy conversion (OTEC)—many of the technologies currently remain in the early development stages, combining with the relatively low energy demand of the islands to deter devel- opment in the near term. However, as states in the Caribbean explore expanding renewable energy generation from the ocean, the region could be a candidate for locating marine renewable testing and demonstration projects. Sources: World Bank 2015; CARICOM 2013; Bunker 2015. The Policy Framework for a Caribbean Blue Economy. A Blue Economy Conceptual Framework has been proposed in Figure 3.5 to help conceptualize an ocean economy that: a)  measures natural capital,  anages competing uses of the ocean space to conserve natural capital, enhance social benefits, b) m and reduce conflicts, and  purs innovation and investment in blue growth sectors and technologies that simultaneously in- c) s crease economic benefits and natural capital. Transitioning to such a blue economy in the Caribbean requires a policy framework that accounts for the ocean as a unique ‘development space,’ shaped by its ecology. Such a policy framework may be driven by CMSP, generating maps to categorize the ocean space for a particular use or array of uses while taking into account ecosystem processes, and in some cases translating these categories into regulations via ocean zoning. Currently ocean governance in the Caribbean is relatively fragmented to support such integrated policies for the blue economy. Over 30 different regional and subregional organizations par- ticipate to some degree; and a collection of multilateral environmental agreements, political agreements, nonbinding agreements, programs, projects, and national laws apply, all of which work at different levels and spatial scales. Across the region and at the national level, this framework is often focused on a sec- tor-specific approach to the ocean economy, unable to respond to the cumulative and synergistic impacts and pressures from human activities in this shared space (Roberts 2015). Governments and development partners have launched a number of regional initiatives to measure and conserve the Caribbean Sea’s natural capital, as a foundation for the transition to a blue economy. For example, since 2009 the GEF has funded a Caribbean Large Marine Ecosystem (CLME) Project implemented by the United Nations Development Programme (UNDP), to better assess the status of the ecological systems and the region’s natural capital, and support policy recommendations for conservation.13 Similarly, in 2013 nine Caribbean states and territories signed the Caribbean Challenge Initiative (CCI) Leaders Declaration com- mitting to conserve and manage at least 20 percent of the marine and coastal environment by 2020, together with sustainable financing mechanisms for operating costs over the long term (Roberts 2015). These commit- ments follow a trend in the region to increase protection of ocean areas (MPAs) with coverage growing from 6,463 square kilometers in 1983 to 143,096 square kilometers by 2014, or some 4 percent of the Caribbean Sea (TWAP 2015). 13 http://www.clmeproject.org/index.html. Chapter 3 51 Figure 3.8. Eastern Caribbean Regional Ocean At the subregional level, in 2013 the members of the Organization Policy of Eastern Caribbean States (OECS) adopted a policy framework that could provide the foundation for a blue economy in this area of the Caribbean Sea. The framework is documented in the Eastern Caribbean Regional Oceans Policy and Action Plan (ECROP) (see Box 3.6). At the national level, a number of states have introduced policies to support the transition to a blue economy, such as in The Bahamas (where an integrated policy framework aims to manage the ocean space and its resources jointly across some 34 different government bodies) as well as St. Kitts and Nevis, St. Vincent and the Grenadines, and Antigua and Barbuda. In the latter, the Barbuda Blue Halo Initia- tive is being supported by the Waitt Institute to develop a compre- hensive, community-driven, and science-based plan for the island’s coastal waters, including new fishing regulations and a zoning plan for coastal waters (Roberts 2015). Similar work is also being undertak- en in countries like British Virgin Islands and Montserrat. As the following section describes, Grenada in particular has intro- duced since 2014 a set of policies aimed at the development of a blue economy as the pillar of the country’s future growth. Box 3.5. Transforming Governance in Oceans - The OECS Experience Promoting Sustainable Oceans Governance in OECS SITUATION ANALYSIS: T  he OECS is an economic subregion in the Caribbean with 10 member states, all of whom are SIDS which have challenges similar to those faced in the marine environment for example, pol- lution among others. The Revised Treaty of Bassetterre establishing the Economic Union which stipulates in Article 4(0), among other things, that the Union shall pursue a common policy for oceans. In addition, all member states ratified the United Nations Convention on the Law of the Sea (UNCLOS). In 2013, the highest decision-making body of the Union (the Authority) approved and adopted a regional ocean policy (ECROP) to promote a common approach to ocean governance in all member states and further mandat- ed that each member develop the national ocean policy to support the regional policy. The competency for the implementation of the Oceans program including ECROP was given to the Commission for the OECS. The ECROP has a number of priorities and a number of goals, of which many find synergy with the SDGs. PROGRESS MADE:In 2014, the implementation commenced and to date, a structure for research has been developed to support a stronger science policy interface (a marine research strategy, code of conduct for responsible marine research, a data platform to support greater access to information, a guideline of marine standards)and an oceans governance team, comprising one nominated represen- tative of each member state who supports the connectivity and articulated the needs on behalf of the state, has been established. To date, five National Ocean Policies have been developed. IMPACT: P rior to the implementation of ECROP, ocean spaces were managed in an ad hoc manner, with a large number of policies dealing mostly with conservation without significant implementation resources, all done solely within national jurisdictions with little bilateral or multilateral cooperation. Now, member states are including the ocean economy in their development models and many countries are also pursuing greater conservation efforts, such as the CCI of having 20 percent of their coastal area under conservation. MAJOR PREREQUISITE FOR SUCCESS: P  olitical will was the major driver; sound governance structure in both multilateral environmental agreements and political diplomatic agreement; polices; effective institutional structure and cooperation. TOWARD A BLUE ECONOMY: A PROMISE FOR 52 SUSTAINABLE GROWTH IN THE CARIBBEAN 3.5 Case Study: Grenada: Translating Aspiration to Action in Its Transition to a Blue Economy The state of Grenada consists of the three islands of Grenada, Car- riacou, and Petit Martinique with a total land area of 345 square Figure 3.9. Map of Grenada kilometers (133 square miles). As one of the nine members of the CARRIACOU OECS, the island nation is nested between the Caribbean Sea and the Atlantic Ocean. Similar to many small island states, Grenada’s economy Caribbean Sea is shaped by its remoteness, small land mass, limited natural resource base, and fragile ecosystems. Grenada supports a population of 106,300 (2014), with a gross national income (GNI) per capita of US$7,910 (World Bank 2014). Grenada is recognized for its natural beauty and cultural di- versity. Over the last quarter century it has developed a tourism-based service economy, and it now brands itself as ‘Pure Grenada: The Spice of the Caribbean.' Grenada has a small, open economy, vulnerable to a wide range of Caribbean Sea exogenous shocks, and faces several development challenges. With a current GDP of US$911 million (World Bank 2014), Grenada has ex- perienced low growth in recent years, and the weak dynamism of the private sector has contributed to high debt levels. The official poverty GRENADA rate in Grenada is 37.7 percent, and the 2008 financial crisis increased the already high unemployment level to 10.2 percent, with youth un- employment over 30 percent. Agriculture represents about 11 percent of the labor force, with nutmeg and mace being the country’s main exports. In the last two decades, however, the importance of traditional export crops has fallen, and natural disasters have severely impacted the agriculture industry. At this time all agriculture, including fisheries, represents 7.1 percent (World Bank 2014) of GDP in Grenada, down from 13.4 percent in 1990. The country is now the world’s second largest producer of nutmeg, accounting for 20 percent of global supply. While nutmeg remains a principal export crop, it is currently second to fisheries as a source of export earnings. The tourism sector is the main pillar driving economy growth in Grenada. Over the years, the economy has shifted from one dominated by agriculture to one focused on the tourism industry—now considered the largest export sector in the country. The economic ramifications of the tourism industry have been profound with the increase in tourism development projects, employment, and investment on the island. The World Travel and Tourism Council (WTTC) estimates that the total contribution of tourism to GDP has increased from 15 percent in 2005 to 25.5 percent in 2015. The share of tourism to total employment increased from 13.9 percent to 23.3 percent from 2005 to 201514 (equivalent to 11,500 jobs). The reliance on tourism has resulted in numerous benefits. Tourism-related activities in the economy has made communities more economically stable, and has improved the health care and education system in the country. Moreover, tourism has brought the protection of the natural environment through funding from entrance fees and the maintenance and enhancement from government funding (Bhola-Paul 2015). While economic growth was moderate in 2015 because of structural challenges, the tourism industry is expected to remain strong and continue to grow. Grenada is highly vulnerable to the adverse impacts of climate change and climate variability. Most of the island’s infrastructure is located in the coastal zone, making the economy vulnerable to impacts of sea-level rise, inundation, erosion, and storm surges, while the steep slopes are vulnerable to landslides. Based on data from DesInventar,15 Grenada’s damages and losses from hydro-meteorological disasters and earthquakes can be estimated at US$1.098 billion between 1994 and 2013. Hurricane Ivan, in particular, caused direct and indi- rect losses of US$889 million, destroying 90 