catalysing ocean finance volume i

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Catalysing Ocean Finance

Volume ITransforming Markets to Restore and Protect the Global Ocean

United Nations Development Programme

Empowered lives

Resilient nations


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September 2012

Catalysing Ocean Finance Volume I Transorming Markets to Restore and Protect the Global Ocean

Copyright 2012 United Nations Development Programme

United Nations Development Programme Global Environment Facility

Bureau o Development Policy GEF Secretariat

304 East 45th Street 1818 H Street, NW

9th Floor MSN P4-400

New York, NY 10017, USA Washington CD 20433, USA

www.undp.org www.thege.org

All right reserved. This publication or parts o it may not be reproduced, stored by means o any system or transmitted, in any orm or by

any medium, whether electronic, mechanical, photocopied, recorded or o any other type, without the prior permission o the United

Nations Development Programme.

Catalysing Ocean Finance Volume I Transorming Markets to Restore and Protect the Global Oceanwas written and edited by the

ollowing individuals: Andrew Hudson and Yannick Glemarec, UNDP-GEF

The authors would like to thank the ollowing individuals or their generous support in providing inormal peer review o


Dandu Pughiuc, Head, Marine Biosaety Section, International Maritime Organization; Carol Turley, Senior Scientist, Plymouth Marine

Laboratory; Paul Holthus, Executive Director, World Ocean Council; Ned Cyr, Director, Oce o Science and Technology, US National Oceanicand Atmospheric Administration (NOAA); Peter Whalley, Independent Consultant; Robert Diaz, Proessor o Marine Science, Virginia Institute o

Marine Science; Chua Thia-Eng, Chair, PEMSEA Partnership Council

Designer: Kimberly Koserowski, First Kiss Creative LLC

Cover Photo: Richard Unsworth/Marine Photobank.

Caption: Indonesia: Hardy head silversides (Atherinomorus lacunosus) are abundant shoals o sh living in shallow water ree at

seagrass meadows throughout the Indo-Pacic. These sh species that eed primarily on zooplankton and small benthic invertebrates are

an important part o the seagrass ood web. They make an excellent ood source or larger sh species.

Production: Graphics Service Bureau, Inc., New York, USA

This publication was printed on recycled paper.

Empowered lives.

Resilient nations.

UNDP partners with people at all levels o society to help build nations that can withstand crisis, and drive and sustain the kind o growth

that improves the quality o lie or everyone. On the ground in 177 countries and territories, we ofer global perspective and local insigh

to help empower lives and build resilient nations. www.undp.org

The GEF unites 182 countries in partnership with international institutions, non-governmental organizations (NGOs), and the private secto

to address global environmental issues while supporting national sustainable development initiatives. Today the GEF is the largest public

under o projects to improve the global environment. An independently operating nancial organization, the GEF provides grants or

projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants

Since 1991, GEF has achieved a strong track record with developing countries and countries with economies in transition, providing $9.2

billion in grants and leveraging $40 billion in co-nancing or over 2,700 projects in over 168 countries. www.thege.org


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Empowered lives

Resilient nations


Volume ITransforming Markets to Restore and Protect the Global Ocean

United Nations Development Programme


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iiCatalysing Ocean Finance Volume I

TABLE OF CONTENTS

Figures, Tables and Boxes 1

Foreword Helen Clark, UNDP and Naoko Ishii, GEF 3

Acronyms 4

Executive Summary 6

Introduction 11

1. A new Paradigm to Address the Main Drivers o Ocean Degradation 13

2. UNDP-GEF Strategic Planning Instruments or Catalysing Ocean Finance 19

3. Lessons Learned 27

4. A Roadmap to Restore and Protect the Global Ocean 34

5. Conclusion 49

Reerences 52


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Catalysing Ocean Finance Volume I

FIGURES, TABLES AND BOXES

Figures

Figure 1 Leveraging Ratio o Six Coastal and Ocean Market Transormation Initiatives 7

Figure 2 Scaling up Actions to Restore Ocean Ecosystems 10

Figure 3 Earths Planetary boundaries 14

Figure 4 Four-Step Approach to Catalysing Ocean Finance 17

Figure 5 Summary o TDA/SAP Approach 20

Figure 6 The ICM Development and Implementation Cycle 23

Figure 7 Generic approach to building on global or regional legal ramework to remove barriers and

put in place enabling environment or catalytic ocean nance 24

Figure 8 Catalytic Ocean Finance Ratio (Catalysed Public & Private Finance: UNDP-GEF Finance)

or the six case studies 27

Figure 9 Global increase in requency o hypoxia 32

Figure 10 Forward Exponentially, Looking Backward 33

Figure 11 Global map o Hypoxic Areas 35

Figure 12 Changes in Ocean pH over the last 25 million years and projections in business as usual

ossil uel use scenario 38

Figure 13 Impact on shipping CO2

emissions o implementation o IMO Ship Energy Eciency

Management Plans (SEEMP) and Energy Eciency Design Index (EEDI) measures, 2010-2050 40

Figure 14 Invasive Marine Species Pathways and Origins 43

Figure 15 Global sheries subsidies breakdown by impact, source and developed/developing nations 44

Figure 16 Scaling up Actions to Restore Ocean Ecosystems 51

Tables

Table 1 Public Costs, Catalysed Finance and Ratios or Scaled Up Actions to Sustain the Global Ocean 9

Table 2 Generic suite o barriers to ocean and coastal sustainability 29

Table 3 Generic Public Policy Mix to Remove Key Barriers to Ocean Protection and Restoration 30

Table 4 Estimated costs to achieve global 10% o global ocean under Marine Protected Areas (MPA) 47

Table 5 Public Costs, Catalysed Finance and Ratios or Scaled Up Actions to Sustain the Global Ocean 50

Boxes

Box 1 Catalysing Finance 16


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2Catalysing Ocean Finance Volume I


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The worlds oceans and coastal areas are an integral part o lieon earth. They are the source o a variety o essential goods andservices including ood, transport, oil, gas, and minerals, toname but a ew, and also deliver vital ecosystem services suchas climate regulation and oxygen production.

It is thereore o tremendous concern that our oceans are undersignicant threat, whether that be rom pollution, overexploita-tion, habitat loss, invasive species, or climate change.

While a number o important commitments have been madeto the protection and restoration o oceans, their health is stillin decline. This underscores the need to take decisive actionwithout delay.

This publication - Catalysing Ocean Finance - demonstrates that, ar rom being an intractable problem, sustainable ocean manage-ment could become a successul legacy o todays generation o decision-makers. It shows how the challenges acing the oceanstem rom widely understood market and policy ailures - ailures which can be addressed through the application o appropriatemixes o market and policy instruments.

As early as the mid-1990s, the Global Environment Facility (GEF) and its partners recognised and began to address threats to marineecosystems and associated livelihoods and economies. In so doing, the GEF acknowledged that the sheer size and multi-countrynature o most o these marine systems, and their linked river basins, as well as the global nature o some o the threats they areaced with, called or coordinated, multi-country approaches. With its ocus on transboundary waters, this positioned the GEF as apotential catalyst to demonstrate and scale up eective strategies to address ocean challenges.

