The Ocean Economy in 2030 Shardul Agrawala Head, Environment and Economy Integration Division OECD Environment Directorate Ny-Ålesund Symposium September 19-21 2016
Outline Global challenges and implications for the ocean economy The Ocean Economy today Growth prospects for ocean-based industries The Ocean Economy in 2030 Some Policy implications 2
GLOBAL CHALLENGES AND IMPLICATIONS FOR THE OCEAN ECONOMY 3
Global Economy is stuck in a low growth trap Source: OECD Economic Outlook 2016 4
OECD Employment will return to pre-crisis only in 2017 OECD Euro area 62 61 60 59 58 57 56 55 54 53 52 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Source: OECD Employment Outlook 2016. 5
Slowing long-term economic growth Source: OECD Long-Term Economic Outlook, 2014 6
Growing population, urbanisation, megacities Source: UN (2014), allianz.com 7
Environmental issues Increasing primary energy demand and accelerating climate change Source: IEA, 2015; IPCC, 2015 8
Where do Oceans fit in? Ocean based assets and economic activities offer prospects for new sources of growth, jobs, and innovation. The also offer solutions to key environmental challenges While also being at increased risk from enhanced economic activity, demographic and environmental pressures 9
THE OCEAN ECONOMY TODAY 10
The concept of the ocean economy Ocean Economy Oceanbased industries Intermediate inputs Impacts Marine ecosystems Market flows and services Physical capital stock ocean-based industries Nonmarket flows and services Natural capital assets Source: OECD (2016) 11
How was the ocean economy measured? Creation of OECD Ocean Economy Database at global scale: - 10 major ocean-based industries so far; - industry-specific contribution to the global economy (gross value-added and employment); - drawn from official primary and secondary international (e.g. OECD, UN organisations, World Bank) and national sources, supplemented by industry and business data; - breakdown by major geographic regions; - partial sectoral coverage for 169 coastal states / economies. 12
What are we measuring? Not volumes (e.g. freight tonnes, gross tonnage/cgt.) Not turnover involves double counting of inputs purchased from other industries Gross Value Added output of entire sector minus intermediate products purchased from other industries the direct net economic contribution of an industry to the overall economy. 13
USD Billions How big is the ocean economy? Value-added of ocean-based industries in 2010 by industry 600 500 400 300 200 100 0 Source: OECD (2016) 14
Regional breakdown of value-added of selected ocean industries in USD billions, 2010 160 140 120 100 80 60 40 20 0 Africa and Middle East Value-added of maritime and coastal tourism by region Asia and Oceania Central and South America Europe NAFTA Rest of the World 45 40 35 30 25 20 15 10 5 0 Africa and Middle East Value-added of fish processing by region Asia and Oceania Central and South America Europe NAFTA Rest of the World Value-added of shipbuilding by region Value-added of fisheries by region 30 25 20 15 10 5 0 Africa and Middle East Asia and Oceania Central and South America Europe NAFTA Rest of the World 9 8 7 6 5 4 3 2 1 0 Africa and Middle East Asia and Oceania Central and South America Europe NAFTA Rest of the World 15
Millions FTE Ocean-based industries contributed more than 31 million FTE jobs in 2010 12 10 8 6 4 2 0 Full-time equivalent employment in ocean-based industries in 2010 Source: OECD (2016) Note: FTE = full-time equivalent 16
THE OCEAN ECONOMY IN 2030 17
Growth prospects for ocean industries Prospects for modest growth Capture fisheries Offshore oil and gas extraction in deep water Prospects for high long-term growth Shipping Shipbuilding Offshore wind Marine aquaculture Tourism Surveillance and safety Long-term potential but not yet at commercial scale Ocean renewable energy Marine biotechnology Deep-sea mining Carbon capture and storage 18
Offshore wind Installed wind power capacity by type and region in the IEA New Policies Scenario, 2040 Source: OECD/IEA, 2014 19
Ocean energy Projected ocean energy installed capacity in context Source: European Ocean Energy Association (2010) 20
The Ocean Economy in 2030 Objective: obtain a coherent projection of the growth of the ocean economy as a whole Our approach Ocean economy database, integrating country- and industry- specific data Business-as-usual scenario: continuation of past trends, no major policy or technological developments. 21
Ocean industry value-added to double (from 1.5 to 3 trillion USD) by 2030 Source: OECD (2016) 22
Millions In 2030, ocean industries likely to provide more than 40 million FTE jobs 12 Full-time equivalent employment in ocean-based industries in 2010 and 2030 10 8 6 4 201 0 2 0 Source: OECD (2016) 23
Conservative estimates! Some important maritime sectors missing due to data gaps or early stage of development. Only measuring direct economic contribution and direct FTE employment (no spill overs effects, etc.) Only industrial-scale activity, no artisanal sector. Qualitative discussion of challenges in marine ecosystem valuation. 24
SOME POLICY IMPLICATIONS 25
A growing ocean economy relies on a healthy marine ecosystem which is already under pressure on various fronts Source: WWF (2015) 26
Business-as-usual growth of economic activities in the ocean is not an option for the future Global warming Acidification Pollution Overfishing Source: IPCC, 2015; FAO, 2015, Maribus, 2010.
Some final thoughts It is time to recognise the closely interconnected clusters of ocean economic activities as an economic system, rather than a fragmented collection of individual sectors (Parallels with the information economy ). Need to strengthen integrated and more strategic approach to management of maritime activities, not least in economic exclusion zones, but also at regional and global levels. Strengthen Information Base: data on marine resources very fragmented and hard to locate, limited information on interactive effects of different uses and users of the ocean Use of Economic Analysis and Incentives : Better economic valuation of marine ecosystems and services, integrating such information in decision-making, greater use of economic instruments to internalise environmental externalities Better harness technology and innovation for the sustainable development of the ocean economy 28
Further Information http://www.oecd.org/futures/oceaneconomy.htm 29
APPENDIX 30
Ocean-based industries Established ocean-based industries Industrial capture fisheries Industrial seafood processing Shipping Port activities Shipbuilding Offshore oil and gas (shallow water) Marine manufacturing and construction Maritime and coastal tourism Marine business services Marine R&D and education Dredging Source: OECD (2016) Emerging ocean-based industries Industrial marine aquaculture Deep- and ultra-deep water oil and gas Offshore wind energy Ocean renewable energy Marine and seabed mining Maritime safety and surveillance Marine biotechnology High-tech marine products and services Others 31