July - August 2016 (9:9)

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Dear MEAM readers,

In this issue of MEAM, we are exploring a variety of topics related to financing multi-sector marine planning and management. These include examples of successful marine management user fee systems and debt-for-marine-planning swaps; tips for reducing costs of ocean planning; and areas of financial innovation that can be used for ocean planning and management.

We will follow up on this article in the coming year with in-depth articles and live webinars on specific financing topics such as impact investing. If you are interested in learning more about a specific marine planning/management finance topic in MEAM or the webinar series, please let us know at meam [at] openchannels.org.

We are also very pleased to be able to follow up on last issue's lead article on planning for equity and social justice in ocean use with an EBM Toolbox in this issue with tips and tools for incorporating equity considerations into planning. Please check it out!

Best wishes for your work,
Sarah Carr
​MEAM Editor

Moving from single-sector to multi-sector ocean planning and management – and conducting it in an ecosystem-based way – can be expensive. It often requires funding beyond what is provided by government budget allocations. To give a sense of scale, a 2012 survey of representatives from MSP projects in Europe, the United States, Azores, and St Kitts and Nevis found most projects cost between US$100K and US$5M[1]. Funds were used for a variety of activities including current and future assessments of ecosystem health and human impacts, as well as stakeholder engagement processes.

Finding additional funding for critical activities can be a big – if not the biggest – challenge for ocean planners and managers. In a separate 2012 survey of coastal management professionals in the US, more than two-thirds of respondents believed that insufficient funding for coastal and marine spatial planning would greatly impact its implementation in their region.

Some additional funding sources for multi-sector planning and management – grants and donations, fees from businesses using ocean resources, etc. – do exist, however. (See Table 3 of Marine Spatial Planning: A Step-by-Step Approach toward Ecosystem-based Management for more examples.) And market-based financing for conservation is an area that is developing rapidly and could potentially be utilized for multi-sector planning and management.

This month, MEAM interviews with three ocean planning and finance experts about different aspects of financing multi-sector marine planning and management, including examples of successful marine management user fee systems and debt-for-marine-planning swaps, tips for reducing costs of ocean planning, and areas of financial innovation that can be used for ocean planning and management. We will follow up on this article in the coming year with in-depth articles and live webinars on specific ocean planning and management finance topics such as impact investing.

Establish financing for all of the essential elements of marine management

Editor’s note: Charles “Bud” Ehler is a marine planning consultant and co-author of the MSP “bible”, the 2009 UNESCO Intergovernmental Oceanographic Commission guide “Marine Spatial Planning: A Step-by-Step Approach toward Ecosystem-based Management.” He can be contacted at charles.ehler [at] mad.com.

MEAM: In your experience, is the success of ocean planning initiatives a function of how much funding they have available for the process?

Ehler: The American entrepreneur Malcolm Forbes said, “Money isn’t everything as long as you have enough.” Adequate financing is critical to any marine planning process and should ideally include financing not only for planning, but also implementation, enforcement, monitoring, and evaluation. In other words, financing should be established for all of the essential elements of marine management—at least through the first cycle of planning and implementation.

But this is rarely the case. It’s unusual for governments — from the United States to Vietnam — to invest adequate financial resources in marine management activities even though they have responsibilities to manage marine resources for the benefit of their country. In some cases, however, governments have figured out creative solutions for financing marine management (see an example in the question and response below). And in other cases, philanthropic organizations such as the Gordon and Betty Moore Foundation have stepped up to fund pioneering marine management activities. Examples of this include the Massachusetts Ocean Management Plan, the Northeast (USA) Ocean Plan, and the Marine Plan Partnership (MaPP) for the North Pacific Coast in Canada. The Moore Foundation has also funded UNESCO’s Marine Spatial Planning Programme that has stimulated many countries to initiate MSP.

MEAM: Can you tell us about any sustainable ocean management financing schemes that you have seen?

