Center for the Blue Economy

ANALYSIS

Director Jason Scorse discusses the economic principles governing ocean and coastal resource management and the steps that need to be taken to manage these resources sustainably

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Why is this idea of the ‘Blue Economy’ so important to you and The Our work is already used by people across governments, NGOs, Center for the Blue Economy (CBE)? businesses and concerned citizens. All of our data and our new journal (the Journal of Ocean and Coastal Economics – JOCE) are free to the public Our tagline is ‘As go the oceans, so goes the world’. And this is really true as we believe open access is important in order to maximise impact. We given the ecological importance of the oceans to all life on Earth. When also carry out consulting work for a range of organisations that would like you look at the interface between the oceans and coasts, which is where to see economic analysis applied to ocean and coastal resources across a most of our work is focused, this is where the overwhelming majority of wide variety of issues. population and economic activity resides. People have always known this, but until we documented the magnitudes, they didn’t realise quite how How is the Center providing data through the National Ocean dominant coastal zones have become. Climate change will hit these areas Economics Program (NOEP)? Will this facilitate participation and hardest. So you have this perfect storm (forgive the pun) where most of greater knowledge sharing? the world’s economic activity and population is coming in contact with the ravages of climate disturbance. I don’t think it’s an overstatement The Center is home to the NOEP and we are greatly expanding our to claim that this is where the future of our species’ overall prosperity is offerings both nationally (US) and internationally. All data is free and open going to be determined. to the public. We publish numerous reports and these are all available free online as well, including our new State of the US Ocean and Coastal Could you detail your interest in behavioral economics, and why Economies 2014. We will also be hosting a symposium in 2015 for the it is important to consider this when looking to successfully purpose of creating a standardised methodology for ocean and coastal manage resources? economics accounting. In conjunction with JOCE, our goal is to be the hub for the growing international community of ocean and coastal I was in the first doctoral class in behavioural economics as a field of economics researchers. study at the University of California, Berkeley. Behavioural economics is amazingly dynamic and extremely important on a number of How are environmental laws evolving, and what makes policing counts. The main reason is that we don’t act rationally on many levels, natural resources so different from property or humans, for example? especially in the environmental realm, and we need to learn how to deal with that. For decades, people criticised economics for its focus on I’m not a lawyer, but a lot of work is currently being conducted on laws rationality, but what behavioural economics does is offer a framework for the high seas, especially the deep sea because technology is improving for analysing the deviations. People, it turns out, follow predictable to the point that it’s becoming economic to drill in some very far out patterns – they are not wild and crazy, doing whatever they feel like. and deep places that were inaccessible only a decade ago. This has huge Even our irrationality can be relatively consistent, and understanding implications since we don’t know much about these ecosystems, and these patterns can help reveal approaches to encourage consumers to the potential for damage is high. One of our affiliated faculty members, be more resource efficient as well as provide insights into what types of Kristina Gjerde, High Seas Policy Advisor to the International Union for incentives might change their behaviour. Conservation of Nature (IUCN), is at the forefront of this work to regulate development of the high seas and build in a precautionary approach. What do you hope the CBE will deliver to the global community? Who can benefit from its resources? The Arctic is another area where the legal landscape is changing rapidly as the ice melts and countries are all eager to exploit what are virtually Above all, we want to create the methodologies, policy ideas and untapped resources – oil, minerals, as well as huge fish stocks. Again, the research that help communities across the world understand and potential profits are high, but so is the ecological impact. This is an area the appreciate the tremendous value of their ocean and coastal resources, CBE wants to become involved with much more over the coming years. and ultimately to help them manage them sustainably. While some of our work is theoretical we don’t do theory for theory’s sake, and Policing natural resources is so difficult because they are ultimately the overwhelming majority of our work is applied. This is meant to diffuse, as are the pollution impacts – natural resources don’t respect have a direct impact on policy and the ultimate uses of ocean and political boundaries. Furthermore, whereas the financial values for coastal resources. We want to help set the global agenda for ocean and resource exploitation are often clear, the ecological values, despite coastal stewardship, and in particular, demonstrate how we might use decades of work in environmental valuation, are still relatively opaque and economic analysis to inform coastal climate change adaptation efforts. difficult for people to grasp. The primary task of the next generation is to This is an area where being proactive versus reactive could literally ensure our economic system fully incorporates the value of natural capital save the global community trillions of dollars and lives. The stakes are into prices and also correctly prices pollution in the market. If we don’t do extremely high. this, the future of humanity will not look so bright.