percent of all property, affecting 85 percent of the nutmeg export 14 Source: World Travel and Tourism Council Data, 2016. https://www.wttc.org/-/media/files/reports/economic%20impact%20research/countries%202015/grenada2015.pdf. 15 EM-DAT, DesInventar, Caribbean Development Bank. Chapter 3 53 crop, and causing a drop of 24 percent in the 2004 GDP.16 Hurricane Ivan rendered inoperable 70 percent of Grenada’s hotel infrastructure in 2004, and the debt-to-GDP ratio increased to 94 percent (World Bank 2015).17 The damage was equivalent to 200 percent of the country’s GDP at the time. The following year, the effects of Hurricane Emily further retarded recovery, especially with inadequate insurance coverage. Therefore, the vulnerability of Grenada to these natural disasters has caused and will continue to cause costly damage to the infrastructure, socioeconomic sectors, environment, and local livelihoods. Grenada has come a long way in its recovery process, Figure 3.10. Growing Tourism Sector while placing a major focus on greening its econo- my. Grenada’s progress is observed in the approach to stimulate key transformation sectors such as tourism and hospitality services; health, well-being and edu- cation services; agribusiness; ICT; and energy develop- ment (renewable and nonrenewable). In transitioning to a low-carbon economy, the national Energy Policy of Grenada aims to deliver a sustainable low-carbon approach through eight core principles: (a) ensuring energy security, (b) achieving energy independence, (c) maximizing energy efficiency, (d) promoting energy conservation, (e) pursuing environmental sustainability through ‘green energy,' (f) guaranteeing sustainable resource exploitation, (g) minimizing energy costs, and (h) energy solidarity.18 Grenada has worked to create a new Electricity Supply Act with a view of achieving 100 percent renewable energy.19 Such an economy would utilize base load geothermal and waste-to-energy, complemented by intermittent wind and solar in the energy mix by 2030. Several policies and programs have been implemented to meet the clean energy goals of renewable energy and energy efficiency.20 A price on carbon through a fuel levy has also been introduced, improving the fiscal space of the coun- try.21 Although Grenada’s total emissions are not significant in the global context, Grenada declared its contribution to reducing greenhouse gas emissions at the conclusion of the UN Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP21) in Paris in December 2015. As per the (Intended) Nationally Determined Contributions submitted by Grenada, the government committed to reducing its greenhouse gas emissions by 30 percent of 2010 by 2025, with an indicative reduction of 40 percent of 2010 by 2030.22 For Grenada mainstreaming climate change adaptation activities into national development planning is a priority. The nation has adopted Climate Smart Agriculture, integrating agriculture development with climate responsiveness. The largest agricultural production systems, nutmeg and other spice production, are ‘climate smart.’23 These arboreal crops sequester carbon, make a vital contribution to soil and watersheds, and resist drought. The sustainable use of water resources is crucial for the future development of the country, and major actions such as a vulnerability assessment of the water sector and a national adaptation plan have been developed. Rainwater collection activities are underway to improve water availability and storage. To reduce the risk of hurricane damage, Grenada has also been a member of the Caribbean Catastrophic Risk Insurance Facility (CRIFF) since 2007. CRIFF was designed as a regional catastrophe fund for Caribbean governments to limit the financial impact of devastating hurricanes and earthquakes by providing quick financial liquidity when a policy is triggered. Broadening its scope past the limited reliance on the green economy, Grenada is now a leader in the transfor- mation to a Blue Economy Ocean State in the Caribbean. In May 2014, the Government of Grenada announced 16 Economic Commission for Latin America and the Caribbean. http://www.cepal.org/en/headquarters-and-offices/eclac-caribbean. 17 World Bank. Summary Diagnostic Report. Grenada Disaster Risk Financing Technical Assistance Project. 18 National Energy Policy of Grenada 2011. http://www.gov.gd/egov/docs/other/GNEP_Final_Nov_23_2011.pdf. 19 Statement by Dr. The Right Honourable Keith Mitchell at plenary meeting of the UN Summit for the Adoption of the Post-2015 Development Agenda. 20 Some of them include demand-side energy efficiency programs; Government Energy Efficiency Program, which targets a 10 percent reduction in government electricity use; Government programs to replace incandescent lights with fluorescent lights, and so on. 21 Statement by Dr. The Right Honourable Keith Mitchell at plenary meeting of the UN Summit for the Adoption of the Post-2015 Development Agenda. 22 Grenada’s (Intended) Nationally Determined Contributions (I)NDC. 23 Most of Grenada’s export crops are from trees that require no tillage. Farmers have also diversified into alternative export crops, including cocoa and tropical fruits to reduce the risk of hurricane damage on shallow-rooted nutmeg trees. Cocoa is a deep-rooted species that is resilient to tropical storms. These initiatives will sustainably increase productivity, enhance resilience, and reduce greenhouse gases TOWARD A BLUE ECONOMY: A PROMISE FOR 54 SUSTAINABLE GROWTH IN THE CARIBBEAN its intention to undertake a number of activities to protect its ‘blue space’ and grow the island’s blue economy.24 As part of the transition to a blue economy, Grenada has established the National Ocean Governance Committee, which includes officials from the ministries of Agriculture, Foreign Affairs, Legal Affairs, Finance, Tourism, the Royal Grenadian Police Force, the Grenada Ports Authority, the Grenada Solid Waste Management Authority, and the National Disaster Management Agency. This committee oversees the development of blue economy initiatives across the government. Grenada is the first OECS member country to develop a vision for its blue growth economy. Grenada’s blue growth vision is to optimize the coastal, marine, and ocean resources to become a world leader and interna- tional prototype for blue growth and sustainability. Because of the country’s outward-looking geography, its ocean and coastal areas provide important resources for developing new ideas and innovation. The situation has opened up an opportunity for blue growth, harnessing the untapped potential of Grenada’s oceans and coasts for jobs and economic growth. This potential is significant, provided the appropriate investments are made. Grenada’s ocean space is 75 times larger than its land area. Beyond the 345 square kilometers of green terri- torial land, Grenada has 26,000 square kilometers of blue ocean space—exclusive economic zone (EEZ). Such a large EEZ provides more space to diversify the country’s economy, and by applying a blue economy approach, many new opportunities will arise to achieve a higher rate of growth, create new jobs, and reduce poverty. Some of the emerging opportunities in the blue economy with a strong potential in Grenada are aquaculture, marine renewable energy, marine biotechnology, and ocean-related tourism. Figure 3.11. Grenada Exclusive Economic Zone While the marine environment has great potential with regard to economic sustainable development, the country is facing increasing environmental pressures. Its large marine ecosystem is characterized by coral reefs, mangroves, sea grasses, sandy beaches, and rocky shores; and the high biodiversity associated with fauna and flora has resulted in high rates of national and regional endemism. These marine resources provide the basis for a range of economic and social activities, including the tourism and fishing industries. The natural systems underpinning the health of Grenada waters are changing at an alarming rate and scale, due largely to human action in the context of weak institutions. Despite the value of the goods and services provided by the oceans, enormous challenges are confronting this natural capital asset, most notably (a) 24 NOW Grenada. Grenada’s blue economy poised for rapid growth. http://nowgrenada.com/2014/05/pm-grenadas-blue-economy-poised-rapid-growth/. Chapter 3 55 habitat change and loss, (b) pollution, (c) overfishing, and (d) climate change. Coastal development and ma- rine-based pollution, for example, threaten 85 percent and 25 percent, of the reefs in Grenada, respectively. Recognizing the rich marine ecosystem and increasing environmental pressures, Grenada has created MPAs and commits to create more. Grenada committed to effectively conserve at least 25 percent of its near-shore marine area and at least 25 percent of its terrestrial area by 2020 as a means to contribute to the sustainable livelihoods for its people and to contribute to protection of the world’s biodiversity (Convention on Biological Diversity - COP8). The MPAs will help restore the productivity of the oceans, avoid further deg- radation, and offer sites for scientific study which can generate income through tourism, biotechnology, and sustainable fishing. Grenada’s strategic location in the world offers a number of significant factors that play into the develop- ment of a successful blue economy strategy. As examples of its advantages, Grenada possesses (a) a location in close proximity to both North and South America with convenient access to/from major cities throughout the world, (b) an EEZ of 26,000 square kilometers of blue ocean space, (c) the gateway to the Grenadine Islands and the best sailing in the Caribbean, (d) one of the most politically stable governments in the region, (e) a widely recognized sound infrastructure and supportive investors, and (f) excellent port facilities and an inter- national airport. All of these factors put Grenada in a unique position to thrive on the path to a blue economy, and to serve as a leader in its implementation. Figure 3.12. Grenada Underwater Sculpture Park underwatersculpture.com Globally, Grenada has already achieved acclaim for several blue economy activities. The world’s first under- water sculpture park is recognized as one of the top 25 wonders of the world by the National Geographic. The park contains a collection of ecological underwater contemporary art located off the west coast. The island has also been recognized for the best advanced diving and wreck diving in the Caribbean by Scuba Diving Magazine. Moreover, Kick’em Jenny is the most active volcano in the region and considered one of the first shallow vent biological communities ever found, providing unique opportunities for research related to the growth of a submarine volcano. TOWARD A BLUE ECONOMY: A PROMISE FOR 56 SUSTAINABLE GROWTH IN THE CARIBBEAN The blue economy in Grenada is