Over the past twenty years, the United Nations Development Programme (UNDP) and the GEF have successully developed a rangeo strategic planning tools aimed at assisting governments to put in place enabling policy environments to catalyse investment orrestoring and protecting the marine environment. In several cases, catalysed public and private nancial ows have exceeded theinitial GEF investment several hundred-old. In some cases, these instruments have helped to shit sizeable ocean industries, such asshipping and tuna sheries, to a more environmentally sustainable path.

Catalysing Ocean Finance takes stock o how eective these instruments have been in helping countries to address challenges acingthe oceans and explores how they could be successully scaled up. It estimates that an initial public investment on the order o $5billion over the next ten to twenty years could be sucient to catalyse several hundred billion dollars o public and private invest-ment, and thereby oster global transormation o ocean markets towards sustainability.

The Global Environment Facility and the United Nations Development Programme, working in partnership with partner countriesand initiatives, such as the recently launched World Bank Global Partnership or Oceans and the UN Secretary Generals OceansCompact, look orward to building on the successul approaches demonstrated inCatalysing Ocean Finance to sustainably utilise ouroceans, or the benet o present and uture generations.

Sincerely,

Helen Clark Naoko Ishii

Administrator Chie Executive OcerUnited Nations Development Programme Global Environment Facility

FOREWORD


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$ US dollarABNJ Areas Beyond National Jurisdiction

ACUMAR Autoridad de Cuenca Matansa Riachuelo

BOD/COD Biochemical Oxygen Demand/Chemical

Oxygen Demand

BSERP Black Sea Ecosystem Recovery Project

BWM Ballast Water Management

CARP Comisin Administradora del Ro de la

Plata

CBD Convention on Biological Diversity

Chl a Chlorophyll a

CO2

Carbon Dioxide

CP Cleaner Production

CTMFM Comisin Tcnica Mixta del Frente

Martimo

DDT Dichlorodiphenyltrichloroethane

DIN Dissolved Inorganic Nitrogen

DRP Danube Regional Project

EBRD European Bank or Reconstruction and

Development

EcoQOs Ecosystem Quality Objectives

EcoQWROs Ecosystem Quality or Water Resource

ObjectivesEEDI Energy Eciency Design Index (or ships)

EEZs Exclusive Economic Zones

EIB European Investment Bank

EU European Union

FAO Food and Agriculture Organization o the

United Nations

FFA Forum Fisheries Agency

FSA United Nations Fish Stocks Agreement

GBP GloBallast Partnerships

GEF Global Environment Facility

GHG Greenhouse gasGIA Global Industry Alliance or Marine

Biosecurity

GloBallast Global Ballast Water Programme

GPA-LBA Global Programme Action to Protect the

Marine Environment rom Land-based

Activities

HCFC Hydrochlorouorocarbons

ICM Integrated Coastal Management

ICPDR International Commission or the

Protection o the Danube River

IOC/UNESCO Intergovernmental Oceanographic

Commission o UNESCO

IFNR Investment Fund or Nutrient Reduction

IMC Inter-Ministerial Committees

IMO International Maritime Organization

IMTA Integrated Multi-Trophic Aquaculture

IPCC Intergovernmental Panel on Climate

Change

ITQs Individual Transerable QuotasIUCN World Conservation Union

IW International Waters

IWRMP Integrated Water Resource Management

Plan

JAP Joint Action Programme

JPOA Johannesburg Plan o Action

LME Large Marine Ecosystem

LPC/PC Lead Partner Country/Partner Country

M&E Monitoring and Evaluation

MARPOL International Convention or the

Prevention o Pollution From Ships

MDG Millennium Development GoalMEPC Marine Environment Protection

Committee (o the IMO)

MHLC Multilateral High Level Conerence

MPA Marine Protected Area

MRV Measurement, Reporting and Verication

MSC Marine Saety Committee

MSY Maximum Sustainable Yield

Mt Metric Tons

N Nitrogen

NAP National Action Plan or Programme

NGO Non-governmental organisationNIMRD National Institute or Marine Research

and Development (Romania)

NOAA National Oceanic and Atmospheric

Administration

ODI Overseas Development Institute

ODS Ozone Depleting Substances

OECD Organisation or Economic Co-operation

and Development

ACRONYMS


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OFMP Oceanic Fisheries Management Project

OPRC International Convention on Oil

Pollution Preparedness, Response and

Cooperation

P Phosphorus

PA Precautionary approach

PCB Polychlorinated Biphenyls

PEMSEA Partnerships in EnvironmentalManagement or the Seas o East Asia

PIC Pacic Island Countries

POPs Persistent Organic Pollutants

PPPs Public Private Partnerships

QA/QC Quality Assurance/Quality Control

R&D Research and Development

REDD Reducing Emissions rom Deorestation

and Forest Degradation

RFMO Regional Fisheries Management

Organisation

RPMF Rio de la Plata & its Maritime FrontSAP Strategic Action Programme

SDCA Sustainable Development o Coastal

Areas

SDS-SEA Sustainable Development Strategy or

the seas o East Asia

SEEMP Ship Energy Eciency Management Plan

SIDS Small Island Developing States

SOC State o the Coasts

SPC Secretariat o the Pacic Community

SSTs Sea Surace Temperatures

STAP Scientic and Technical Advisory Panel

TDA Transboundary Diagnostic Analysis

TSC Train-Sea-Coast

UN United Nations

UNCED United Nations Conerence on

Environment and DevelopmentUNDP United Nations Development

Programme

UNEP United Nations Environment Programme

UNESCO United Nations Educational, Scientic

and Cultural Organization

UNFCCC United Nations Framework Convention

on Climate Change

WCMC World Conservation Monitoring Centre

W/C Western and Central

WCPFC West & Central Pacic Fisheries

CommissionWCPO West & Central Pacic Ocean

WHO World Health Organization

WSSD World Summit or Sustainable

Development

WTO World Trade Organization

WWTP Wastewater Treatment Plant

YSFRI Yellow Sea Fisheries Research Institute

YSLME Yellow Sea Large Marine Ecosystem


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6

Catalyzing ocean fnance andgovernance reorm to restore the

worlds Large Marine Ecosystems (LME)

chapter1


Marine and coastal resources directly provide at least $3

trillion annually in economic goods and services plus an

estimated $20.9 trillion per year in non-market ecosys-

tem services (Costanza, 1997). Unortunately, coasts and

oceans are exposed to increasing threats such as pollu-

tion, overshing, introduced species, habitat and species

loss, and poorly planned and managed coastal inrastruc-

ture development. The cumulative economic impact o

poor ocean management practices is at least $200 billion

dollars per year. In the absence o pro-active mitigation

measures, climate change will increase the cost o damage

to the ocean by an additional $322 billion per year by 2050

(Noone, 2012). The ocean is estimated to have absorbed

25-30% o anthropogenic carbon dioxide emissions. While

this has served to mitigate atmospheric warming to a size-able extent, it has increased the acidity o the ocean by