Ehler: One creative and sustainable financing scheme has been implemented in the People’s Republic of China (PRC). Its 2002 Law on the Management of Sea Use identified three principles: (1) a system authorizing the right to use the sea that declares the sea is owned by the State, i.e., the PRC, and that the State Council exercises the ownership of the seas on behalf of the State. Any entity or individual who intends to use the sea must apply in advance and obtain the right to use the resources of the sea; (2) a system of “Marine Functional Zoning” that stipulates that any use of the sea areas must comply with marine functional zoning plans established by the national, provincial, and local governments; and (3) a user-fee system that requires all entities and individuals that use the sea to carry out economic activities must pay for its use.

An allocation formula for use of the funds collected through the user-fee system was laid out in the 2007 Notice to Strengthen the Management of Sea User Fees issued by the Chinese Ministry of Finance and the State Oceanic Administration. Seventy percent of the fees collected from sea users are returned to provincial governments, and thirty percent go directly to the national government as revenue toward marine development, protection, and management. The provincial governments decide what proportion goes to local governments, and this varies from province to province. For example, in Shandong province, 60% out of the provincial allocation goes to local governments. China collected over RMB67.1 billion (about US$10.4 billion) in user fees between 2005-2014. No other national government has made such an extensive application of user charges to finance marine management.

MEAM: What aspects of ocean planning processes generally cost the most? Do you have any advice for projects looking to control costs while not shortchanging the overall process?

Ehler: Without a doubt, most money is spent on data collection and, to a lesser extent, synthesis—a disproportionate amount in many cases. Too little money is spent on specifying objectives, developing scenarios of the future, identifying management actions, developing the management plan, implementation, and monitoring and evaluation. Often these other activities of marine planning are left to the last hour—if addressed at all. It is far easier to collect data and construct data layers and portals than to write SMART objectives or construct scenarios. My best advice is to develop a thorough work plan at the start to ensure that adequate resources are allocated to all of the activities essential to completing the overall process and be prepared to adapt the work plan as marine planning unfolds.

Field testing market finance for coastal-marine conservation and management

Editor’s note: Nicolas Pascal is a conservation finance expert and director of the UNEP-funded Blue Finance project. He is currently focused on structuring a suite of impact investments for marine conservation biodiversity. He can be contacted at npascal [at] blue-finance.org.

MEAM: Ocean planning and management processes have historically relied on government appropriations and/or philanthropic funding. What new funding mechanisms are emerging for multi-sector ocean planning and management work?

Pascal: Recent studies have confirmed that total funding for protected areas and biodiversity conservation needs to increase dramatically to achieve the targets set at national and international levels such as the Convention on Biological Diversity (CBD) Aichi targets. Currently, 80% of biodiversity finance is generated from non-market mechanisms. And with the exception of philanthropy, non-market mechanisms are public sector mechanisms – domestic budget allocation, official development assistance, debt-for-nature swaps, subsidies reform, etc. – that rely on public opinion and political will for allocation of public finance and implementation.

Although these mechanisms could scale-up in the future, market-based mechanisms have a greater potential to increase in scale. The CBD recently identified seven areas of financial innovation that could increase funding to support the Convention objectives, five of which involve private finance: schemes for payment for ecosystem services; biodiversity offset mechanisms; markets for green products; business-biodiversity partnerships and new forms of charity; and development of new and innovative sources of international development finance. A 2012 study estimated that market-based mechanisms such as these could generate up to 50% of coral reef biodiversity finance in 2020.

The challenge now is to establish and strengthen long-term, reliable sources of market financing for biodiversity conservation. There is little practical experience using these mechanisms for marine and coastal environments, but several organizations such as the Reef Trust (Australia) and Blue finance (Eastern Caribbean) are currently working to provide empirical experiences of non-public funding mechanisms for integrated coastal management. The Reef Trust is looking to pilot conservation projects for the Great Barrier Reef utilizing conservation finance mechanisms developed with impact investors. My organization Blue finance is exploring new ways of utilizing the business world for marine conservation while staying true to the triple bottom line – environmental, social, and financial returns. Its primary activity is structuring and managing impact investments in marine conservation biodiversity, and we’re currently developing a suite of projects in the Eastern Caribbean.