closely linked to the in- come generated by ocean-related tourism. As the largest Figure 3.13. Tourism in Grenada industry in Grenada, tourism is heavily reliant on the coast- al and marine environment with regard to cruise ships, beach side hotels and beaches, scuba diving, recreational and sport fishing, and recreational yachting. The country has been recognized as a sustainable tourism destination with its 'Pure Grenada' brand, referring to the spices, pris- tine tropical rain forests, and coral reefs. The charming villages, towns, and harbors reflect the maritime heritage. In addition to providing berths for large cruise ships, Gre- nada serves as a major destination point for private yachts and mega yachts. The diving segment alone contributes around EC$57 million. The economic impact of yachting on Grenada is over EC$230 million. The quality and status of the marine environment could therefore have a signifi- cant impact on the value of this sector, depending on how tourists perceive the quality of the marine environment and the experience it offers. The growth of Grenada’s fisheries exports has contributed in major ways to the blue economy. The con- tribution of fisheries to the national economy has been increasing, representing (along with other agriculture) 7.1 percent (2014) (World Bank 2014) of GDP in Grenada. The characterization of Grenada’s ocean waters has determined the nature of its fisheries; Grenada has a large ocean space in relation to its terrestrial size, but the majority of this is deep oceanic water with a relatively small area of shallow shelf. The fisheries are therefore dominated by large oceanic pelagic species like tuna, which constitute 75 percent of landings.25 Yellow fin tuna, which is mainly targeted for export, comprises 28 percent of total annual fish catch.26 Other prime species include demersals (reef fish like snapper, grouper, and parrotfish) and small pelagics (mostly scads) which are caught in coastal areas. Overall, it is important to highlight that the oceanic pelagic fishery has been a major area of growth in the country’s economy. Unlike other Eastern Caribbean countries, Grenada has a successful high-value seafood export business, which has significant and positive economic implications for the country. Two important factors led to this success: (a) Fresh tuna exports are sent by air to the United States, and (b) the country achieved the quality standard required to gain an European Union ‘number’ to export fresh demersal fish (grouper, snapper, and so on) to Martinique (which is a Department of France).27 Fisheries have thereby played a major role in reviving the economy, and the expanding export of high-value fish (fresh tuna) has generated a significant level of foreign exchange in recent years. Grenada is actively pursuing opportunities for ocean aquaculture. This subsector was discontinued in Gre- nada after its introduction in the 1990s (tilapia and fresh water prawns), mainly due to lack of an economy of scale and an inability to compete with the traditional capture fisheries. Grenada is part of the Global Blue Growth Network, which recognizes the need to better protect the marine environment and at the same time produce an additional 60 million tons of fish through sustainable aquaculture by the year 2030.28 Grenada has been an advocate for addressing climate change and building coastal resilience. Ocean issues are a critical part of any attempts to address climate change, and major efforts have begun to build coastal resilience in the country. In the coastal zone, effectively addressing climate and disaster risks requires an integrated approach that looks at exposure to impacts from climate change and natural hazards. Gre- nada has now completed its integrated coastal zone policy in 2015 with a view to preserve, enhance, and strengthen resilience of coastal ecosystems while enabling social and economic development.29 Moreover, assessments of the national and local vulnerability have been undertaken30 to provide a holistic picture of risk, thus helping design and implement locally relevant solutions. One initiative to be implemented is the 25 Fisheries Policy for Grenada 2012. http://acpfish2-eu.org/uploads/projects/id140/I1544%20-%20ACPFISH%20II%20-%20CAR%20-%201.2%20-%20B2b%20-%20Policy%20 Grenada%20%20-01.pdf. 26 FAO Country Profile. ftp://ftp.fao.org/FI/DOCUMENT/fcp/en/FI_CP_GD.pdf. 27 Fisheries Policy for Grenada 2012. http://acpfish2-eu.org/uploads/projects/id140/I1544%20-%20ACPFISH%20II%20-%20CAR%20-%201.2%20-%20B2b%20-%20Policy%20 Grenada%20%20-01.pdf. 28 Statement by Dr. The Right Honourable Keith Mitchell at the Interactive Dialogue 4 “Protecting our Planet and Combating Climate Change” Trusteeship Council Chambers on September 27, 2015. 29 Grenada’s (Intended) Nationally Determined Contributions (I)NDC. 30 The Nature Conservancy. At the Water’s Edge (AWE): Coastal Resilience in Grenada and St. Vincent and the Grenadines. An Integrated Approach to Adaptation and Disaster Risk Reduction. Chapter 3 57 establishment of a fisheries insurance to promote the resilience of the small-scale fisheries sector against the increasing climate-change-related disaster risks. Other efforts already under implementation include several community ecosystem-based adaptation activities, in particular coral restoration, mangrove rehabilitation, alternative livelihood solutions, and so on, all of which will reduce the community’s vulnerability to threats and help inform actions and policies to further build resilience. Grenada is the first country to initiate a proactive and comprehensive national coastal master planning approach to blue growth. The government recently completed a high-level Blue Growth Coastal Master Plan for the islands of Grenada, Carriacou, and Petite Martinique. The plan not only summarizes key goals and objectives but also identifies specific blue growth development incentive zones along the coast. It doc- uments preliminary site and facility concepts for desirable blue growth strategic projects to initiate a dialog with investors. The master plan, in concert with Grenada's Integrated Coastal Zone Management Policy, is a roadmap for the nation to become a world leader in the development of a sustainable blue economy that will generate new jobs, alternative livelihoods, and an expanded economy, while preserving the natural environment. A detailed description of the planning process and findings are highlighted in Annex 4. On the pathway toward blue growth, Grenada further aims to establish a Blue Growth and Oceans Gov- ernance Institute. The institute will make Grenada a global example for Blue Growth as an Ocean State. It will house many of the leading global ocean research centers, and promote its vision to optimize the coastal, marine, and ocean resources around the Caribbean. Grenada has put major efforts into education, which rep- resents 20 percent of the GDP. The island is home to St. George’s University, the leading academic center in the Caribbean. Moreover, Grenada has joined Dominica and Marshall Islands to promote a new initiative called ‘We are the Oceans’ (WATO), inspired by the United Nations Global Goals. WATO is dedicated to educating youth across the world about ocean sustainability and making it part of every school’s curriculum by 2030. Marine spatial planning (MSP) is a fundamental tool for developing Grenada’s blue economy. Threats to Grenada’s ocean space (and the entire Caribbean Sea) have not occurred in isolation, but often overlap and intensify their impacts in the same physical space, which is often governed by different sector-based legal frameworks. Utilizing tools such as MSP will help Grenada better understand and then reform gov- ernance of the diversity of ocean uses and economic activities, resulting in a more secure framework for sustained investment in the blue economy. To achieve blue growth aspirations, Grenada and other OECS countries are aiming to fill the capacity gap, which has become a priority in the Eastern Caribbean Regional Oceans Policy and the Three Year Strategic Plan (ECROP) approved in 2013. Drawing upon MSP, it will bring several benefits tied to the health of the marine ecosystems, which would include increased sustainable livelihoods from ocean-based tourism and from fisheries, enhanced food security from fisheries, and in- creased defenses and resilience to extreme weather events. The successful development of a blue economy will require governance and policies that integrate environmental and economic considerations. Good governance at local and regional levels is imperative to fully realize the transition to a blue economy. Grenada is well on its way through its several ongoing blue economy initiatives, at the regional level also, through the endorsement of the new Eastern Caribbean Regional Ocean Policy. The planning and management for multiple coastal and ocean uses requires consid- eration of the full range of uses, users, and values, through an integrated, interdisciplinary and inter-sectoral approach. Trade-offs must be made where space imposes limits on the combination of all activities. The mix of marine resource development will be determined by existing governance structures and will likely require new legislation, defined rules, strengthened institutions, and potentially entirely new ones (Roberts 2015). By applying a blue economy approach, Grenada will continue to encounter many new opportunities, also to the benefit of the Caribbean region. The blue economy approach allows countries to coordinate man- agement across sectors and resources and integrates environmental management directly with economic development, fiscal policy, and social goals. The emerging opportunities will require investment in research and development, strengthening technical capacity, and creating the right enabling environment to attract and retain outside investments. Some enablers are vital to the conditions for blue growth. These include (a) policies for a healthy, resil- ient, and productive marine environment; (b) infrastructure; (c) technology, research, and development; (d) TOWARD A BLUE ECONOMY: A PROMISE FOR 58 SUSTAINABLE GROWTH IN THE CARIBBEAN business development with sustainable finance; (e) maritime surveillance, monitoring, and enforcement; (f) education and awareness; and (g) institutions for integrated ocean governance. With these conditions, the blue economy will create new jobs, achieve a higher rate of growth, reduce poverty, and also secure international biodiversity and sustainability obligations. To create the financing environment to advance the transformation to a blue economy, Grenada orga- nized Blue Week 2016 to promote blue growth and investment to SIDS and least developed countries. This international conference was in response to the adoption of the Agenda 2030 by the UN in 2015, including the SDG on oceans and seas (SDG 14), and the Paris