30%, with signicant threats to calcium carbonate xing

organisms that serve as the oundation or many ocean

ood chains upon which hundreds o millions depend or

ood protein and livelihoods. Climate change is already

aecting surace ocean temperatures, driving sh stocks to

migrate to more avorable waters and reducing upwelling

o vital nutrients to key sheries areas, urther threatening

sheries yields (Sherman and McGovern, 2012). In addi-

tion, sea level rise, due to the thermal expansion o seawa-

ter, glacial melt and groundwater extraction, endangers

millions living in the coastal zone and island states, mostly

in the worlds least developed countries

The key nding o this publication, however, is that it is still

possible to restore and sustainably develop the oceans ull

potential or present and uture generations. A common

driver behind the accelerating degradation o the marine

environment is the inability o markets to sustainably utilise

open-access resources such as the global ocean. As a result o

these market ailures, both the private and the public sectors

have tended to under-invest or not invest at all in activities

necessary to sustain the marine environment (wastewa-

ter treatment, coastal habitat protection, etc.) and to over-

invest in activities detrimental to the marine environment

(over-exploitation o sh stocks, chemically intensive agri-

culture, etc.). These market ailures have oten been urther

compounded by policy ailures (perverse subsidies, etc).

In recent years, decision-makers throughout the world

have designed and implemented a wide array o instru-

ments to identiy and remove these market and policy ail-

ures. These instruments have helped governments put in

place clear incentives to all market players to restore and

protect coasts and oceans. The objective o this publica-

tion - Catalysing Ocean Finance - is to take stock o these

achievements and explore how they could be scaled up to

address key ocean challenges with only modest additional

public unds. Notably, Catalysing Ocean Finance presents

three major instruments that have proven highly eective

at promoting science-based, long-term integrated plan-

ning and barrier removal to transorm markets and create

sustainable productive use patterns o coastal and ocean

resources over the past 20 years. These instruments include:

Transboundary Diagnostic Analysis/Strategic Action

Programme (TDA/SAP) Integrated Coastal Management (ICM)/Framework or

Sustainable Development o Coastal Areas (SDCA) Global or Regional Ocean Legal Frameworks

EXECUTIVESUMMARY


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Drawing rom the portolio o International Waters projects

nancially supported by the Global Environment Facility

(GEF) and implemented by the United Nations Development

Programme (UNDP) in 31 o the worlds most important trans-

boundary marine and reshwater ecosystems, six case studies

have been selected to illustrate the application o these three

market transormation instruments to promote sustainable

coastal and marine resource development: (i) Danube River/

Black Sea; (ii) Yellow Sea Large Marine Ecosystem; (iii) Rio de

la Plata/Maritime Front; (iv) Seas o East Asia; (v) West/Central

Pacic Fisheries; and (vi) Global Ballast Water Programme.

By advancing ocean governance reorm at local, provincial,

national, regional and/or global scales, each planning instru-

ment used in these six case studies has proven highly eec-

tive at leveraging large public and/or private nancial ows,

leveraging the GEF public grant nance several hundred-

old. In specic cases, these initiatives have catalysed su-

cient nancial ows to restore large marine ecosystemsseverely degraded by pollution, move some o the worlds

largest sheries towards sustainability, and reduce global

risks rom the transer o invasive aquatic species. Strik-

ingly, in the six case studies reviewed, the ratios o catalysed

nance to initial GEF grant support range rom 57 to 1 to

2,500 to 1, averaging 458 to 1. For an order o comparison,

UNDP regards as satisactory a leveraging ratio o 4 to 1 or

o-grid clean energy access (Glemarec, 2012).

Figure 1: Leveraging Ratio o Six Coastal and OceanMarket Transormation Initiatives

What specic lessons can be learned rom these

methodologies and case studies that can inorm their

replication and scaling up in other ocean and coastal

contexts? We believe that seven key lessons can be derived

rom Catalysing Ocean Finance.

The rst lesson is that correcting market and policy ail-

ures through application o science-based integrated

ocean planning and barrier removal instruments can not

only act catalytically to restore and protect coasts andoceans, but can also generate sizeable business activ-

ity and jobs when job creation activities are deliberately

built into ocean management reorms. No country has

ever truly developed based on a green growth model and the

materiality o green markets at large scale remains a subject

o debate. However, Catalysing Ocean Finance provides

strong evidence or eective blue economy approaches

to ocean management that generate substantial jobs in

support o marine ecosystem restoration and protection.

As such, allocating programme resources or job creation

as well as documenting and communicating the impact o

coastal and ocean reorms on business activity and jobs will

be critical to oster the political support needed to scale up

the eective ocean actions described in this publication.

The second lesson is the importance o investing in

capacity development or ocean policy makers and

other stakeholders. In each o the six case studies exam-

ined, enhancing the policy development and implementa-

tion capacity o decision-makers played a substantial role

in accelerating the ormulation o new policy and the adop-

tion and implementation o new regulatory and economic

instruments at local, national, regional and global levels.

The third lesson is the need to reach consensus among

all stakeholders about the most eective mix o public

instruments to remove barriers to investment and

market transormation. In general, the engagement o our

main groups o stakeholders will always be required to trans-

orm a market: communities; ocean-impacting industries,

policy makers; and nanciers. Each o these groups typically

encounters a number o specic barriers that prevent them

rom using ocean and coastal resources in a sustainable

manner. Policies that bring benets to one group o stake-

holders can penalise another and lead to a policy deadlock.

The ourth lesson is that public policies are not or

ree. Whatever the policy mix that is selected, there

will be a cost or industry, consumers, tax payers and

0100

200

300

400

500

600

700

800

2500

57

213

737

281 277

PEMSEA GloBallastFrePlataYellow

Sea LME

W/C

Pacic

Fisheries

Danube/

Black Sea


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shareholders. As a general rule, everything that can be done

to rst reduce systemic investment risks such as long

term and transparent policies, streamlined administrative

processes, or improved consumer inormation needs to

be a rst-order priority, beore resorting to more expensive

public policy instruments to increase investment-specic

rewards such as subsidies or concessional nance.

The th lesson is the importance o dedicating adequate

public resources to investment pre-easibility work during

the policy analysis and development stage o market

transormation eorts. Much greater leveraging ratios

are observed in programmes having committed adequate

resources to assist stakeholders in preparing priority invest-

ment portolios. With a ew exceptions, this is an area that has

received insucient attention in the GEF International Waters

portolio and represents an opportunity to enhance the likeli-

hood o large nancial ows being successully catalysed by

GEF-nanced ocean and coastal initiatives.

The sixth lesson relates to the value o combining two or

even all three o the market transormation methodol-

ogies - TDA/SAP, ICM and global/regional legal rame-

works in the design and implementation o ocean

governance programmes. This approach can generate

multiple, synergistic benets by strategically building on

the comparative advantage o each instrument at dierent

geographic scales. It also increases their exibility and can

enhance the impact o these instruments on a broad range

o existing and emerging ocean challenges, including over-

shing, hypoxia, coastal habitat loss, invasives species, and

ocean acidication.

