Solutions to measuring and managing economic risks and Opportunities in Sustainable ocean development (SOS)

Marine and coastal ecosystems are major contributors to human well-being and economic development. Yet, our ability to account for the environmental, economic, and social value of the ocean is undermined by relevant knowledge and evidence being scattered between different institutions and expert communities. There is an urgent need to interlink data, statistics, and communities to embed the use of connected evidence in laws, policies, and development planning.

The Dasgupta review calls for changing measures of economic success and new economic models which properly account for human interaction with and dependence on nature. The sustainable development of the ocean economy requires such a model or system for measuring progress. Although the standard system of national accounting provides a solid foundation for doing so, the scope of the accounts needs expansion to include the role of nature in the economy.

Natural capital accounting (NCA) is a necessary step towards understanding the place of nature's services in our economies. It offers us a way to estimate the impact of policies on natural capital, which is a prerequisite for policy analysis. Through initial engagement with NCA users within government departments in two countries (UK Department for Environment, Food and Rural Affairs (Defra), and South African Department of Environment, Forestry and Fisheries (DFFE)) it was established that there is a need for innovative tools to improve and simplify the use of NCA data in decision making, such as economic analysis of trade-offs in financing coastal and marine development.

This fellowship proposes to improve the link between relevant government stakeholders (users of NCA and economic models) to organisations and partnerships (owners of research, data, and practical knowledge) to co-produce solutions to measuring and managing economic risks and opportunities in sustainable ocean development.

The Dasgupta review argues that international cooperation in the construction of national natural capital accounts and the sharing of data would improve decision-making around the world. Additionally, the harmonisation of national accounts should be coupled with decision support tools to increase the functionality of national NCA. The suggested approach to this Knowledge Exchange (KE) fellowship is therefore to facilitate connecting SA and UK NCA users to evidence-based tools for ocean economy investment and policy impact evaluations.

The outcome therefore aims to inform the Taskforce on Nature-related Financial Disclosures (TNFD) on potential tools and materials to promote worldwide consistency for national level nature-related reporting.

Through two case studies, one in South Africa and the other in the UK, the fellowship will aim to demonstrate the use of an existing state-of-the-art regional computable general equilibrium economic (CGE) model as a tool that uses national NCA data to evaluate the impacts of different environmental policies on the health and wealth of the ocean economy and the communities that depend on it. Users of CGE models can create versatile policy and investment scenarios to model the economy-wide impact, which is useful for risk policy management and to guide financial sector to optimal areas for investment into the blue economy.

The outputs of the case studies, being the application of the existing SA CGE model and the facilitation of a blueprint for an updated UK CGE model, will contribute to the technical assistance required to ensure long-term impact and application of natural capital accounting. The identified areas of key interest to both groups of stakeholders overlap (DFFE and Defra), potentially allowing the fellowship to address the needs of both groups at once and in a unified way through two parallel national level case studies.