Agreement at the UNFCCC in December 2015. Blue Week 2016 focused on integrating ocean health and wealth, and bringing together ocean-related investment into a co- herent package of bankable projects to increase the benefits of SIDS. In particular, the conference established a Blue Growth Network to (a) harness ocean-based investment initiatives; (b) recognize that integrated ap- proaches are vital for long-term investment, reduced pressure on marine habitats, and sustainable livelihoods; and (c) recognize that capacity development is essential to achieving blue growth. In conclusion, this chapter suggests that the economic benefit derived from oceans is poised to increase at even higher rates as ocean industrialization continues. Countries like Grenada have recognized this fact and are preparing to better understand and ultimately harness the ocean’s potential for future growth. However, the very ocean assets underpinning economic growth are facing threats due to their unsustainable utilization. If ocean wealth rises and falls with that of ocean health, as indicated by reports, recognition of that relationship holds great importance. Governments will need to maintain the integrity of ocean assets and indeed help them to appreciate in value by better care of ocean ecosystems. Based on early estimates of the ocean economy’s contribution to GDP, quite a lot is at stake. This chapter provides a framework or entry point for needed policy reforms. The next chapter provides a suggested pathway to a blue economy. Chapter 3 59 Pathway and Approach for the transition to a Caribbean Blue Economy A n infinite number of pathways are possible. The development of the ocean economy in the Caribbean from the current baseline described in Chapter 1 will require thoughful consideration. In modeling the trajectory of the global ocean economy, the OECD described three future scenarios to 2030: a)  Unsustainable growth in the region’s ocean economy; b)  Business-as-usual growth (and decline in the natural capital); and c)  Transition to a blue economy (OECD 2016). Achieving the third scenario will take coordinated action. While it is beyond the scope of this paper to model future pathways for the ocean economy in the Caribbean and quantify projections over time, some initial policy recom- mendations and actions can be proposed for initiating a transition to a blue economy, based on the general blue economy policy framework suggested in Chapter 3 from international experiences and recent work undertaken in the Caribbean by the Commonwealth. These policy recommendations pro- vide a broad menu from which countries may choose what applies to their local context, given that ocean governance arrangements are at different stages of readiness throughout the region. Some recommendations and cases may be applicable at a regional scale for shared natural capital assets and ocean industries, whereas others may be best pursued by subregional coalitions or at the national level. As a first step, a set of ‘Ocean Principles’ for the region’s blue economy may be useful to guide both policy and investment. These are based on a review of selected international law, the Equator Principles, the Carbon Principles, and several initial attempts to articulate key principles for the use of the ocean. This report proposes some Ocean Principles for discussion and consideration in the region in order to help the transition to a Caribbean blue economy. In particular, relevant policy statements of principles included in international law can be found in, among others:  N Convention on the Law of the Sea Treaty; ■■ 1982 U  io Declaration on Environment and Development; ■■ 1992 R  ode of Conduct for Responsible Fisheries; ■■ 1995 C ■■ 2002Johannesburg Declaration on Sustainable Development; ■■ 2012The Future We Want Outcome Document; and ■■ 2015  Voluntary Guidelines for Securing Sustainable Small-Scale Fish- eries in the Context of Food Security and Poverty Reduction. Of note in particular, the Future We Want Outcome Document from the Rio+20 Summit renewed international commitment to the principles of sustainable development articulated in 1992 at the first Earth Summit. It emphasized the need for sustained, inclusive and equitable economic growth in order to achieve sustainable development, introducing the con- cept of policies to promote a green economy that better aligns production and consumption patterns with conservation of ecological systems and pro- cesses (United Nations, 2012). TOWARD A BLUE ECONOMY: A PROMISE FOR SUSTAINABLE GROWTH IN THE CARIBBEAN 61 n addition to international law, several recent international efforts I Box 4.1. Ocean Principles for Investment have synthesized principles to guide investment in the ocean space in a Caribbean Blue Economy with various objectives that may be helpful, including: ■■ Principle 1: Sustainable Development/ ■■ International Union For Conservation of Nature (IUCN) Princi- Sustainable Livelihoods ples for High Seas Governance;31 ■■ Principle 2: Marine Ecosystem Health ■■ Principle 3: Integrated Ocean Governance ■■ Blue Ribbon Panel to the Global Partnership for Oceans Princi- ples (Blue Ribbon Panel 2013); and ■■ Principle 4: Science-based, Precautionary, and Adaptive Decision-making ■■ World Wildlife Fund Blue Economy Principles.32 ■■ Principle 5: Duty of Care and Accountability ■■ Principle 6: Inclusive and Transparent  ased on these efforts, the following Ocean Principles are proposed B Decision-making for discussion and consideration in the region, with the objective of ■■ Principle 7: Ecosystem-based Management guiding public and private investment in transition toward a blue economy in the Caribbean (see Annex 2 for more detail). ■■ Principle 8: Develop Ocean Solutions that will Reduce Climate Change Risks and Allow A policy framework is needed to enable the transition to a Ca- the Development of Climate Change-Relat- ribbean blue economy. A generic blue economy framework was ed Opportunities proposed in Chapter 3 from a set of international experiences in ■■ Principle 9: Sharing of Benefits Derived from promoting governance that would integrate the environmental, the Blue Economy social, and economic dimensions of the ocean economy with ■■ Principle 10: The Right to Development broad participation and innovation. Research was also undertak- en with a number of Caribbean countries by the Commonwealth Secretariat.33 This report suggests seven interrelated priorities for a policy framework to enable the transition to a blue economy in the region: Figure 4.1. Potential Policy Framework for a Caribbean Blue Economy Policy Instrument Design Policy Instrument Delivery Policies for Integrated Ocean Governance Education and Awareness Policy objectives for a healthy, resilient, and productive Maritime Surveillance, Monitoring and Enforcement marine environment Infrastructure Research and Development Business Development and Sustainable Finance Policy instrument design 1: Developing and strengthening regional and national policies to better inte- grate the governance framework for the Caribbean Sea. This framework sets a key priority on reviewing and enhancing the broad policies for integrated ocean governance. At different scales, these policies must support the design and enactment of more ocean-specific (rather than sector-specific) policy instruments. They should also review the capacity for delivery (that is, the regulations and institutions to give effect to the policies). Robust and integrated governance (i.e. both policy instrument design and delivery) is the unique key to achieving adequate management of the ocean and is therefore an overarching theme for the transition to a blue economy. As the OECD notes, given the expected rapid future expansion of ocean industrial activity worldwide and the increasingly crowded ocean space, establishing effective integrated ocean governance in coastal countries is imperative (OECD 2016). The existing policy framework for ocean governance in most, if not all, developing Caribbean states em- phasizes a traditional sector-specific approach. Their management and planning thus show symptoms of 31 See: https://cmsdata.iucn.org/downloads/10_principles_for_high_seas_governance___final.pdf 32 www.panda.org/wwf_news/?247477/Principles-for-a-Sustainable-Blue-Economy. 33 See for example the situation analysis completed in support of the development of a national maritime policy framework for The Bahamas (Commonwealth Secretariat 2013). TOWARD A BLUE ECONOMY: A PROMISE FOR 62 SUSTAINABLE GROWTH IN THE CARIBBEAN the problem facing a large number of countries seeking to implement a blue economy approach: Ocean governance remains highly ‘balkanized’ (McGinnis 2016). As Caribbean governments encourage economic development of marine areas in the future, value-based conflict between competing interests is likely to increase. Clear, coordinated institutional mechanisms for integrated coastal and ocean management estab- lished and implemented across relevant sectors such as fisheries, tourism, transport, energy and environment, will be essential to accommodate and resolve these conflicts. This goal will be difficult to achieve without a more comprehensive and integrated approach to marine planning and decision-making. At the same time, it should be recognized that trade-offs will need to be made where ocean space is limited and the combination of all activities is not feasible. New policies for ocean governance should produce change in management practices that enable a shift toward the sustainable use of ocean resources. A more effective governance system can be summarized in three components. The first component is a broad policy framework that creates the administrative mechanisms required for integrated management of the ocean. This mechanism may be either formal (for example, the establishment of a Ministry or Department with functions and powers and duties for coordination) or informal (for example, an across government co- ordination committee with broad representation from different sectors). The mechanism incorporates local knowledge and leadership. The second component is the more frequent policies and regulations that these administrations develop to govern the use and allocation of ocean resources and space. It includes capacity to enforce compliance with access and use rules. (A number of countries in the region have embarked on the development and implementation of national ocean policy frameworks.) The third component consists of tools to achieve the implementation and coordination of integrated ocean policy frameworks (for example, CMSP, administrative capacity for monitoring and enforcement, and so on). With regard to the tools, the application of CMSP is particularly important for guiding decision-making in a blue economy, and for resolving conflicts over ocean space. CMSP brings a spatial dimension to the regulation of marine activities