Time to learn more about the 7th largest economy you’ve never heard about

As an entity that covers over 70% of the earth’s surface, it’s surprising to hear that more of the moon’s surface has been mapped than the bottom of the ocean. Yesterday we celebrated World Ocean Day, and the awareness is growing of the crucial role the ocean plays in our lives. Up to 80% of the oxygen we breathe is produced by this vast body of water and more than 90% of the excess heat caused by greenhouse gas emissions has been absorbed by it. 

Convinced that the huge economic benefits of the world’s oceans are completely undervalued and investors don’t understand nearly enough about the threats to this vast natural resource, UNESCO has developed an ‘ocean literacy’ course specifically for the financial sector. The UN’s sustainable development goal for life below water is also woefully underfunded, receiving only 0.01% of all SDG funding. So, UNESCO’s literacy mission is urgently needed and abrdn has been working with UNESCO to develop this. 

First of all, it’s important to understand the vast economic value of the ocean. According to the WWF, if the ocean were a country, this nation would be the world’s 7^th largest economy. The value of fishing, shipping lanes, costal tourism, transport, marine products for pharmaceuticals, and the many other ocean benefits and products are worth an estimated $24 trillion, with an annual value on outputs of $2.5 trillion. 

With so many businesses and industries dependent on the ocean, the threats from pollution, climate change, rising sea levels, damaging infrastructure developments and poor industry practices need to be taken much more seriously. As investors, it’s our duty to understand the threats and engage with the companies we invest in, so we can work towards more sustainable ways of using this resource. Investors in businesses as diverse as hotel chains, shipping containers, vaccines, fish-farms, beauty products and travel companies, need to consider how much could be at stake if ocean health and sustainability is not carefully considered. 

Fishing 

Around the world, three billion people get over 20% of their protein from fish, and the population is expected to increase by two billion over the next 30 years. In some of the poorest countries, fish provide more than 50% of people’s protein intake – so sustainable fishing practices are essential. Instead, fishery productivity is falling throughout the world due to over-fishing, the damaging effects of climate change, pollution from poor industry practices and coastal infrastructure damaging local habitats.  

An estimated 50% of all fish for human consumption now comes from aquafarming. This is an industry that is highly vulnerable to and often responsible for: pollution, poor water quality and the spread of disease. We would like to see the whole aquaculture supply chain collaborating to ensure practices are sustainable.  

Tourism 

Home for two billion people is within 100km of the coast. Many of these communities rely on the ocean for income from sectors such as fishing, tourism or food, so they are exposed to rising sea levels which damage coastal properties, and to the effects of poor ocean health, such as acidification, which can devastate fishing and tourism. Tourism, which tends to be based around coastal areas, contributes 10% to global GDP – so poorly managed tourism and unsustainable environmental practices will have a very detrimental impact on the global economy. 

Shipping

Around 80-90% of the world’s goods are transported by sea and the volume of this trade is expected to double by 2030 and quadruple by 2050. But huge container ships are major producers of greenhouse gases, plus air and water pollution. To be fit for the future, the sea-transport industry must improve its environmental impact. 

Pharmaceuticals 

The ocean has a crucial role in the cosmetic and pharmaceutical industry. Marine algae and seaweed are widely used in cosmetic products. Squaline, from shark livers, is used in COVID-19 vaccines as it boosts immune system response. Being able to use these valuable natural resources over the long term, depends on carefully conserving sharks and all marine life. 

Looking ahead  

Everyone benefits from better ocean health. The best way to improve the future health of the world’s oceans and their marine life is to gain a much better understanding of their importance and the unique threats they face. 

By becoming ocean literate, investors can better identify both the ocean-related risks and the many exciting ocean-related opportunities to be found. We’ll also be able to engage much more knowledgeably with the huge number of companies and industries that have the ocean as their lifeblood.