Our seventh and nal lesson is probably the most impor-

tant. The time rames to transorm ocean markets through

science-based integrated planning, barrier removal and

market transormation are long, typically 15-20 years

or more. In contrast, the present rate o increase o the

majority o ocean issues including hypoxia, acidication,

overshing, and coastal habitat loss, is geometric. Thecombination o the geometric pace o ocean degra-

dation with the long time rames needed to acilitate

catalytic and transormative changes in ocean sectors

underscore the urgency o taking immediate action on

the key ocean challenges.

For each o the six case studies reviewed in this publication,

while stress on marine ecosystems has been reduced and,

in some cases, measurable environmental improvements

realised, globally coasts and oceans remain on a nega-

tive trajectory and are likely to continue to degrade at anincreasing pace i the drivers o degradation are allowed to

continue unabated. Building on these ndings and nancial

and environmental data generated by the UNDP-GEF port-

olio o International Waters projects over the past 20 years,

Volume I oCatalysing Ocean Finance sets orth a roadmap

to restore and protect our ocean over the next 20 years. It

reviews the environmental status o the our main threats to

the world ocean: (i) Ocean Hypoxia; (ii) Ocean Acidication;

(iii) Introduced Species; and (iv) Overshing, with important

cross-linkages to coastal habitat loss and degradation.

For each threat, the publication presents the main drivers

o degradation and provides recommendations on how

scaling up the market transormation methodologies and

approaches described in Catalysing Ocean Finance can oster

policy reorm and catalyse investment to mitigate/eliminate

these drivers and preserve the socio-economic benets

provided by coastal and ocean resources. Then, it estimates

the approximate public costs, benets and total catalysed

nance o a global eort to dramatically reduce the impact

o each o these our threats to ocean ecosystems.

Catalysing Ocean Finance estimates that reducing and in some

cases arresting the degradation o coastal and ocean resources

would require an initial public investment o about $5 billion

over the next 10-20 years. The methodologies and assumptions

used to reach this estimate are summarised in Figure 2. The cost

breakdown and expected nancial ows to be catalysed by this

initial public investment or each o the our main threats are

consolidated in Table 1. The bulk o the nancial ows catalysed

will come rom the private sector or commercial utilities, not the

public sector. For ocean hypoxia, ocean acidication, oversh-ing and marine invasive species, catalysed ocean nance ratios

range rom 8 to 1,000, comparable to the ranges observed in

the six case studies presented in Volume II o this publication.


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Table 1: Public Costs, Catalysed Finance and Ratios or Scaled Up Actions to Sustain the Global Ocean

Issue (1)

One-time

public cost

($ m.)

(2)

Additional

and Recurring

Public Costs

($ m./yr)

(3)

One-time

Catalysed

Finance

($ m.)

(4)

Recurring

Catalysed

nance

($ m./yr)

(5)

Catalysed

Finance Ratio

(1-time costs)

=(3)/(1)

(6)

Avoided Costs

($ m./yr)

Hypoxia 2,500 - 76,000 - 30:1 200,000-790,000Ocean Acidication 820 - 20,000 300-5,100 24:1 104,000-182,000

Overshing 29,048 21,000 232,000 56,000 8:1 50,000

Marine Invasive

Species

20 - 20,000 - 1000:1 10,000-90,000

Source: Data rom Chapter 4 and also summarised in Figure 2

For sheries, 98% o the initial public costs would be or the

establishment and operation o a global system o Marine

Protected Areas (MPAs) that met the CBDs Aichi target o

10% o ocean area by 2020 and would accelerate recovery odepleted sh stocks. The bulk o these initial costs could be met

rom innovative private nancing mechanisms ($40 billion/

year rom ITQ proceeds) and budget neutral scal reorm

($16 billion/year rom redirected bad sheries subsidies).

All the cost and benet estimates given in this publication

are rough and probably accurate to no more than a actor

o about 2-3. However, this uncertainty does not alter the

overall conclusion oCatalysing Ocean Finance: the amounts

o catalysed public and private ocean nance that could be

realised through the scaling up o the strategic planningand existing and emerging policy instruments described in

Catalysing Ocean Finance would be many times the initial

publicly unded investments, and the realised benets/

avoided costs would exceed the initial public costs by

even higher ratios. The initial investment in public grant

unds required to support the planning and governance

reorms needed to catalyse these nancial ows would be

on the order o $4-5 billion. This amount would represent an

average annual allocation o about $250 -$500 million per

year i programmed over 10-20 years. This nancial eortis well within the reach o existing nancing mechanisms

such as the Global Environment Facility and possible new

and emerging mechanisms such as the World Banks Global

Partnership or Oceans or the Green Climate Fund.

In conclusion, this analysis underscores that the deterio-

ration o coastal and ocean resources is not an intractable

problem. We have the policy tools required to reverse these

global degradation trends and a concerted programme o

highly catalytic public and private investments to sustain the

world ocean lies well within our nancial reach. However, thewindow o opportunity to restore and sustainably develop

coastal and resources or present and uture generations is

closing very ast, as the ongoing degradation o these assets

is occurring at a geometric rate and could become irrevers-

ible beyond certain tipping points.


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Figure 2: Scaling up Actions to Restore Ocean Ecosystems

Ocean Hypoxia Ocean Acidication Overshing Marine Invasive Species

Reduce nutrientover-enrichment of

coastal areas

StrategicPlanning

Methodologies

Scale up TDA/SAP in20 remaining LMEs (&linked river basins)facing hypoxia

Scale up ICM in sameLMEs as tool to leveragenutrient pollutionreduction investmentsand protect nutrientsinks

Build on UNFCC Ocean pH target

(minimum) Adoption of Blue Carbon

Build on new IMO shipenergy eciency guidelines

ICM, TDA/SAP to helppromote scaling up local andnational Blue Carboninitiatives

Build on Global & RegionalLegal & InstitutionalFrameworks Complete WTO

negotiations to phase outnegative sheries subsidies

Strengthen RFMOs & LMEinstitutions

TDA/SAP: Scale up in ~50LMEs/sheries areas facing

depletion/overexploitation ICM as cross sectoral tool to

promote sustainable shing& aquaculture

Build on anticipatedinternational instrumenton Ship Hull Fouling

Incorporate hull foulingissue into LME TDA/SAPswhere invasives arepriority issue

PolicyIns

truments

Nutrient managementregulations

Nutrient emissions capand trade in river basins(national, regional)

Fertiliser subsidy reform Subsidies to agricultural

nutrient reduction

practices & technology Subsidies to wastewater

and industrial nutrientrecovery & re-use

Global nutrient reductionfund capitalised byinnovative nancialmechanism(s)

Amend UNFCCC toincorporate safe oceanacidity limit & catalyse actionon low carbon economy

Blue carbon inventorymethodologies

Tools, methodologies,standards & guidelines to

promote uptake of IMOenergy eciency guidelines Ship management plans

(SEEMP) Ship design standards

(EEDI) Facilitate private sector

R&D

Shift negative sheriessubsidies $16 billion/yr tosustainable aquaculture &MPAs

Scale up Individual Transfer-able Quotas (ITQ), $ to MPA,aquaculture, management

CBD Aichi Biodiversity Target

11-10% oceans under MPAs Ensure sound science, EBA,

data sharing, precautionaryprinciple in RFMO & LMEcommission mandates

UN Fish Stocks Agreement,FAO Code of Conduct, PortState Measures, etc.