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To what extent does resilience thinking factor into the enforcement mechanisms (preferably prison sentences) for environmental Center’s studies? crimes, allocation of its own tremendous purchasing power, and for creating the market institutions required to price environmental Resilience thinking factors in a lot – it’s really related to the concept of pollution (eg. a cap and trade system). There is simply no ‘free market’ sustainability in my view and instead is just a new nuance rather than environmentalism; it’s a myth created by rightwing hacks and polluting a whole new paradigm. But climate adaptation in many ways is all corporations who want to profit at everyone’s expense. The market must about resilience. There is ecological resilience but there is also economic be embedded within a highly sophisticated and capable government resilience and often they go hand-in-hand. regulatory apparatus, and be augmented with large public investment.

What action needs to be taken to improve the protection of Which national or international instruments to manage resources are the oceans? What advice would you prescribe to society and effective, and why? policy makers? There are some pretty amazing success stories in California where local A top priority is to end all fishing subsidies. They are devastating the governments, researchers, and then ultimately the federal government oceans and must stop. A close second is a true traceability system for (through the National Marine Sanctuary Program) have helped revitalise seafood. Right now there is so much fraud and mislabelling in global the entire Monterey Bay region, making it one of the most healthy and fisheries that there is simply no such thing as sustainable seafood. There biodiverse ocean ecosystems in the world (though we still have a way are a lot of people with good intentions, but until traceability is figured to go). You also have the Law of the Sea (still not ratified by the US!), out, it’s mostly smoke and mirrors. which has made huge improvements in ocean resource management. In particular, the establishment of 200-mile exclusive economic zones The other big priority is understanding coastal climate change impacts and (EEZs), which set the stage for more sustainable management of fishers, how to deal with them in an equitable way. First, people need to realise are all valuable protective measurements for marine resources. that most infrastructure on the shoreline is in harm’s way and many people will have to move. Doing so will be wrenching and difficult, but Next year signifies a turning point in environmental policy as necessary. We can’t armor thousands of miles of coastline everywhere; it’s scientists, policy makers, business and civil society descend on Paris far too expensive and would devastate coastal ecosystems. So accepting for the 21 Conference of the Parties of United Nations Framework this reality is extremely important. Policy makers should contact the CBE Convention on Climate Change (UNFCCC) – the Climate Summit. so we can advise them on how to adapt to this reality! What outcomes would be favourable for the protection of the marine environment? Will you be attending? Why is it critical for environmentalists to understand economic principles and their inextricable links? Can sustainability be The key is to achieve serious caps on greenhouse gas emissions and real guaranteed if society solely uses market mechanisms for resource commitments for reductions from both the US and China. Without this extraction and conservation? the international negotiations will ultimately fail and ocean acidification will accelerate. This is a huge deal, but with Obama’s recent executive

Not to give a shameless plug, but my book What Environmentalists Need orders and China’s apparent willingness to take CO2 reductions seriously, I to Know About Economics contains 150 pages dedicated to answering am optimistic this time around. I am unlikely to attend but who knows! this. The bottom line is that it is poorly functioning markets that are the biggest threat to the environment. Well-functioning markets that properly price natural resources and pollution are environmentalists’ best allies – it’s hard for many to accept but it’s true. Creating such markets is also difficult, so that’s what current work in environmental economics is often focused on. These things don’t happen on their own, and there are many entrenched and powerful interests that don’t want markets to price things correctly. They profit from market failure and want to keep it that way. go.miis.edu/blue-econ But, market mechanisms are definitely not enough. First, as mentioned earlier, people aren’t completely rational and we need to address that. Also, there are classes of highly toxic compounds that should simply be banned, and not left to ‘the market’. In addition, the government plays a critical role in many areas – public investment in R&D, establishing strong