by helping to establish geographical patterns of sea uses within a given area (OECD 2016). One key practical issue for the use of CMSP in the Caribbean will be the appropriate spatial scale CHAPTER 4 63 for planning to match uses to ecosystems and ecosystem processes, including the strong representation of protected areas (Hoegh-Guldberg et al. 2015). Another issue is ensuring greater leadership for the develop- ment of spatial plans (for example, at the national scale perhaps ensuring a single lead agency for marine spatial planning, harmonizing associated legislation and policies). Additionally, ‘Future Ocean Spatial Planning’ (FOSP) has been suggested as a further framework to guide sustainable development of the ocean and coasts inspired by the MSP approach (EU-U.S. Conference Series 2011). Fortunately, recent years have seen a significant increase in the number of countries and regions putting in place strategic policy frameworks and decision tools for better ocean management (OECD 2016). The ECROP in the eastern Caribbean is an example of a step toward more integrated ocean governance within the region, and a number of states have begun the development and implementation of integrated ocean policy framework at the national scale (for example, Antigua and Barbuda, The Bahamas, St. Lucia, St. Kitts and Nevis, and St. Vincent and the Grenadines). Policy instrument design 2: Ensuring the implementation of policy objectives for a healthy, resilient, and productive marine environment in the Caribbean, as the basis for a blue economy. In addition to develop- ing more integrated frameworks for ocean governance, policies should explicitly reflect the principle that the health of the oceans is inextricably linked to the sustainability of economic livelihoods for coastal commu- nities and the economy generally. As noted in section 2.1, they also provide a range of essential goods and services that would be extremely costly to restore or replace once lost. For Caribbean countries in particular, the health of coral reefs and associated biodiversity are of critical importance from both their environmental and economic perspective due to the strong reliance of their economies on the tourism and fisheries sectors. Effective management of the Caribbean marine environment and the maintenance and restoration of ecosys- tem health and integrity is thus fundamental to ecologically sustainable development in the region. Policy instrument delivery 1: Carrying out education and awareness for the blue economy. The lack of education and training in many small Caribbean states leads to chronic gaps in the technical capacity for policy instrument delivery. The gaps occur notably in marine research, planning, and decision-making across all sectors of the ocean economy. Identifying future skill needs, labor market supply, and demand trends and adapting and developing existing education, vocational, and professional training programs to meet them will be essential if the blue economy is to become a reality in the Caribbean. Interested governments may find a key ‘short cut’ in many cases through cooperation to share capacity on issues or sectors of the ocean econ- omy of critical concern, in a creative, effective, and politically appropriate manner—for example, for maritime surveillance and monitoring. Such cooperation, coupled with greater coordination across governments, can help reduce costs and accelerate the transition to the integrated governance approaches needed for a blue economy. A more coordinated focus between the existing research and educational facilities in the region may well prove beneficial in addressing key gaps in research skills and capacity building. Ultimately a more comprehensive research strategy is likely required for Caribbean small states to realize fully the opportunities presented by a blue economy. This strategy would likely include regional cooperation or partnerships to more systematically identify and quantify the skills needed for the blue economy; it would then engage local and regional universities to explore whether current curricula can meet these needs. Policy instrument delivery 2: Ensuring maritime surveillance, monitoring, and enforcement, to enhance compliance with policy instruments. The Commonwealth’s experience of undertaking stakeholder en- gagement in several SIDS highlights the difficulties associated with the enforcement of existing rules and regulations, particularly with regard to fisheries. In many countries, the issue of illegal, unregulated, and unre- ported (IUU) fishing by neighboring states34 and poor enforcement of existing fisheries laws are key concerns for governments and marine users alike. In the context of a Caribbean blue economy, IUU fishing prevents governments from achieving their nationally and regionally agreed-upon fisheries management goals and objectives (FAO 2015). A key element of monitoring and enforcement is surveillance of a nation’s ocean space and an awareness of the activities undertaken in the maritime domain. Improving procedures for monitor- ing and enforcement and clearly defining the responsibilities for the management of marine activities and resources between various ministries and departments is a crucial issue that must be addressed. Caribbean small states need to enhance their ability to identify threats to maritime space in a timely manner. They may 34 Concerns were voiced to Commonwealth advisers during stakeholder consultation programs in The Bahamas and Antigua and Barbuda alike. The key concerns relate to foreign fishing vessels fishing illegally in those states’ national waters with little or no possibility for enforcement action being taken by the respective coastal state. TOWARD A BLUE ECONOMY: A PROMISE FOR 64 SUSTAINABLE GROWTH IN THE CARIBBEAN share and integrate intelligence, surveillance, and navigation systems into a common operating picture. They must position decision-makers to prepare for, prevent, respond to, and recover from a broad spectrum of potential maritime-related threats. Regional cooperation in maritime domain awareness will also allow limited resources to be shared and more effectively deployed, for example around satellite-based remote sensing platforms to monitor large areas of ocean space in near real time, combined with innovative tracking and analysis tools,35 drawing for example upon facilities that already exist within the Commonwealth. Policy instrument delivery 3: Providing the infrastructure for a blue economy. Coastal and port infrastructure are critical assets that serve as catalysts of economic growth and development in Caribbean small states. These countries rely heavily on coastal tourism and are almost entirely dependent on maritime transport to facilitate global trade (UNECA 2014). A number of Caribbean small states are also positioning themselves as maritime hubs in the region, anticipating future growth in that sector as a key pillar in their economic development strategies.36 In many Caribbean small states, tourism resorts, coastal towns, and infrastructure are at risk, given their location at or near present sea level and their proximity to the coast. Relocation or fortifying coastal infrastruc- ture for coastal protection will become financially burdensome for governments. A more integrated approach to planning could make the tools to help minimize hazards of flooding and erosion and investments in coastal infrastructure affordable and optimize performance. Policy instrument delivery 4: Supporting research and devel- opment for a blue economy. Research and development leads to new products and services; the generation of new knowledge about the marine environment; facilitation of better manage- ment and protection of marine ecosystems; and informed policy, governance, and regulation of the marine sector.  Knowledge of the marine environment is a critical need for effective deci- sion-making toward a blue economy. Translating new opportu- nities into productive sectors will require investment in research and development, building technical capacity, and creating the right environment to attract and retain outside investment. Identifying and defining ongoing strategic marine research and information needs, in an inclusive and adaptive manner, togeth- er with the appropriate funding resources and mechanisms, is essential for achieving economic development through a blue economy framework. This research will ensure that the maximum value can be achieved from any resource through sound planning and management, ensuring that the best decisions can be made regarding the balance between economic development and sustainable resource use (Greenhill et al. 2015). There is generally a paucity of marine data relating to the offshore waters in Caribbean small states. Fur- thermore, indigenous marine research is not well developed in most small states due to a lack of funding and research institutions. Numerous international research cruises are undertaken in the Caribbean Sea, related to the collection of hydrographic/bathymetric data, biological sampling, or environmental characterization. Establishing a program for identifying marine data, in particular bathymetry, via a number of academic and other sources, and reviewing the process by which diplomatic clearance for marine scientific research is given. Requiring that copies of all data collected are provided to the government upon research completion would greatly enhance countries’ ability to use what is acquired (at considerable expense) for use in developing their marine management plans (Evans 2015). To this end, the OECS has recently published a series of strategy 35 For example, see: http://globalfishingwatch.org/. 