MEAM: Can you tell us more about Blue finance’s work in the Caribbean?

Pascal: Blue finance is working with the national governments of Martinique and Barbados to find sustainable financing for and assist in the establishment of Marine Management Areas (MMAs). For example, the Barbados Marine Management Area (BMMA) will be approximately 20 km2 of fishery, tourism, and conservation areas in the most intensively developed coastal zones on the south and west coasts of the island. Meetings have been held with local stakeholders and relevant government agencies. The private tourism sector fully supports the project and is extremely interested in becoming a business partner in the new management regime under specific conditions of fund management. Some fishers are open to the idea of the MMA as a means of preserving their livelihood and potentially earning income from resource monitoring.

The project will be implemented by the Barbados Ministry of the Environment and Drainage. The operator of the BMMA is expected to be set-up through a long-term agreement with the government and will be in charge of the asset investment and management of the MMA. The operator, with private capital (both from national and international impact investors), will be steered by an advisory committee with members from government, NGOs, and private sector.

MEAM: Do you think that available means for funding multi-sector ocean planning and management (e.g., marine spatial planning projects or ecosystem-based management efforts) are different than the available means for funding biodiversity conservation projects? In other words, does the multi-sectoral nature of this work open up or close down any funding streams open to conservation projects?

Pascal: Marine biodiversity conservation efforts are often focused on creating MPAs. In many cases, the MPAs created are not very large or ecologically connected and do not address major biodiversity issues such as water quality and coastal development. MSP broadens the approach and, in theory, allows most of the issues (e.g., ridge to reef, multiple human uses) affecting an ecosystem to be addressed. I do not have any proof that MSP attracts more public funding for project development and enforcement, but it should. For the private sector impact investor, bigger is better. So it should be easier to attract impact investors for a 50 km2 MMA than a 2 km2 MPA, both for the size of the investment and potential returns (millions of dollars instead of thousands) and the size of the environmental impact.

A debt-for-conservation-adaptation-and-spatial planning swap in Seychelles

Editor’s note: Robert Weary is Director of Conservation Finance at The Nature Conservancy. He currently leads an initiative to assist Small Island Developing States with debt-conversions to finance climate change adaptation projects. He can be contacted at rweary [at] tnc.org.

MEAM: Can you give us a brief description of the Seychelles debt swap?

Weary: The debt swap converts a portion of the Seychelles’ debt to other countries (United Kingdom, Italy, Belgium, and France) into more manageable debt held by a local entity. To accomplish this refinancing, The Nature Conservancy provided US$15.2 million in an impact capital loan and US$5 million in grants to buy-back US$22.8 million of Seychelles debt at a seven percent discount. The Government of Seychelles debt service is now redirected to an independent, nationally based public-private trust fund called the Seychelles Conservation and Climate Adaptation Trust (SeyCCAT).

Debt service payments will fund three distinct streams: one to repay impact investors, one to capitalize SeyCCAT’s endowment, and one to fund work on the ground that advances marine and coastal conservation, including strategies for ecosystem-based climate adaptation and disaster risk reduction. The amount to be invested in these conservation activities and the endowment through the debt swap is upwards of US$11 million, with nearly 70 percent of this payable in local currency rather than hard currency, averting the extra cost of conversion for the government. In essence, this US$11 million in debt service has been redirected from the external creditors for investment in the Seychelles, an obvious benefit for the government of the Seychelles.

In addition, the period for debt payment will be extended from eight years to 20 years, reducing the government’s annual debt service by over US$2 million annually, freeing up funds for other needs of the citizens of Seychelles.

As part of the swap, the government of the Seychelles has committed to placing 30% of its Exclusive Economic Zone (EEZ) into Marine Protected Areas (MPAs), with half of this area in high biodiversity zones. Given the large size of the Seychelles EEZ, this will result in 400,000 square kilometers of new MPAs. Currently less than one percent of the Seychelles EEZ is in MPAs. The design of the expanded MPAs will be determined by a science-based, stakeholder-driven Marine Spatial Plan (MSP), which will be adopted as official policy by the government of the Seychelles.

