Tundi's Take: Private Sector Investment in EBM Makes Good Business Sense

The Skimmer on Marine Ecosystems and Management

By Tundi Agardy, MEAM Contributing Editor (tundiagardy [at] earthlink.net)

"Engage the private sector" has become something of a mantra in marine management. But thus far, direct financial involvement by the private sector in ocean management has been relatively limited. While industries such as commercial fisheries, shipping, and offshore energy have been granted use privileges, there has been little private sector interest in investing in management measures to sustain the benefits that well-managed ecosystems provide.

This is true for myriad reasons:

  1. There is an enduring assumption that the public sector (government) will manage ocean resources and space sufficiently;
  2. Without the development of markets, the vast majority of social and economic values associated with coastal and ocean areas remain unaccounted for in capital market transactions; and
  3. The commons property regime existing in ocean space makes mechanisms for engaging the private sector not so apparent.

Incentives for private sector engagement have not been made very clear to this point, so any financing of management that originates in the private sector is viewed more as a tax than as an investment.

Surveys of how coastal ecosystems are currently protected show that innovative financing mechanisms that tap into private sector funds are rare. With a few exceptions, the management of these areas has generally fallen to the public sector. Inequities exist in the way coastal areas are managed, such that taxpayers shoulder most of the costs of protection, while industries receive a comparatively free ride in deriving the benefits coastal ecosystems provide. There is room for a dramatic shift in the engagement of business in EBM.

With growing recognition of the value of ecosystem services, new sources of potential market demand for such services are emerging. Markets that involve payments for the protection of ecosystem services (such as payments for carbon sequestration, water quality maintenance, or biodiversity maintenance) are expanding on land, and there is growing awareness of the potential for carrying this seaward among business, investment, and conservation communities. Marine management can and should be supported by the very industries that realize the benefits of coastal and ocean ecosystems: the fishing industry protecting nursery habitats, for instance, or the tourism industry restoring mangroves for their roles in water filtration and in buffering land from storms.

We cannot assume the business community will become engaged in EBM because it is the right thing to do. Yes, companies can derive public relations value from charitable contributions to marine management efforts (performed either by governments or by NGOs). But a truly effective and sustainable financing strategy will have to be based on business models that demonstrate the profitability of investing in management.

I've recently been involved in assessing existing public/private partnerships in marine management. It appears that when this sort of co-management is structured as not-for-profit, businesses are reticent to support the efforts, or eventually withdraw. But when partnerships recognize the positive payoffs that effective management investment can provide, and structure their joint ventures so that real profits flow back to the business investors, sustainable financing can result. Undertaking projects that show that effective management is profitable for businesses by reducing financial risks and generating increased revenues will demonstrate that investing in EBM makes good business sense.

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