Tools, methodologies,standards & guidelines onhull fouling management

Support to negotiationsand enhanced capacity forimplementation ofpossible new internationalagreement

Facilitate private sectortechnology R&D

Costs,

Benets

&

Catalysis

Public costs:TDA/SAP LMEs:

$1.0 billion (1 time)

ICM global:


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Coasts and oceans are being degraded at a rate that will

have signicant social and economic implications world-

wide i allowed to continue unabated. Over the last twenty

years, UNDP-GEF has successully developed and applied a

series o ocean and coastal market transormation method-

ologies that have proven very eective at removing barri-

ers and putting in place an enabling policy environment

that can catalyse sizeable quantities o public and private

sector nancial ows or ocean restoration and protection.

The ambition o Catalysing Ocean Finance is to codiy

and share the lessons learnt by UNDP-GEF in transorm-

ing markets to restore and protect the global ocean. It is

intended or government policy makers tasked with creat-

ing incentives or the protection, restoration and sustain-

able development o coastal and ocean resources vital to

the economic uture o the worlds coastal nations. Catalys-

ing Ocean Finance is divided into two volumes.

Volume I o this publication, titled "Transorming Markets

to Restore and Protect the Global Ocean", summarises,

through a series o six case studies, the eectiveness o

each o these instruments in catalysing nancial ows and

presents options or scaling them up to address present and

uture threats to coastal and ocean resources. Volume I is

organised into our chapters. Chapter 1 explores the main

causes o coastal and ocean degradation and presents a newparadigm to sustainably utilise open access resources such

as the global ocean: using scarce grant unds to promote

integrated, science-based ocean and coastal planning and

policy reorm, remove investment barriers, and catalyse

large public and private ows or sustainable ocean resource

management.

Drawing rom six case studies, Chapter 2 briey describes

the application o three major planning instruments used

to oster sustainable productive use patterns o coastal and

ocean resources over the past 20 years. Chapter 3 considers

the lessons learnt rom these case studies and methodolo-

gies over the past 20 years that can inorm their transer

and replication in other ocean and coastal contexts. Lastly,

Chapter 4 sets orth a roadmap to restore and protect our

ocean over the next 20 years via the combination and

scaling up o these planning instruments to address our

principal ocean sustainability challenges.

Volume II o this publication, titled "Methodologies and

Case Studies", comprehensively reviews each o the

three methodologies and six case studies used to urther

substantiate several o the main conclusions reached

in Volume I. It is divided into three chapters. Chapter 1

provides a detailed description o the TDA/SAP methodol-

ogy as a strategic planning tool or management o Large

Marine Ecosystems and their linked drainage basins. This is

ollowed by three case studies Danube/Black Sea Basin,

Yellow Sea Large Marine Ecosystem, and Rio de la Plata/

Maritime Front documenting how TDA/SAP created the

necessary enabling environment to deliver sizeable levels

o investment or ocean restoration and protection in each

o these waterbodies. Chapter 2 describes Integrated

Coastal Management as a very eective tool or promoting

sustainable use o coastal resources at local, municipal and

provincial scales, and highlights the UNDP-GEF East Asian

Seas PEMSEA programme as a case study documenting how

eective ICM can be at creating an enabling environment

that can leverage large sums o environmental investment,

both public and private. Lastly, Chapter 3 describes how

an approach involving building on emerging or anticipated

INTRODUCTION


16/60


global or regional legal rameworks can deliver signicant

new and additional nancial ows or ocean sustainability,

and can literally transorm entire markets such as shipping

and sheries.

Catalysing Ocean Finance also builds on the ndings o

two companion UNDP-GEF publications (Sherman and

McGovern, 2012; UNDP-GEF, 2012): The rst publication,Frontline Observations on Climate Change and Sustainability

o Large Marine Ecosystems, reviews climate change and

other threats to ocean ecosystems, and the steps UNDP

and other GEF agencies are taking to address these threats

in 10 LMEs. The second, International Waters Delivering

Results, highlights the substantial progress made in

addressing these threats through twenty years o UNDP-

GEF support to advancing the sustainable management

o 31 o the worlds most important transboundary marine

and reshwater ecosystems. International Waters Delivering

Results documents the much broader ongoing application

o Catalysing Ocean Finances three planning instrumentsacross a wide range o waterbodies, both marine and

reshwater. The two companion volumes provide a wealth

o technical inormation or urther research and action.


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1.1 The Ocean An Engine or EconomicDevelopment under Threat

The ocean covers three-ourths o the earths surace,

contain 97% o the earths water, and represent 99% o theliving space on the planet by volume. The ocean contains

nearly 200,000 identied species but actual numbers may

lie in the millions. The ocean serves as a major source o

protein or the worlds growing population; one in six o the

earths seven billion people depend on the ocean or their

primary source o protein. Fisheries and aquaculture repre-

sent about a $100 billion per year contribution to the global

economy. Marine sheries directly or indirectly employ

over 200 million people. In some parts o the world, such

as West Arica and the Pacic islands, sheries represent

30 to 80% o export earnings and provide local livelihoodsor hundreds o thousands o coastal shermen. Ninety

percent o all internationally traded goods are transported

via shipping. The shipping industry contributes around

$435 billion per year to the global economy and supports

nearly 14 million jobs. The tourism industry represents 5%

o global GDP, 6% o global jobs, and ocean and coastal

tourism represents a major portion o this. Thirty percent

o global oil production now occurs rom oshore sites

not land-based. Overall the number o people engaged

in ocean-related livelihoods is estimated to exceed 500

million. In sum, marine and coastal resources directly

provide at least $3 trillion in annual (market) economic

goods and services plus an estimated $20.9 trillion per year

in non-market ecosystem services, about 63% o the value

o all such services (Costanza, 1997).