36 Notable examples include Jamaica, Antigua & Barbuda, and The Bahamas. CHAPTER 4 65 Figure 4.2. Summary of Potential Policy Framework for a Caribbean Blue Economy Governance for a Blue Economy Ocean Principles for Investment in a Caribbean Blue Economy Policy Instrument Policy Instrument Design Delivery Principle 1: Sustainable Development/Sustainable Livelihoods Principle 2: Marine Ecosystem Health Policies for Education and Integrated Awareness Principle 3: Integrated Ocean Governance Ocean Maritime Principle 4: Science-based, Precautionary, and Adaptive Decision Making Governance Surveillance, Principle 5: Duty of Care and Accountability Policy Monitoring and objectives for a Enforcement Principle 6: Inclusive and Transparent Decision Making healthy, Infrastructure Principle 7: Ecosystem-based Management resilient, and productive Research and Principle 8: Develop Ocean Solutions that will Reduce Climate Change marine Development Risks and Allow the Development of Climate Change-Related Opportunities environment Business Principle 9: Sharing of Benefits Derived from the Blue Economy Development Principle 10: The Right to Development and Sustainable Finance Direction of time from design to delivery documents aimed at facilitating and improving coordination on marine-related research among its member countries.37 These documents may serve as a useful model for countries to develop their own approaches. Policy instrument delivery 5: Supporting business development and sustainable finance. Many countries are developing and implementing strategic plans to stimulate growth in their ocean space (see, for example, the Grenada Case Study in section 3.5). Such plans generally include fisheries, aquaculture, ecosystem services, marine and coastal tourism with the potential for the future integration of other important sectors as appro- priate (Ababouch 2015). These plans have the potential to significantly increase investment in the transition to a blue economy. Such strategic development plans focus on both existing sectors and new and emerging opportunities such as aquaculture and marine renewable energy. While it is clearly recognized that the ocean offers further potential for economic benefits to be derived from the sea—both from living and nonliving resources—it has not always been clear what a sustainable ocean economy should look like, and under what conditions it is most likely to develop (Economist Intelligence Unit 2015). The realization of these opportunities will require strategies that (a) further support investment in and development of existing sectors; (b) promote investment and innovation to support the development of new sectors; and (c) further develop the backward and forward links in the value chains of existing sectors. In Caribbean island states in particular, perhaps the greatest potential for value addition and job creation lies with the development of small and medium-sized enterprises within the blue economy value chains. There is, therefore, a need to examine the mechanisms necessary to encourage and finance start-up micro, small and medium enterprises (MSMEs) and to assist with capacity and technology development. Approach for the transition to a Caribbean blue economy. While the above policy framework for consider- ation in the region to enable the transition to a Caribbean blue economy is easy to articulate at the level of political ambition, execution is highly complex, and the pathway from intent to action is uncharted (Greenhill et al. 2015). Many of the elements required to transition to a Caribbean blue economy do, however, already exist, and the evolution of current approaches is both possible and realistic. Identifying and addressing some immediate actions for the above priorities could significantly drive and enable progress in this direction. Particularly for the island states and territories such actions would also be consistent with, and support imple- mentation of, the program agreed at the Third International Conference on Small Island Developing States in 2014 and its SAMOA Pathway Outcome document. 37 These include OECS Commission 2016; OECS 2016a; OECS 2016b; OECS 2016c. All documents are available at http://www.oecs.org/our-work/units/ogu. TOWARD A BLUE ECONOMY: A PROMISE FOR 66 SUSTAINABLE GROWTH IN THE CARIBBEAN Box 4.2. Proposed Approach to Begin the Transition toward a Caribbean Blue Economy Measure. ■■ Improve the statistical and methodological base for measuring the scale and performance of the ocean economy. ■■ Establish natural capital accounts for the Caribbean Sea at the national and regional levels. Manage. ■■ Create and expand integrated approaches to ocean governance. ■■ Apply marine spatial planning at the scale of exclusive economic zones. ■■ Invest in restoration and maintenance of the function and integrity of critical marine ecosystems. ■■ Build and strengthen the institutional and human capacity to act. Invest. ■■ Promote ocean principles to guide investment in the blue economy. ■■ Advance key infrastructure investments. Monitor. ■■ Continue to enhance knowledge of the Caribbean Sea. ■■ Expand maritime domain awareness of the Caribbean Sea. ■■ Track key indicators of the transition to a blue economy. Repeat. ■■ Keep close track of actions and progress and adjust as needed. This report recognizes that progress on integrated ocean governance arrangements are at different stag- es of readiness across the Caribbean. It proposes some potential immediate next steps for action that could serve as the basis for a practical approach (that is, medium-term strategies and actions) (Laffoley 2013) to help achieve a Caribbean blue economy. These actions are grouped under five strategies which, if pursued by na- tional and regional authorities with the support of development partners, could help transform the promising concept of a Caribbean blue economy into a sustainable process of implementation. In conclusion, this report and the above approach has aimed to provide a first-order estimate as a baseline for measuring the size of the current ocean economy in the Caribbean, together with a synthesis on the available information on the status of the natural capital underpinning that economy, and a conceptual framework and basis for countries to advance their stated aims to pursue a transition toward a Caribbean blue economy. Based on terrestrial experiences in the green economy as well as OECD’s recent measure and models of the global ocean economy, the report has proposed some likely policy priorities and approach for advancing this transition. An important next step will be to develop the blue economy conceptual framework proposed here into a blue economy model for the region that could project potential net economic benefits from various policy decisions and scenarios of transition—for example, modeling the net benefits of pursu- ing the approach suggested here, in line with internationally agreed principles for social equity and poverty reduction. CHAPTER 4 67 Annex 1. Summary of OECD Projections for Growth in the Ocean Economy G lobally in the coming decades, every sector of the ocean economy is likely to be affected by technological advances such as innovations in advanced materials, subsea engineering and technology, sensors and imaging, satellite technologies, computerization and big data analytics, autonomous systems, biotechnology, and nanotechnology. The OECD modeled the development of the ocean economy to 2030, projecting many ocean-based industries to outperform the growth of the global economy—indeed doubling its contribution to global value added from 2010. In particular, the OECD projects strong growth rates in shipping and transport, port services, ma- rine aquaculture, offshore wind, and ocean-based tourism, among others. Marine renewable energy, marine biotechnology, and carbon capture and storage are also considered to have significant potential, though unlikely to be realized by 2030 (OECD 2016). Table A1.1. OECD Projections of Changes in the Ocean Economy to 2030 under Business as Usual Scenario CHANGE IN OCEAN GROSS VALUE GROSS VALUE SHARE OF OCEAN INDUSTRY ECONOMY SHARE ADDED (US$, ADDED INCREASE ECONOMY (%) (%) BILLIONS) (US$, BILLIONS) 2010 2030 2010 –2030 2010 2030 2010 –2030 Tourism 25 26 1 375 780 405 Ports 13 16 3 195 480 285 Fisheries 6 11 5 90 330 240 Marine renewables 1 8 7 15 240 225 Shipping 20 17 -3 300 510 210 Offshore oil and gas 34 21 -13 510 630 120 Aquaculture 1 1 0 15 30 15 Total 100 100 1,500 3,000 1,500 Source: OECD (2016). The OECD projected growth in the ocean economy under three different scenarios: (a) unsustainable growth, (b) business-as-usual, and (c) sustainable growth (a blue economy). The difference in the contribution to gross value added from these three scenarios by 2030 is relatively small (from US$2.8 trillion, to US$3.0 trillion, to US$3.2 trillion, respectively), though expected to widen significantly by 2050 (OECD 2016). The OECD’s projec- tion for the global ocean economy is instructive for the Caribbean, which constitutes a significant portion of this economy. Annexes 69 Annex 2. Detailed Description of Proposed Ocean Principles S.NO. PRINCIPLE DESCRIPTION This principle recognizes the importance of marine ecosystems in delivering essential goods and services that underpin the livelihoods of millions by Sustainable Development/Sustain- contributing to food security, poverty eradication, livelihoods, income, em- 1 able Livelihoods ployment, health, safety, equity, and political stability. Central to this principle is the need to align the use of resources to optimize the well-being of people today and in perpetuity. The diversity, health, and productivity of marine ecosystems is fundamental to the management of both the oceans and the land. The diversity, productivity, 2 Marine Ecosystem Health and core functions of marine ecosystems must be maintained, restored, and protected with a desired end of maintaining or recovering natural levels of the natural capital upon which its prosperity depends. Integrated governance is a commitment to planning and managing human activities in a comprehensive manner while considering all factors necessary for the conservation and sustainable use of marine resources and the shared use of ocean spaces. 3 Integrated Ocean Governance Inherent to this principle are initiatives that produce change in management practices to enable a rapid shift toward the sustainable use of marine and coastal resources. The goal is to support (or design) effective innovative gover- nance systems that provide incentives to private and public sector leaders at all levels to engage and support a healthy ocean and community well-being. Ocean planning and management decisions should be based as far as possible on the best available information on the natural, social, and economic processes that affect ocean and coastal environments. When adequate information and knowledge are not available, decision-mak- Science-based, Precautionary and ers should take a precautionary approach, actively seek to develop such 4 Adaptive Decision-making knowledge, and refrain from undertaking activities that could potentially lead to harmful effects. Adaptive management allows decision-making to respond to the availability of new information concerning risks and sustainable opportunities. All users of the marine environment take responsibility for the impacts of their activities, by taking appropriate action, as well as by being transparent 5 Duty of Care and Accountability about their impacts so that stakeholders are well informed and can exert their influence. Full stakeholder awareness and participation contributes to credible, accepted rules that identify and assign the corresponding responsibilities appropriately. A sustainable blue economy should therefore be based on active and effective stakeholder engagement and participation. Inclusive and Transparent It is also critical that decision-making processes are conducted in a manner 6 Decision-making that is transparent and accountable to minimize the likelihood of disputes and to promote international cooperation. For the blue economy to be a success, partnerships between government, the private sector, and civil society must be built to ensure co-responsibility for ocean management and to empower stakeholders to participate effectively. TOWARD A BLUE ECONOMY: A PROMISE FOR 70 SUSTAINABLE GROWTH IN THE CARIBBEAN S.NO. PRINCIPLE DESCRIPTION There is a need to move away from the sectoral and species-based approaches, which characterize our current approach to managing the marine environment. Ecosystem approaches need to be further refined and made operational. Large-scale MSP and networks of MPAs, and other area-based management measures for biodiversity conservation purposes, should be integral parts of the blue economy. 