MEAM: What is the potential for replicating this sort of arrangement with other countries, particularly with regard to supporting multi-sector ocean planning efforts?

Weary: We are already actively working on six additional similar debt conversion projects with other Small Island Developing States in the Caribbean and Pacific. We expect to close three of these debt conversions during 2017. Similar to the Seychelles, we will complete MSPs with all six countries, as part of the projects.

MEAM: Any lessons learned from this process so far?

Weary: A key lesson is patience as the Seychelles debt conversion took four years to conclude. However, we expect the next set of deals to move more quickly. Not surprisingly, the Ministry of Finance plays an important and active role, along with our more traditional partner, the Ministry of Environment. Additionally, it has been helpful to get high-level commitments for the deals, such as Cabinet or Minister’s endorsement of the overall project, including the MSP.

[1] This survey was conducted by Jennifer McCann, director of U.S. Coastal Programs at the Coastal Resources Center and director of Extension Programs for Rhode Island Sea Grant. It is available upon request at meam [at] openchannels.org.

By Tundi Agardy, Contributing Editor, MEAM. Email: tundiagardy [at] earthlink.net

Greater financial support for effective marine and coastal management is necessary the world over – especially if management is going to address, simultaneously, the complex suite of issues integral to EBM.

But even as the need for financing accelerates, the budgets of management agencies are shrinking (global recession and dealing with immediate security risks and conflicts both play into this). New revenue streams are badly needed – and these must be in the form of the steady, continuing support that keeping coastal systems healthy requires, not the one-off infusions of cash that often come from the donor community.

This makes finding innovative financing solutions for EBM imperative and urgent. In particular, this means that those who benefit from well-managed, productive, and valuable ocean areas must invest in their management. Naturally, many beneficiaries of marine ecosystem services would prefer to continue as free riders. But competition for ocean space and resources is ever increasing, and for those that benefit from ecosystem goods and services, not actively supporting marine management may mean that those benefits stop flowing. Enlightened members of the private sector are unlikely to let that happen as long they can see that management is resulting in return on investment.

Innovative financing schemes emerging

Luckily, innovative financing schemes that allow the public sector and the private sector (both businesses and communities) to share marine planning and management costs are emerging. These schemes include payments for ecosystem services (PES), biodiversity offsets, public/private partnerships, Marine Conservation Agreements [MCA], trust funds and other endowments, as well as impact investing.

The emergence of PES and other market-based mechanisms for protecting natural capital has been particularly slow in the marine realm for several reasons. One is the lack of conventional property rights at sea. This has required contract developers to utilize access rights rather than property rights to ‘sell’ ecosystem service delivery. Another major factor in the slow utilization of PES for marine and coastal habitat protection has been the limited capacity to date for assessing marine ecosystem services, determining their value, and ascertaining what factors affect ecosystem services delivery.

New rapid assessment techniques for quantifying and valuing marine ecosystem services, from blue carbon to shoreline stabilization, are now coming on line, however. The location of concentrations of ecosystem service-delivering habitats can be mapped, as can benefits flows across broader landscapes, setting the stage for innovative financing mechanisms like PES.

Measuring management performance is necessary for attracting investments

However, while we may be better at assessing and valuing benefits and services flowing from oceans, attracting investment in management is still not easy. I would argue that the biggest hindrance to doing so lies in our distaste for performance-based management and a naïve sense that EBM should be done because it is the right thing to do, not because it can profit investors. And while I share a distaste for commodifying nature, I also think the only way to set up the sustainable financing so necessary for lasting EBM is to attract the support of businesses that benefit from ecosystem goods and services alongside ocean advocates.