Unortunately, our coasts and oceans remain under assault

rom a variety o pressures, including pollution (mostly

land-based), overshing, introduced species, habitat and

species loss, and poorly planned and managed coastal

development. Around hal o global sh stocks are ully

exploited, and a quarter are depleted, over-exploited or

recovering rom depletion. The World Bank and FAO esti-

mate economic losses due to overshing at $50 billion

per year (Arnason et al., 2008). An estimated 20% o

global mangroves have been lost since 1980, 19% o coral

rees have disappeared, and 29% o sea grass habitat has

vanished since 1879. Less than 1.4% o marine habitats are

protected -- compared with 11.5 per cent o global land

area. The occurrence o low oxygen hypoxic1 dead zones,

caused by excess nutrient pollution to coastal zones, has

been expanding at a geometric pace in recent years, with

associated losses to ecosystems and the livelihoods and

economies that depend upon them in the many tens o

billions o dollars per year. Invasive marine species, espe-

cially those carried in ship ballast water and on ship hulls,

cause an estimated $100 billion each year in economic

damage to inrastructure, ecosystems and livelihoods.

Thus the cumulative economic impact o poor ocean

management practices is at least $200 billion dollars per

year, a tremendous drain on human economic progress.

Climate change driven by greenhouse gas emissions only

complicates an already challenging ocean management

situation. Most o the earths available carbon is in the ocean

which holds ty times more carbon than the atmosphere.

1 Hypoxia, or oxygen depletion, is a phenomenon that occurs in aquatic environments with high organic carbon loadings as dissolvedoxygen is depleted by bacteria consuming the organic carbon and becomes reduced in concentration to a point where it becomes

detrimental to aquatic organisms living in the system.

1. A NEW PARADIGMTO ADDRESS THE MAIN DRIVERS

OF OCEAN DEGRADATION


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About hal o earths net primary production, the conversion

o water, carbon dioxide, sunlight, and inorganic nutrients

into oxygen and hydrocarbons, occurs in the ocean, the

remainder on land. Climate change is already aecting

surace ocean temperatures and both horizontal and

vertical ocean circulation, driving sh stocks to migrate to

more avorable waters and, with warming surace waters

increasing ocean stratication, reducing upwelling o vitalnutrients to key sheries areas, threatening sheries yields

(Sherman and McGovern, 2012). The ocean is estimated

to have absorbed 25-30% o cumulative anthropogenic

carbon dioxide emissions but at the same time its capacity

to absorb more CO2

is slowly declining. While this has

served to mitigate atmospheric warming to a sizeable

extent, it has had the negative eect o increasing the

acidity o the ocean by 30%, with signicant threats to

calcium carbonate xing organisms such as corals, but

also plankton species that serve as the oundation or

many ocean ood chains upon which hundreds o millions

depend upon or protein and livelihoods. Sea level rise,

due to the thermal expansion o seawater, glacial melt

and groundwater extraction, threatens millions living in

the coastal zone and island states, mostly in the worlds

least developed countries. In the absence o pro-active

mitigation measures, the cost o damage to the oceancould rise by an additional $322 billion per year by 2050

as a result o climate change (Noone, 2012), bringing the

total damage to over $0.5 trillion per year, a sizeable drain

on global economic development and poverty reduction.

Four o the 9 planetary boundaries (Figure 3) recently

proposed (Rockstrom, 2009) by a group o eminent earth

system and environmental scientists relate wholly or in

part to the ocean biodiversity loss, nitrogen and phos-

phorus loads, chemical pollution and ocean acidication.

Figure 3: Earths Planetary boundaries

Source: Rockstrom et al., 2009

These planetary boundaries represent thresholds beyond

which the risk o irreversible and abrupt environmental

change to planetary lie support systems would make

Earth less habitable. O these, nitrogen burdens to the

ocean are already estimated to be exceeding the plan-

etary boundary by a actor o 3.5, and the ocean acidica-

tion boundary will be crossed very soon in the business as

usual ossil uel energy use scenario.


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1.2 Market ailures drive ocean degradation

A common driver behind the accelerating degradation

o the marine environment is the inability o markets to

sustainably develop and manage open-access resources

such as those ound in the ocean. This is a similar open

access challenge aced by other global commons such

as the atmosphere. As stressed by a recent study romthe Stockholm Environment Institute (Noone et al., 2012)

the ocean is the victim o a massive market ailure. The true

worth o its ecosystems, services, and unctions is persistently

ignored by policy makers and largely excluded rom wider

economic and development strategies. For the main

degradation challenges aecting the ocean, these market

ailures, compounded in several cases by perverse subsidy

policies, can briey be summarised as ollows:

Nutrient over-enrichment o the ocean and associated

coastal eutrophication and hypoxia reect the lack ointernalisation o the cost o the nutrient damage to

the coastal and ocean environment into the price o

industrially produced ertiliser and wastewater treat-

ment. Consequently, the agricultural and wastewater

sectors have no nancial or policy incentives to invest

in improving ertiliser use eciency or in sucient

levels o human and animal wastewater treatment to

remove (and ideally, recover) most nutrients beore

they reach the ocean. This issue is urther exacerbated

in many cases by subsidies to agriculture including or

ertiliser; Marine invasive species reects the lack o internali-

sation o the nancial damage o invasive species on

aquatic ecosystems and linked economic activity into

the operations o the shipping industry. As a result, until

recently the shipping industry has had no incentive to

incorporate the cost o preventing such invasions into

shipping operations and to stimulate remedial actions

that can ensure clean ship ballast water and hulls via

treatment and management; Loss o coastal habitats (especially coral rees,

mangroves, seagrasses) reects the lack o proper valu-ation o the ecosystem services such habitats provide

such as nurseries or sheries, protecting coasts rom

storm surges, tourism, nutrient and carbon sinks, etc.; Ocean acidication is wholly driven by the increase

in anthropogenic carbon dioxide in the atmosphere,

25-30% o which has already entered the ocean and

will only continue to increase as long as atmospheric

levels o CO2

continue to rise. The market ailure behind

ocean acidication is simply the lack o a proper price

on carbon which incorporates the massive environ-

mental externalities o climate change and ocean

acidication; Overshing reects the lack o internalising the social

and environmental costs o overshing (estimated at

$50 billion/year by World Bank/FAO (Arnason et al.,

2008) into (sustainable) sheries management. This

market ailure is compounded by policy ailures includ-

ing negative global subsidies o about $16 billion per

year to the shing industry (such as uel subsidies, tax

breaks, etc.) leading to eet overcapitalisation and

overexploitation.

As a result o these market and policy ailures, both the

private and the public sectors are likely to under-invest

or not invest at all in activities necessary to sustain the

marine environment (wastewater treatment, coastal

habitat protection, etc.) and to over-invest in activities

detrimental to the marine environment (over-exploitation

o sh stocks, chemically intensive agriculture, etc.). This

important nding presents a powerul argument in avor

o governance reorms that put in place clear policy and

regulatory incentives to all market players to prevent the

degradation o the ocean and create sustainable produc-

tive use patterns.

1.3 A new paradigm or ocean restoration andprotection Catalysing public and privatenance

Over the last twenty or more years, the international

community has made numerous commitments which aim

to protect and restore our ocean back to sustainability.