7 Ecosystem-Based Management Such processes must be participatory, accountable, transparent, equitable, and inclusive, to be responsive to present and future human uses and needs, including the needs of minorities and the most vulnerable groups in society. To make informed trade-offs, such processes should also use appropriate tools and methods to capture the range of benefits that ecosystem goods and services can bring to different stakeholders. Develop Ocean Solutions that Sustainable energy provision is fundamental to the transition to a low-carbon will reduce climate change risks economy, and the basis for progressing toward sustainable development 8 and allow the development of cli- globally. It is critical to ensuring progress in areas such as food, water, health, mate-change-related opportunities gender equality, and poverty alleviation. The benefits from the use of common ocean resources, and the responsibil- ities for their continued health and productivity, should be shared by all citi- zens. Governments should govern marine resource use based on the interests Sharing of Benefits Derived from the 9 of the whole community and the interests of intergenerational equity. Blue Economy Economic instruments such as taxes, subsidies, and fees can help by internaliz- ing environmental and social benefits, costs, and risks to society of ocean use. Human development in harmony with the environment is fundamental to the achievement of sustainable development, so that individuals and societies are empowered to achieve positive social and environmental outcomes. 10 The Right to Development The value of the resources provided by the oceans must be recognized and opportunities for their economic development optimized to meet society’s needs and promote the well-being of coastal communities. Annexes 71 Annex 3. Contribution of the Blue Economy to Selected SDGs and Some of Their Targets SDG 13: Climate Action SDG 1: End Poverty SDG 2: End Hunger, Achieve Food Security & Improved Strengthen resilience and Eradicate extreme poverty Nutrition adaptive capacity to climate-related hazards and Reduce by at least half the proportion of men, women, and children of all ages End hunger and ensure access natural disasters living in poverty in all its dimensions by all people, and address the Integrated climate change Ensure all have equal rights to economic resources, as well as access to basic nutritional needs of measures into national services, ownership and control over land and other forms of property, adolescent girls, pregnant and policies, strategies and inheritance, natural resources, appropriate new technologies and financial services lactating women and older persons planning Build resilience of the poor and those in vulnerable situations Ensure sustainable food Create sound policy frameworks based on pro-poor and gender-sensitive production systems SDG 12: Responsible development strategies Consumption and Production Achieve the sustainable management and efficient use SDG 6: Clean Water and of natural resources Sanitation Reduce food losses along Improve water quality by production and supply chains reducing pollution, halving the proportion of untreated Reduce waste generation wastewater through prevention, reduction, recycling and reuse SDG 7: A ordable and Clean Energy SDG 11: Sustainable Cities & Communities Increase substantially the share of renewable energy in the Reduce the adverse per capita global mix environmental impact of cities Increase the number of cities A Blue Economy in the Ocean and human settlements SDG 8: Decent Work & adopting and implementing Economic Growth integrated policies toward inclusion, resource efficiency, Sustainable per capita mitigation and adaptation to economic growth in LDCs climate change, and resilience Higher economic productivity to disasters through diversification, technology upgrading and innovation SDG 10: Reduced Inequalities Improve global resource efficiency in consumption and Achieve and sustain income production and endeavor to growth for the bottom 40% of decouple economic growth the population at a rate higher from environmental than the national average SDG 14: Ocean Conservation & Sustainable Use degradation Empower and promote the Achieve full and productive social, economic and political Prevent and reduce marine pollution employment and decent work inclusion of all Protect marine and coastal ecosystems for all women and men Effectively regulate fishing, and end overfishing, illegal, unreported and Protect labor rights and SDG 9: Industry, Innovation & unregulated fishing promote safe and securing Infrastructure Conserve at least 10% of coastal and marine areas working environments for all workers Quality, reliable, and Increase economic benefits to SIDS from sustainable use of ocean resources sustainable infrastructure Promote sustainable tourism Source: United Nations (2016). TOWARD A BLUE ECONOMY: A PROMISE FOR 72 SUSTAINABLE GROWTH IN THE CARIBBEAN Annex 4. Grenada’s Blue Growth Coastal Master Plan T he Government of Grenada’s Blue Growth Investment Prospectus to generate investment, jobs, and growth is based upon a high-level coastal development master plan for Grenada, Carriacou, and Petite Martinique that outlines a ‘Blue Growth’ and ‘Sustainable Nation’ strategy. The ‘Blue Growth’ and ‘Sustainable Nation’ strategy outlines an approach for development that will improve sustainable productivity at land and at sea so as to benefit all economic sectors. Blue eco- nomic development must also be sustainable and respect the marine environment. The Blue Growth strategy is based on maritime clusters—groupings of industries, suppliers, and educational/research institutions that reinforce each other through their close proximity. A ‘Smart Growth’ strategy for urban planning will concentrate growth in development centers with mixed- use components. Open spaces, farmland, natural beauty, and critical environmental areas will be preserved and enhanced. Specific Development Incentive Zones in Grenada, Carriacou, and Petite Martinique consid- ered the following factors: (a) Development must be in harmony with the MPAs and (b) Development must enhance the existing cultural characteristics and activities of the area and promote its strengths in the global market. Development opportunities have been evaluated and prioritized to determine which projects could be combined for greater efficiency and investor interest, and which projects would have the most spin-off development opportunities. As a result, a number of strategic projects have been identified and included in an investment prospectus for global tourism, boutique tourism, fisheries/aquaculture, marine services, coastal residences, shipping, and industries. The Government of Grenada is encouraging investment into strategic projects via public-private partnerships, and/or private development. Special development incentives for these projects were prepared. Planning Process Phase 1 planning process consisted of three stages of development:38 Stage A: Data gathering, stakeholder meetings, vision; Stage B: Developing blue growth planning options; and Stage C: Documenting the final blue growth master plan. The planning process involved a series of meetings with Grenada key stakeholders, private sector entities, and community groups; visit to potential sites and identification of development alter- natives; planning workshops; and preparation and presentation of reports to the Government for their review and approval. Consultations with key government counterparts provided critical data and input into the process to as- sure that the report is comprehensive and addressed the key planning issues. Additional key stakeholders who participated in planning meetings and workshops provided insight and assisted in the evaluation of alternative development options. The ‘consensus-building’ process included stakeholder meetings and a blue growth planning forum. The principal consultant met with key stakeholders to review both the Stage A Report findings as well as to discuss key issues and/or potential planning opportunities. Key stakeholders 38 Raymond Moldenhauer, Director of RM STRATEGIES and the Principal Strategic Planning Consultant, led the Coastal Master Planning process and was responsible for the development of the Phase 1 reports and coordination with government advisors and government consultants. Annexes 75 Box A4.1. Three Stages of Development of Phase 1 Planning Process  ata Gathering, Stakeholder Meetings, Vision STAGE A: D ■■ Island tours and meetings in Grenada with key stakeholders ■■ Gather planning data (topographic, infrastructure, demographics, planning, photos,…) ■■ Gather previous master plans and coastal development plans, as well as information on legacy projects, existing projects, and planned projects (to the extent that these are readily available). ■■ Discuss planning, infrastructure, and sustainability issues that a master plan must address with key stakeholders, government advisors and counterparts, consultants, and where feasible, community leaders. ■■ Prepare a preliminary report that summarizes key findings  eveloping Blue Growth Planning Options STAGE B: D ■■ Prepare preliminary planning concepts for key blue growth development zones ■■ Review preliminary planning concepts with key stakeholders, government advisors and counterparts during planning workshops in Grenada ■■ Determine high-priority initiatives and potential government blue growth policies ■■ Prepare a preliminary report that summarizes key conclusions  ocumenting the Final Blue Growth Master Plan STAGE C: D ■■ Refine planning concepts for strategic projects in Grenada, Carriacou, and Petite Martinique ■■ Develop market sector investment prospectuses ■■ Prepare the final report and presentation ■■ Present the blue growth conceptual coastal master plan to the government and key stakeholders Figure A4.1. Stakeholder Meetings represented Tourism, Forestry and Fisheries, Ag- riculture, Economic and Technical Cooperation, Physical Planning, and the Port Authority. Key dis- cussion points were summarized. As part of defining the vision, the Stage A Report summarized the strengths, weaknesses, and threats for each of the islands, then identified where the existing blue growth economic activ- ities and proposed blue growth projects were currently located. Multiple coastal sites were iden- tified, noting both the current as well as potential land use opportunities. The areas to be designated for blue growth development must also consider the sustainable livelihoods of the residents, while providing the ‘right’ opportunities to use the natu- ral resources in the most sustainable manner. The plan also identified the current areas in Grenada, Carriacou, and Petite Martinique that are considered to be environmentally fragile and in need of protection.  