Planet Tracker reaches its conclusion in a carefully argued analysis that urges policymakers to draw on the power of financial markets to support commercial fishing companies while marine ecosystems regenerate
So-called 'Blue Bonds' could play an important role in restoring ocean ecosystems and setting the world's fisheries on a sustainable development course, according to a new study from financial think tank Planet Tracker.
Production from the world's wild-catch fisheries is set to decline, or at best plateau, over the next few decades. At the same time, global population growth means seafood production needs to increase by 118 per cent by 2050 to meet healthy dietary requirements.
To tackle this issue, ocean ecosystems need time to regenerate, having been hit by decades of overfishing and other human activities that caused the abundance of marine life to decline by an estimated 70 per cent through the course of the 20th century.
Planet Tracker's new analysis argues that in the long-term, stripping back catch levels to allow marine ecosystems to regenerate would benefit the world's fishing industry. Drawing on a model examining the feasibility of a global recovery of fish stocks, it finds that while a business-as-usual scenario results in higher profits and cash flow in the short term, financial returns quickly fall below those envisaged under a 'recovery scenario' by the sixth year. By the 17th year of the model a business-as-usual scenario starts to see losses totting up - meaning that, from year 17 onwards, commercial fishing companies would not be able to finance themselves through their own operations and would require external capital.
However, while commercial fishing companies may agree that in the long-term replenishing fishing stocks will lead to higher profits, they remain subject to short term financial pressures and the famous Keynesian dictum that "in the long run we are all dead".
As such, Planet Tracker's report suggests blue bonds could be used to help fishing firms endure the short-term financial consequences of restricting the global catch.
Under the blue bonds model investors could subsidise the difference in free cash flow compared to a business as usual scenario for five years, the report suggests, providing companies demonstrate they are fishing at a reduced capacity. Then, once stocks begin to recover, companies could fish at a higher rate again and begin repaying investors.
The proposed mechanism provides a financial incentive to prevent overfishing which aligns - at least far more successfully than the business-as-usual scenario - the interests of investors, fishing companies, and the planet's marine ecosystems.
The study notes that potential impacts on seafood processing companies and employment in the wild-catch fishery sector would require careful management. It also acknowledges that agreeing and enforcing quotas could present another challenge.
However, it points to evidence that the the global costs-benefits ratio - the overall monetary benefits of a project relative to its costs - for fisheries management reform is above 9:1, with the ratio higher than 200:1 in some countries.
Moreover, there are growing signs that policymakers are keen to grapple with the challenge of over-fishing. Earlier this month the European Commission adopted a proposal for a management plan of some fish stocks in the western Mediterranean. If ratified in November at the Agriculture and Fisheries Council, the move would see catch limits and quotas imposed on a range of species including turbot, eel, sprat and dolphinfish, and signpost a way forward for such negotiations across the EU in the future.
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