These include commitments and targets under Agenda 21,

the World Summit or Sustainable Development (WSSD), the

Global Programme o Action to Protect the Marine Environ-

ment rom Land-Based Activities (GPA-LBA), the FAO Code

o Conduct or Responsible Fisheries, the FAO StraddlingStocks Agreement, the Convention on Biological Diversity,

and others. While some progress has been made in each o

these initiatives, signicant gaps remain in the implementa-

tion o a wide range o ocean commitments and the overall

level o nancial commitments has been woeully inade-

quate (Global Ocean Forum, 2011); consequently, the overall


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health o the ocean has continued to deteriorate includ-

ing all o the primary threats listed earlier. The gravity and

accelerating pace o the threats to ocean ecosystems and

associated livelihoods, the increasing scale o the economic

damage, and the mixed record on implementing agreed

commitments, together underscore the need to identiy and

rapidly scale up new and innovative approaches to reversing

ocean and coastal degradation.

In an era o increasingly scarce nancial resources, it

becomes even more critical to strategically use limited

public grant resources to inuence the direction o much

larger volumes o public and private investment or ocean

restoration and protection. In addition to providing addi-

tional nancial ows, the private sector possesses the

skills and knowledge critical to developing and scaling up

clean technology and resource management solutions to

reduce pollution loads, invasive species risk, overshing

and habitat loss. Hence, a key ocus o governance reormsto protect and restore the ocean should be on addressing

market and policy ailures in a manner that can catalyse

both private and public sector nancial ows.

Box 1: Catalysing Finance

The dictionary denition o catalyse is the causing or

accelerating o a chemical change by the addition o

a catalyst; (chemical) catalysts are essential to many

industrial processes and, more undamentally, to theunctioning and survival o most living creatures. Cata-

lysts enable chemical reactions that would otherwise

be blocked or slowed by a kinetic barrier (insucient

speed o the involved molecules to allow the reaction

to proceed). For the purposes o this volume, we can

substitute ocean nance or chemical change; the prin-

cipal catalyst that is acting is the improved enabling

environment, which helps remove many o the barriers

(inormation, institutional, regulatory, technical, nan-

cial, etc.) to public and private sector investment.

In recent years, coastal and ocean decision-makers, rom

a wide geographic range and acing one or more o the

key ocean challenges summarised earlier, have success-

ully applied a key suite o ocean planning instruments

to remove ocean market and policy ailures and catalyse

additional nance. These instruments have helped govern-

ments put in place clear incentives to all market players to

restore and protect coasts and oceans. The objective o this

publication - Catalysing Ocean Finance - is to take stock o

these achievements and discuss how they could be scaled

up globally to address key ocean challenges with only

modest additional public unds. Catalysing Ocean Finance

presents three major instruments that have been usedto promote science-based, long-term integrated plan-

ning and barrier removal to transorm markets and create

sustainable productive use patterns o coastal and ocean

resources over the past 20 years:

1. Transboundary Diagnostic Analysis/Strategic Action

Programme (TDA/SAP): TDA/SAP is a multi-country,

long-term integrated planning approach that helps

governments to prioritise issues, identiy barriers,

and to agree upon and implement both regional

and national governance reorms (policy, legal, insti-tutional) and investments aimed at addressing the

roots causes o aquatic ecosystem degradation. The

principal biogeographic planning unit the GEF has

adopted or application o the TDA/SAP process and

the ecosystem-based approach in the marine environ-

ment is the Large Marine Ecosystem (LME). TDA/SAP

can and has been applied in both highly degraded and

relatively pristine marine systems; not surprisingly,

the case studies or TDA/SAP in this volume ocus on

the ormer where investment needs to reduce pollu-

tion and other threats are oten quite sizeable. TDA/SAP has also proven to be a useul tool to maintain the

health o relatively clean, undegraded marine ecosys-

tems by putting in place the necessary preventive

enabling environment that can reduce environmental

risk rom increased ocean exploitation, uture develop-

ment, population growth, etc.;

2. Integrated Coastal Management (ICM): Whereas TDA/

SAP can be viewed as a more top-down planning tool

or promoting ocean governance reorm at regional

and national scales, ICM takes a more bottom-up

approach which ocuses on improving marine resourcemanagement at provincial or municipal scales, and

promoting replication by eeding local experience and

best practice into national ICM rameworks. By acilitat-

ing local, provincial and national governance reorm

or sustainable ocean management, ICM also helps


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to remove barriers and create the necessary enabling

environment or catalysing public and private sector

investment, particularly at the municipal level;

3. Fostering Global and Regional Multilateral Agreements,

aims to eect governance reorm at the level o large

scale ocean regions or the global ocean as a whole.

The approach described involves building on existing

or anticipated processes o negotiating and adopt-

ing regional and global ocean legal rameworks as a

means to catalyse public and private nancial ows.

Each o these three types o strategic instruments uses a

similar our-step methodology to guide decision-makers in

the design and implementation o ocean restoration and

protection policies, as shown in Figure 4:

Figure 4: Four-Step Approach to Catalysing Ocean Finance

The rst step o each methodology is to promote a

science-based analysis o threats and drivers o degrada-

tion. The second step consists in identiying the inorma-

tion, regulatory, technology, institutional and nancial

barriers preventing investment in sustainable coastal and

ocean resource management. The third step is to deter-mine an appropriate mix o inormation, policy, regula-

tory and economic instruments to remove these barriers.

The ourth and last step is to implement these market

transormation measures.

Drawing on the portolio o International Waters projects nan-

cially supported by the Global Environment Facility (GEF) and

implemented by the United Nations Development Programme

(UNDP) in 31 o the worlds most important transboundary

marine and reshwater ecosystems, six case studies have been

selected to illustrate the application o these three markettransormation instruments to promote sustainable coastal

and marine resource development: (i) Danube River/Black Sea;

(ii) West/Central Pacic Fisheries; (iii) Yellow Sea Large Marine

Ecosystem; (iv) Rio de la Plata/Maritime Front; (v) Seas o East

Asia, and (vi) Global Ballast Water Programme.


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1.4 The challenge o assessing the leveragingratio or Ocean Finance

Each o the six case studies reviewed in this publication

includes a discussion o the investment ows/nancial

data used to calculate the ocean nance leveraging ratio

and its catalytic impact.

Assessing the eectiveness o interventions to transorm

markets to restore and protect ocean ecosystems requires

common perormance metrics. The leveraging ratio is increas-

ingly becoming the key perormance metric or a public

sector intervention, similar to the role o the bottom line or

the private sector. In the corporate world, the leveraging ratio

most commonly reers to the the debt-to-equity ratio - the

debt which can be raised against a given equity contribution.

For example, i a company has $20 million in debt and $10

million in equity, it has a debt-to-equity ratio o 2 to 1.

However, there is no universally accepted denition o the

term when it is applied to a set o public policy instruments

used by a national or international development agency to

catalyse other public and private investment (Brown et al.,

2011). For the purpose o this publication, we will ollow

the Global Environment Facilitys approach and distinguish

three types o leveraged nance:

1. Incremental: expands the resources available rom the

Global Environment Facility to cover part o the incre-

mental cost o the GEF intervention, to transorm an

initiative with primarily national benets into one also

with global environment benets; and

2. Substitutional: redirects the non-incremental part o

the nancing rom one type o activities to another; or

3. Additional: new and additional nancing arises as a

direct result o the enabling environment established

by the GEF intervention.

