The Role of the Blue Economy in Achieving Sustainable Development Goals

The Rise of the Blue Economy: A New Frontier for Sustainable Development

By Dr. Rak Worakijpokathorn, EXIM BANK

Over the past year, there has been a significant global shift towards combating climate change, as evidenced by the increasing number of countries and companies pledging to achieve net zero emissions. While the green economy has been a prominent mechanism in this endeavor, the blue economy, which focuses on the sustainable use of marine resources, has been gaining traction as a crucial player in the fight against climate change.

The blue economy holds immense potential, with the global ocean economy projected to reach $3 trillion by 2030, according to the Organization for Economic Co-operation and Development (OECD). Additionally, the oceans play a vital role in maintaining the planet’s environmental balance, contributing to the production of oxygen and absorption of heat and carbon dioxide.

Despite its significance, the blue economy has been underfunded, with Goal 14 of the Sustainable Development Goals (SDGs) receiving the least financial support. The World Economic Forum estimates that achieving Goal 14 will require approximately $175 billion per year in investments, a target that has not been met in recent years.

One important financial instrument that can support the growth of the blue economy is the issuance of blue bonds. Although the market for blue bonds has been growing, it still represents a small fraction of the total sustainable bond market, with clear standards and criteria being a key challenge. However, the recent collaboration between the International Finance Corporation (IFC) and other international organizations to create Guidelines for Blue Finance signifies a positive step towards attracting more private sector participation in the blue bond market.

Thailand, with its heavy reliance on marine and coastal resources, stands to benefit greatly from the development of the blue economy. The sector accounts for around 30% of the country’s GDP and provides 26% of total employment, making it a crucial driver of the Thai economy.

As the world continues to prioritize sustainable development, the blue economy presents an opportunity for countries and businesses to contribute to environmental conservation while fostering economic growth. It is crucial for all sectors to align with the principles of the green economy and support initiatives that promote the sustainable use of marine resources.

EXIM BANK, a key player in supporting sustainable initiatives, has recognized the importance of the blue economy and is committed to providing financial support to businesses operating within this sector. As EXIM BANK prepares to issue its first blue bond, it is evident that the institution is dedicated to fostering the growth of Thailand’s economy while safeguarding the marine environment.

Column: Next Normal Author: Dr. Rak Worakijpokathorn EXIM BANK

Over the past year or so, I have been very pleased to see that the world is taking steps to seriously combat global warming, with the release of Net Zero Tracker, an independent organization that tracks global greenhouse gas emissions- wide in collaboration with the University of Oxford. .

It was found that more than 150 countries around the world have set targets to reduce their greenhouse gas emissions to net zero. In addition, more than 1,000 large world-class listed companies (Forbes Global 2000) have set targets of such (October 2023), an increase of around 700 in June 2022, or an increase of more than 40% in just 16 months.

In the past, the mechanism we heard often And many sectors use it as the main way to achieve the above goal, which is the green economy. However, today I would like to invite you to talk about another mechanism that has not get a lot of talk about it. And it is expected that it will start to play a bigger role, namely the blue economy, which is interesting in many matters as follows:

– How important is the blue economy if green makes us think of a forest? Blue probably makes us think of water and the ocean, right? To begin with, the blue economy has similar principles to the green economy, but focuses on the use of marine resources. and the coast in a sustainable manner

The oceans are a source of employment and income for millions of people around the world. The Organization for Economic Co-operation and Development (OECD) expects the value of the world’s ocean economy to reach US$3 trillion by 2030. It has more than doubled from 20 years ago.

In addition, the United Nations (UN) found that the oceans help produce up to 50% of the world’s oxygen gas, absorb up to 90% of heat from human activities, and also help absorb more than 25% of CO2 gases. reasons, conservation Marine resources become Goal 14 (Life Under Water) in the Sustainable Development Goals (SDGs) of the United Nations.

– How to push the blue economy In addition to all of us having to “work” to help protect marine resources more seriously. Another important driving force that is indispensable is “finance” to support activities related to the use of resources.

However, an assessment by the OECD found that goal 14 of the Sustainable Development Goals, which is directly linked to the green economy, is the least funded goal among the 17 goals. The World Economic Forum (2022) expects, if the sustainability goals are to be achieved in 14 By 2030 investment costs will reach approximately US$175 billion per year.

But between 2015 and 2019, there was less than 10 billion US dollars per year in real investment, which means a GAP of almost 165 billion US dollars per year, or about 1/3 of Thailand’s GDP .

– Blue bonds must play a greater role to help close the GAP Currently, research from Columbia University found that although the growth rate of blue bonds over the past 5 years (2018-2022) has expanded to 92% per year (CAGR), but if we consider the market value of about 5 billion US dollars. This represents less than 0.5% of the total sustainable bond market. Considered still very small compared to green bonds with a share of over 50%.

Since the Republic of Seychelles first issued blue bonds in 2018, only 26 blue bonds were issued in the world (data from Columbia University at the end of 2022), so many people say that the blue bond market is still the same at this time. level as the green bond market Just 10 years ago

In the past, the reason why blue bonds have not been very popular. This may be because there are still no clear standards and criteria. But recently, since the beginning of 2022, when the International Finance Corporation (IFC) collaborated with several international organizations to create Guidelines for Blue Finance, we started to see more private sector players participating. Previously, more than half of blue bonds were issued mainly by international organizations or governments.

– Does Thailand need to develop a blue economy? Thailand’s economy relies heavily on marine and coastal resources. According to the National State of Oceans and Coasts report 2020, Thailand’s blue economy was found to account for around 30% of GDP and provide 26% of total employment

Many businesses associated with the blue economy are all important mechanisms to drive the Thai economy. Be it fishing travel Maritime transport, energy, as well as the Eastern Special Development Zone (EEC) project which is the base of industrial production for Thailand’s future. or even the Land Bridge project It’s all about the blue economy.

It is probably time for all sectors to accelerate the awareness and development of the green economy, blending it seamlessly with the existing green economy mechanisms EXIM BANK has given importance to the green economy, in especially in providing financial support to Hotel business and maritime trade which is in line with the blue economy, while EXIM BANK recently plans to issue its first blue bond as well. Let’s come together to grow Thailand’s economy while protecting our blue ocean.

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