Can the Baltic Region harbour a Sustainable Blue Economy?

Valerie de Liedekerke,
Baltic Ecoregion Programme Manager & Interim Director,
World Wide Fund for Nature,
Sweden

A healthy Baltic Sea can provide blue natural capital for our economy, our societies, and future generations – yet if financial flows in the region continue to follow current business-as-usual pathways, the Baltic Blue Economy (BBE) will remain at peril. Recent research, done by WWF and 3Keel, mapping financial flows and their environmental and social impacts on the Baltic Sea region revealed that the BBE is currently some distance from being sustainable where nature can thrive, and resources are available in perpetuity. Governments, industry, and financial actors are in a position to steer future investments towards nature and climate positive outcomes; while guidelines, guardrails, and accountability frameworks relevant to the ocean context are coming on stream and are applicable to support current and future decision-making in the Baltic Sea region. Will they be employed to accelerate the transition to a Sustainable Blue Economy (SBE)?

Significant value at stake

The total turnover of the BBE is approximately €1.17 trillion per year, with an estimated Gross Value Added (GVA) of €263.5 billion – one and a half times the GVA of the entire agricultural sector within the EU. The average annual growth in the BBE, based on Eurostat data from 2016-2018, was estimated at 6.5% and driven largely by increased turnover from non-living resource-related activities. Extraction and renewable energy generation had the highest per-sector growth rates at 10.1% and 8.4%, respectively. Tourism and recreation also saw 7.5% annual growth.

Extraction sector poses a challenge

The extraction sector is the largest of all in terms of turnover, commands the largest share of financial flows and stocks, ranks worst in terms of environmental and social impact, and employs 23% of the entire BBE workforce. While small in terms of total turnover, the fossil fuel sector is of particular concern as it had an average year-on-year growth of 33%. If sustained into future years, such a high growth trend in this sector would prove an obstacle for the transition to a SBE. Furthermore, it highlights the disconnect between national net-zero commitments and fossil fuel plans, calling on an urgent need to align national environment, climate, and finance government agendas.

Renewable sector poised for growth

The rise of renewables in the Baltic as the lead profit generating economic sector is cause for optimism and a potential source of examples for other sectors. The highly intentional coordination of resources and creation of support mechanisms for renewable energy demonstrate that short-term change is possible. The challenges for renewables are reducing or eliminating negative environmental impacts associated with infrastructure placement and noise pollution, and reliance on natural mineral resources. Investment is needed to support innovative, sustainable, and circular flow solutions to address these, as well as effective marine spatial planning and stakeholder engagement processes to ensure development occurs in appropriate areas to avoid known impacts and potential conflicts with other sectors.

Marine circular economy offers potential

The marine circular economy in the Baltic represents a significant opportunity as it is not matched to the value of goods flowing through the current ‘take-make-waste’ system. Although circular activities can and do take place in many sectors, the only defined economic sector that is dedicated to circular resource use is the ‘resource and material recovery’ sub-sector. This sub-sector generates approximately €9 billion, a mere 3% of the €286.4 billion generated by all extraction sectors.

Stakeholders have tools to accelerate the transition

Adopting and implementing UNEP FI’s SBE Finance Principles can transform the way in which ocean assets are used and managed, ensuring that investment decisions deliver long-term value without having a negative impact on marine ecosystems or on efforts to reduce carbon emissions. The EU Taxonomy can support achieving both EU Environmental and Biodiversity Directives and the HELCOM Baltic Sea Action Plan by establishing a list of environmentally sustainable economic activities via its classification system. It also could play an important role in helping the EU scale up sustainable investment and implement the European Green Deal.

It is critical that public and private finance and investment actors take leadership and redirect finance towards sustainable development pathways that will build environmental, social and economic resilience to secure the needs of present and future generations across the Baltic Sea region. Likewise, strong government leadership is needed now to create the enabling conditions through supporting measures and setting common standards, regulations, carbon pricing and a clear net zero transition roadmap. To avoid a more difficult and costly transition in the future, the time to act is now.

Email: Valerie.deLiedekerke@wwf.se

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