The Ocean Economy in 2030

Shardul AgrawalaHead, Environment and Economy Integration DivisionOECD Environment Directorate

Ny-Ålesund SymposiumSeptember 19-21 2016

Outline

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• 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

GLOBAL CHALLENGES

AND IMPLICATIONS FOR

THE OCEAN ECONOMY

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Global Economy is stuck in a “low growth” trap

4Source: OECD Economic Outlook 2016

5

52

53

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55

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57

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60

61

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Q42007

Q42008

Q42009

Q42010

Q42011

Q42012

Q42013

Q42014

Q42015

Q42016

Q42017

OECD Euro area

Source: OECD Employment Outlook 2016.

OECD Employment will return to pre-crisis only in 2017

Slowing long-term economic growth

6

Source: OECD Long-Term Economic Outlook, 2014

7

Source: UN (2014), allianz.com

Growing population, urbanisation, megacities

Environmental issues

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Increasing primary energy demand…

… and accelerating climate change

Source: IEA, 2015; IPCC, 2015

• 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

Where do Oceans fit in ?

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THE OCEAN ECONOMY

TODAY

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The concept of the ocean economy

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Ocean Economy

Ocean-based

industries

Marine ecosystems

Market flows and services

Natural capital assets

Non-market

flows and services

Physical capital stock ocean-based

industries

Intermediate inputs

Impacts

Source: OECD (2016)

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.

How was the ocean economy measured?

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• 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.

What are we measuring?

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How big is the ocean economy?

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0

100

200

300

400

500

600

US

D B

illi

on

s

Value-added of ocean-based industries in 2010 by industry

Source: OECD (2016)

Regional breakdown of value-added

of selected ocean industries in USD billions, 2010

15

0

5

10

15

20

25

30

Africa andMiddle East

Asia andOceania

Central andSouth

America

Europe NAFTA Rest of theWorld

Value-added of shipbuilding by region

0

5

10

15

20

25

30

35

40

45

Africa andMiddle East

Asia andOceania

Central andSouth

America

Europe NAFTA Rest of theWorld

Value-added of fish processing by region

0

1

2

3

4

5

6

7

8

9

Africa andMiddle East

Asia andOceania

Central andSouth America

Europe NAFTA Rest of theWorld

Value-added of fisheries by region

0

20

40

60

80

100

120

140

160

Africa andMiddle East

Asia andOceania

Central andSouth

America

Europe NAFTA Rest of theWorld

Value-added of maritime and coastal tourism by region

Ocean-based industries contributed

more than 31 million FTE jobs in 2010

16Note: FTE = full-time equivalentSource: OECD (2016)

0

2

4

6

8

10

12

Mil

lio

ns

FT

E

Full-time equivalent employment in ocean-based industries in 2010

THE OCEAN ECONOMY IN 2030

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• Capture fisheries• Offshore oil and gas extraction in deep water

Prospects for modest growth

• Shipping• Shipbuilding• Offshore wind• Marine aquaculture• Tourism• Surveillance and safety

Prospects for high long-term growth

• Ocean renewable energy• Marine biotechnology• Deep-sea mining• Carbon capture and storage

Long-term potential but not yet at

commercial scale

Growth prospects for ocean industries

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Offshore wind

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Installed wind power capacity by type and region in the IEA New Policies Scenario, 2040

Source: OECD/IEA, 2014

Ocean energy

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Source: European Ocean Energy Association (2010)

Projected ocean energy installed capacity…

… in context

• 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.

The Ocean Economy in 2030

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Ocean industry value-added to double

(from 1.5 to 3 trillion USD) by 2030

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Source: OECD (2016)

In 2030, ocean industries likely to provide more than 40 million FTE jobs

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Source: OECD (2016)

0

2

4

6

8

10

12

Mil

lio

ns

Full-time equivalent employment in ocean-based industries in 2010 and 2030

2010

• 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.

Conservative estimates!

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SOME POLICY IMPLICATIONS

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A growing ocean economy relies on a

healthy marine ecosystem…

26Source: WWF (2015)

… which is already under pressure on various fronts

“Business-as-usual growth of economic activities

in the ocean is not an option for the future”

Source: IPCC, 2015; FAO, 2015, Maribus, 2010.

Pollution Overfishing

Global warming Acidification

• 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

Some final thoughts

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Further Information

http://www.oecd.org/futures/oceaneconomy.htm

APPENDIX

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Ocean-based industries

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Established

ocean-based industries

Emerging

ocean-based industries

Industrial capture fisheries Industrial marine aquaculture

Industrial seafood processing Deep- and ultra-deep water oil and gas

Shipping Offshore wind energy

Port activities Ocean renewable energy

Shipbuilding Marine and seabed mining

Offshore oil and gas (shallow water) Maritime safety and surveillance

Marine manufacturing and construction Marine biotechnology

Maritime and coastal tourism High-tech marine products and services

Marine business services Others

Marine R&D and education

Dredging

Source: OECD (2016)