To do so we have to set up our management regimes so they deliver. Performance does not have to be measured in profitability, although most investors will see that first and foremost among the other elements of the triple bottom line, i.e., environmental, economic, and social outcomes. Performance can also be gauged in terms of satisfaction with management outcomes, equitable sharing of benefits, reduction in user conflicts, and hopes for the future. Planning performance-based management, with cost-effective monitoring schemes to demonstrate pay-offs, lends itself to investment in oceans, as opposed to welfare for oceans. And great investments are likely to stand the test of time, while welfare ebbs and flows like the tides.

By Ben Halpern

Editor's note: The goal of The EBM Toolbox is to promote awareness of tools for facilitating EBM and MSP processes. It is brought to you by the EBM Tools Network, a voluntary alliance of tool users, developers, and training providers.

The rising interest in addressing social issues within conservation planning has led to increasing awareness of the need to address equity, both for its own sake and for how it can affect conservation success. Below I describe a few key tools that can help incorporate equity concerns in resource management and conservation planning.

For setting clear objectives

Conservation planning requires clearly defined objectives. Traditionally such objectives have included things like maximizing species richness at minimum cost, building connectivity between patches, or protecting a minimum area of critical habitats. Equity concerns in conservation are no different. If equity is something you care about, make it an explicit objective. This requires planners to know: a) what type(s) of equity people in the planning area care about, and b) how to measure those types of equity (see Halpern et al. 2013 PNAS and Klein et al. 2015 GEC for further details).

To assess equity concerns: Survey your community, informally at a minimum but ideally more formally. Create a structured survey that asks key stakeholders and the broader community about their concerns related to each type of equity (procedural vs. distributive; gender, occupational, class, generational; etc.) and how important each is. If you want to know the relative importance of the different types of equity, use something like Analytical Hierarchy Process (AHP) to elicit relative weights.

To measure equity: Once you know which type(s) of equity are most important to people, make sure you know how to measure them correctly. Are people concerned about change in access to a resource, or financial benefit/cost under new management rules, or both? Do people care more about equality (everyone gets exactly the same amount) or equity (some proportional or relative distribution)? Make sure the management plan is set up to measure and monitor these aspects of the community once new management rules are in place.

For assessing equity tradeoffs

Whenever there are multiple objectives in conservation planning, tradeoffs between those objectives likely exist. Just as conservation outcomes and costs often have tradeoffs (e.g., achieving perfect conservation outcomes is generally really expensive, whereas one can achieve modest conservation outcomes with a smaller budget), equity and conservation can be at odds with each other (see Fig. 1). When developing and assessing spatially explicit plans, a number of potential tools can be used to evaluate the potential tradeoff between equity and conservation goals: Marxan, InVEST, or other ecosystem service modeling tools. In each case, you have to track the equity outcome of each possible spatial plan and then plot those outcomes (see Fig. 1).

Fig. 1. Relationship between conservation and equity outcomes. Increasing how much one achieves of one outcome often requires reducing how much can be gained of the other outcome, and vice versa – a typical tradeoff in objectives. Top Panel: Simulated outcomes from a range of possible management scenarios (each point) show that different management actions can have very different consequences for one or both of the planning objectives (find additional examples here). Bottom Panel: Here the tradeoff emerges as concave (weak tradeoff), but there are many possible shapes to these tradeoffs (learn more here and here), including no tradeoff where the ‘curve’ would actually be a square.

[Editor’s note: Ben Halpern is a professor of marine biology and conservation science at the Bren School of Environmental Science & Management at the University of California, Santa Barbara; director of the National Center for Environmental Assessment and Synthesis; and director of the Center for Marine Assessment and Planning. His research focuses on issues and questions related to the effective and efficient protection and sustainable use of marine resources. Read more about his research. He can be reached at halpern [at] nceas.ucsb.edu.]

Global information released on economic, social, and cultural values of coastal nature

The Nature Conservancy in cooperation with partners worldwide has recently released the Atlas of Ocean Wealth. The atlas includes over 60 maps illustrating ecosystem services around the world as well as a chapter on how ecosystem services can be incorporated into marine planning with examples from Canada and Brazil. Access the atlas and associated online mapping tool.