All of the development concepts that were explored considered the following factors: ■■  Development must be in harmony with the existing and proposed MPAs ■■  Development must enhance the existing cultural characteristics and activities ■■  Development should be specific to a region to best promote its attributes and strengths TOWARD A BLUE ECONOMY: A PROMISE FOR 76 SUSTAINABLE GROWTH IN THE CARIBBEAN Figure A4.2. Blue Growth Designated Areas  otential projects within each market sector were evaluated based on the potential market, environment, P appropriate project scale, infrastructure, and support facilities available to achieve a ‘smart growth’ approach.  reliminary blue growth development zones were identified for each island, with the intent to strategically P locate blue growth activities in the most appropriate regions and with the goal to promote economic activity throughout the islands to the extent feasible. Figure A4.3. Potential Projects Within Each Sector Annexes 77 Figure A4.4. Marine Tourism  ine focused Blue Growth Marine Centers of Excellence will promote Grenada in both the Caribbean and N global markets: 1. MARINE SERVICES - D  evelopment of new full-service marinas on Petite Martinique and Carriacou will enhance their strategic location as a ‘Gateway to the Grenadines’ and southern safe haven during the hurricane season. New jobs will help to boost the economy in those areas and allow residents to pursue work without having to leave the islands. 2. BOUTIQUE TOURISM - N  ew smaller-scale resort hotels with high-end amenities will help increase the international tourism business to northern Grenada, Carriacou, and Petite Martinique. The relocation of Figure A4.5. Blue Growth Economic Opportunties TOWARD A BLUE ECONOMY: A PROMISE FOR 78 SUSTAINABLE GROWTH IN THE CARIBBEAN Figure A4.6. Blue Growth Centers of Excellence the existing Lauriston Airport in Carriacou to Dumfries, with a longer runway that will accommodate com- mercial airlines, will open the door for new tourism opportunities. 3. MARINE RESEARCH - N  orthern Grenada, with access to the pristine ocean waters surrounding Ronde Island, the Leatherback Turtle nesting area near Levera, and the submerged volcano—Kick Em Jenny just off shore—should establish itself as the base of operations for significant marine research into the potential benefits from the ocean’s biological resources and unique environment. Facilities that foster research activities by academic, private, government, and international institutions could include: Ocean Life Research, Turtle Research, and expanded Submarine Volcano Research. 4. ECOTOURISM -  With its close proximity to Mount St. Catherine, the highest mountain peak in Grenada, and to numerous waterfalls, Victoria is a prime location to promote Ecotourism in Grenada. The scenery is breathtaking and the flora and fauna of the rainforest will be major draws for hikers. Development will highlight activities centered on Healthy People and a Healthy Planet, including Renewable and Efficient Energy. 5. FISHERIES/AQUACULTURE - T  he village of Gouyave is the ‘Fishing Capital of Grenada’ and host to weekly ‘Fish Friday’ festivals. Development here will further promote the fishing industry in Grenada with increas- ing exports to North America and Europe. CRFM members were also recently urged to reverse the decline in aquaculture. In addition to the promotion of the fishing industry, new development should advance Gouyave as a Fisheries and Aquaculture leader in the region. 6. GLOBAL TOURISM - T  he southwest quadrant of Grenada, with the international airport and cruise ship terminal will further promote development with a focus on Grenada as a world-class tourism center for hospitality, education, medical care, and sports. New facilities that will enhance the global market image include a Grand Anse Tourism Center, Medical Tourism Hospital, and Wellness Campus, Hotel/Casino, Regional Sports Center and Village, and the site for the proposed Blue Growth and Oceans Governance Institute. 7. SCIENCE AND TECHNOLOGY -This area, with proximity to the airport, major businesses in St. George's, and St. George’s University, is envisioned as a high-tech knowledge corridor for new international ven- tures and services in concert with the proposed new Google partnership. Annexes 79 Figure A4.7. Blue Growth Incentive Zones 8. COASTAL RESIDENTIAL -  The southeast coast of Grenada, with numerous peninsulas and protected coves, is ideal for the development of marina communities for residents as well as retired expats. The developments will range from individual homes to villas and multi-family apartment complexes. 9. SHIPPING AND INDUSTRY - R  elocation of the port to Grenville, in conjunction with a free trade industrial zone and cargo air terminal, will increase Grenada’s role in the shipping industry while allowing the de- velopment of light industrial activities and other new economic opportunities for Grenada’s east coast.  and within each of the proposed development zones was identified along with a list of potential projects L that would be provided special Blue Growth Incentive Packages by the government.  Potential strategic projects were discussed based on the following criteria: ■■  The plan must consider conservation and protection of the environment. ■■  The plan must reflect the ‘Pure Grenada’ brand. ■■  The plan must integrate with Grenada’s strategic plan and coastal zone management plan. ■■  The plan should be ‘transformative’ and address the economic, environmental, and social impact. ■■  The plan should allow opportunities for local investment.  From the list of strategic projects, the following criteria was used to determine priority projects: ■■  The project is sustainable. ■■  The project promotes economic, environmental, and social goals. ■■  The project addresses a global and/or Caribbean market. ■■  The project does NOT require a government infrastructure investment. ■■  The project has a high potential for private investment. TOWARD A BLUE ECONOMY: A PROMISE FOR 80 SUSTAINABLE GROWTH IN THE CARIBBEAN Figure A4.8. Blue Growth Strategic Projects. ■■  The project creates both short-term and long-term jobs. ■■  The project is likely to create ‘spin-off’ projects and opportunities.  reliminary design concepts were developed for the priority projects to best convey the vision to investors. P These diagrams and benchmark images are indicative of the desired project scope and scale, but are not final designs. The investor is invited to discuss alternative concept plans and/or a project scale that may better meet the investor's financial pro forma.  he Blue Growth vision for St. George’s Harbor takes advantage of three very prominent ‘gateway’ sites that T will be developed with large-scale ‘Anchor Projects’ that will transform the harbor into one of the most Figure A4.9. Blue Growth vision for St. George’s Harbor Annexes 81 Figure A4.10. Blue Growth Vision and Architectural Character Figure A4.11. Blue Growth Vision and Architectural Character desirable destinations in the Caribbean. Their success is expected to generate numerous ‘spin-off’ develop- ment opportunities around The Carenage and Esplanade for new commercial, retail and restaurants, and cultural event centers.  he project scale and architectural character are also described via the use of sketch-up 3D modeling and/or T the depiction of other relevant ‘Benchmark Projects.' Documenting the Plan:The blue growth strategic projects have been documented in market-based invest- ment prospectuses that can be shared with key investors, in the following areas: Global Tourism, Boutique Tourism, Fisheries/Aquaculture, Marine Services, Coastal Residential, and Shipping and Industry. Each of the projects include the following key information: Site Location, Current Land Ownership, Program Summary, Project Description, Preliminary Site Plan, Concept and/or Benchmark Images and Preliminary Project Cost. TOWARD A BLUE ECONOMY: A PROMISE FOR 82 SUSTAINABLE GROWTH IN THE CARIBBEAN Figure A4.12. Blue Growth Vision and World Trade Center Figure A4.13. Strategic Projects Integrating the Coastal Master Plan with Marine Transportation Planning  Blue growth development will be supported by the following marine transportation projects: Dumfries Airport  The current airport runway in Carriacou does not allow for larger commercial jets to land and take off. The relocation of the airport to Dumfries will allow for direct commercial flights to Carriacou, which will increase tourism and also open up land for the development of other economic activities including a Commercial Center, Fishing Village, Aquaculture Center, and Marine Housing. Annexes 83 West Coast Ferry Service  The blue growth master plan promotes the expansion of the current ferry service from St. George’s to Hillsbor- ough, Carriacou, and on to Town Dock in Petite Martinique to include Sandals, Gouyave, Victoria, and Sauteurs. East Coast Highway  With the relocation of the port to Grenville, a new East Coast Highway will be built to move goods and ser- vices to St. George's. This plan will open up additional land along the Southeast Coast for the development of marine residential communities on the numerous peninsulas. A second phase of an East Coast Highway may include a Northeast Highway from Grenville to Sauteurs. St George’s Harbor Water Taxi Service  As St. George’s Harbor is developed, a new market for regularly scheduled water taxis would connect the Cruise Ship Esplanade with Portofino, the Carenage, the proposed Central Harbor Development, the Lagoon, Port Louis Marina, and finally around the corner to the Port Louis Phase 2 development project. Inter-Island Ferry Service  An Inter-Island Ferry Service might also be developed to include Trinidad, Union Island, St. Vincent, St. Lucia, Martinique, Dominica, and Barbados. TOWARD A BLUE ECONOMY: A PROMISE FOR 84 SUSTAINABLE GROWTH IN THE CARIBBEAN Reference List Ababouch, L. 2015. Fisheries and Aquaculture in the Bowen, A., and C. Hepburn. 2014. “Green Growth: An Context of Blue Economy. Senegal: UN Econom- Assessment.” Oxford Review of Economic Policy ic Commission for Africa. 30 (3): 407–22. doi:http://oxrep.oxfordjournals. 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