Strategies described for minimizing conflicts between offshore wind and fisheries

SeaPlan, in collaboration with offshore wind energy developer Deepwater Wind LLC and the Rhode Island Charter and Party Boat Association, has released Addressing Interactions between Fisheries and Offshore Wind Development: The Block Island Wind Farm. The report summarizes strategies that have been effective in minimizing conflict and establishing cooperation between Deepwater Wind and Rhode Island fishing communities at the Block Island Wind Farm pilot project. It describes Deepwater Wind’s fisheries mitigation options framework, including collaborative groundfish and lobster surveys conducted with local fishermen and other strategies that may be useful for informing future offshore wind projects in the United States. Read the report.

MSP challenges and opportunities for ocean businesses analyzed

The World Ocean Council (WOC) has released a report “Ocean Industries and Marine Planning” that reviews and analyzes challenges and opportunities that MSP holds for the ocean business community. The report covers opportunities to identify and develop data sources on marine ecosystems and their uses, streamline regulatory/permitting processes, reduce user conflicts and litigation, and reduce investor uncertainty. To fully support MSP, however, ocean businesses need more clarity on the relationship between MSP and other governance processes and mechanisms, regulatory and authority gaps and uncertainties, and how MSP will function in multiple jurisdictions. Read the report.

Draft ocean plan released for US Mid-Atlantic

The Mid-Atlantic Regional Planning Body (RPB) has just introduced a draft ocean action plan for the US Mid-Atlantic (the Atlantic coast states from Virginia to New York). The plan outlines a series of actions US federal and state agencies, tribes, and the Mid-Atlantic Fishery Management Council can take to better collaborate on ocean governance and decision-making for the region. Public comments are solicited through September 6, 2016, and public meetings in all of the US Mid-Atlantic states will be held between July 12-27, 2016. Read the plan, provide comments, and see the open house schedule.

Denmark undertakes MSP process to promote economic growth

The Danish parliament has passed a bill tasking the Danish Maritime Authority with overseeing the development of a holistic maritime spatial plan for the Danish sea areas. The purpose of the maritime spatial plan is to promote economic growth through coordinated development and use of the sea areas. The maritime spatial planning effort will incorporate the energy sector, maritime transport, fishing, aquaculture, the extraction of raw materials from the sea, recreational activities, and tourism as well as protection of the environment. The final maritime spatial plan is to be issued by March 31, 2021, at the latest. Learn more.

US makes progress towards offshore wind energy

The US Department of the Interior’s Bureau of Ocean Energy Management (BOEM) has proposed the lease of 81,130 acres off the coast of the state of New York for the development of commercial wind energy. To date, BOEM has awarded 11 commercial offshore wind leases, including nine through a competitive lease sale process (two each offshore of the states of New Jersey, Massachusetts, and Maryland; two in an area offshore of the states of Rhode Island and Massachusetts, and one offshore of the state of Virginia). BOEM is requesting public comment on the lease sale off the coast of New York by August 6, 2016. Get information on how to submit comments.

In addition, BOEM has issued a call for information and nominations to gauge the wind industry’s interest in commercial wind leases in two areas spanning approximately 485,000 acres in federal waters offshore of the state of Hawaii. To date, BOEM’s offshore program has identified wind energy areas in federal waters off of seven Atlantic states. In the Pacific, BOEM is processing three unsolicited commercial floating wind lease requests offshore of the states of Hawaii and California and evaluating an unsolicited lease request for a floating wind demonstration project offshore of the state of Oregon. BOEM is requesting information and nominations on the potential leases off the coast of Hawaii by August 8. Get information on how to submit comments.

Editor’s Note: From the Archives calls attention to past MEAM articles whose perspectives and insight remain relevant.

Considerations such as health, food security, and population growth can have a profound impact on the success of marine management. A small number of population, health, and environment (PHE) initiatives have been established in biodiversity hotspots in developing nations to address concerns about public health and unmet family planning needs while also working to improve ecosystem health and biodiversity conservation. Read our interviews with PHE experts to find out why so few integrated programs exist and the potential for expanding them.