The leveraging ratio typically includes these three types o

leveraged nance. For example, a government might decide

to invest in a demonstration wind power station costing

$250 million rather than in a coal red power station costing

$200 million or the same power amount and quality; this

is an example o (a) substitutional nancing above. This

pilot project is then replicated throughout the country or

a total wind power investment o $1 billion; this is the addi-

tional nancing deriving rom the enabling environment or

upscaling created by the demonstration. The agreed GEFcontribution to this intervention is $25 million. In accordance

with the above denition, the leveraging ratio o the GEF

intervention is $1,250 million/$25 million or 50 to 1. It breaks

down as ollows: $25 million co-nancing to cover hal o

the $50 million incremental costs; $200 million transorma-

tional as it shits investment rom ossil uels to renewable

energy; and $1 billion o additional investment attracted by

the enabling environment established by the GEF to attract

and drive investment towards renewable energy.

While calculating the leveraging ratio is relatively straightor-ward or a ossil uel substitutional project such as described

above, a slightly dierent leverage paradigm is required or

ocean protection and restoration investments. In the GEF

International Waters ocal area, the nancial leverage will

instead primarily be obtained through the additional invest-

ment and other nancial ows catalysed by the improved

enabling environment and removal o key barriers which

the GEF intervention helped to put in place. This enhanced

enabling environment would increase the likelihood o

required investments being prioritised among compet-

ing needs or public and/or private capital. For example, agovernment/industry might decide to invest $1 billion in

water pollution reduction inrastructure as the result o the

enabling environment created by a $20 million GEF Inter-

national Waters project ($10 m. GEF, $10 m. co-nance).

$500 million was already programmed (e.g., the pre-GEF

project baseline) and $500 million is additional, as a result

o incentives enabled by the GEF project (agreed action

programmes, policies, regulations, etc.) that create a more

avorable climate or investment. With the GEF contribut-

ing $10 million to this intervention, the investment nance

leveraging ratio is $500 million/$10 million or 50 to 1.


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The presentation o UNDP-GEF instruments and approaches

to Catalysing Ocean Finance is divided into three sections:

(1) Transboundary Diagnostic Analysis/Strategic Action

Programme (TDA/SAP); (2) Integrated Coastal Management

(ICM); and (3) Building on Global and Regional Multilateral

Agreements. Each section summarises the key elements

o each ocean planning instrument and the consolidated

results o the case studies. A more comprehensive descrip-

tion o each planning instrument and case study can be

ound in Volume II o this publication.

2.1. Applying the TDA/SAP methodology torestore the worlds Large Marine Ecosystems(LME)

Introduction

Large Marine Ecosystems (LMEs) are relatively large areas

o ocean space o approximately 200,000 km or greater,

adjacent to the continents in coastal waters where primary

productivity (e.g., production o ocean phytoplankton

(microscopic plants)) is generally higher than in open ocean

areas. The worlds LMEs represent a major source o protein

or human consumption; LMEs produce about 80% o the

worlds annual marine wild sheries catch and contrib-

ute an estimated $12.6 trillion in (non-market) goods and

services annually to the world economy (Costanza et al.,1997) (the authors acknowledge that this estimate was

subject to controversy and criticism as being overinated

but, at the same time, ew would question the critical

importance and sizeable economic value o the broad suite

o non-market ecosystem services provided by the ocean).

Due to their proximity to the continents and the sizeable

raction o the human population that lives near the coasts,

LMEs are centers o coastal ocean pollution and nutrient

over-enrichment, habitat degradation (e.g., sea grasses,

corals, mangroves), overshing, invasive species, biodiver-

sity loss, and climate change eects. Since a sizeable rac-

tion o human economic activity derives rom LME goods

and services, most o the economic losses highlighted or

the ocean as a whole in the Introduction are taking place

in LMEs.

As a consequence o climate change, 62 o the worlds 64

LMEs show warming trends and more than one-quarter are

warming at a very ast rate (Sherman and Hempel 2008);

this is already orcing sh stocks to move, oten to cooler

waters in nearby countries, representing a direct threat to

ood and national security or some coastal communities,

including the loss o investments and jobs. Climate change

and warming o ocean surace waters is also leading to

increased ocean stratication, particularly in temperate

and tropical regions oten highly dependent on marine

resources or sustenance and livelihoods. This stratication

reduces the upwelling o deep, nutrient-rich ocean waters

which can reduce ocean primary productivity (plankton

growth) and associated biomass production in higher

trophic level ecosystems (including sheries) that ulti-

mately depend on these nutrient supplies.

Methodology - Tranboundary Diagnostic Analysis/

Strategic Action Programme (TDA/SAP)

Over the last 15 years, UNDP has played a lead role in the

GEF International Waters ocal area in developing, pilot-

ing, and replicating a consistent methodological approach

2. UNDP-GEF STRATEGIC PLANNINGINSTRUMENTS FOR CATALYSING

OCEAN FINANCE


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(TDA/SAP), endorsed by the GEF, aimed at ostering the

restoration and protection o over a dozen o the worlds

most important transboundary LMEs (e.g., LMEs whose

boundaries include waters lying within multiple national

jurisdictions) through a sequential approach o diagnostic

and barrier analysis, strategic planning and implementa-

tion support, including investments. In several cases, where

UNDP-GEF support has helped to put in place an enabling

ramework (particularly new policies and legislation, as

well as pre-investment support) conducive to investment,

sizeable quantities o public and private sector investment

or ocean restoration and protection have been catalysed.

The TDA/SAP approach is schematically summarised in

Figure 5.

Figure 5: Summary of TDA/SAP Approach

Volume II, Chapter 1 oCatalysing Ocean Finance summarises

the TDA/SAP approach as a proven methodology or

advancing regional and national ocean governance reorm

that, through the improved enabling environment, can also

catalyse substantial sums o public and private sector invest-ment. The chapter provides three case studies documenting

the sizeable levels o investment that commitments made

under regionally adopted SAPs or the Danube River/Black

Sea, Rio de la Plata, and the Yellow Sea, have catalysed.

In the Danube/Black Sea, in parallel to the negotiation,

adoption and ratifcation o regional conventions or both

the Danube River (Sofa Convention) and the Black Sea

(Bucharest Convention), between 1991 and 2007, UNDP-

GEF supported regional and national governance reorm

and capacity building aimed at addressing the agreed prior-

ity transboundary issue or both water bodies, nutrient

over-enrichment and associated hypoxia in the Black Sea.The collapse o the Soviet Union in the early 1990s and the

subsequent accession process o several Danube and Black

Sea countries to the European Union, which required compli-

ance with the EUs comprehensive Water Framework Direc-

tive, combined with the support rom UNDP-GEF to create a

perect storm o drivers or governance reorm and invest-

ment, including those targeting nutrient pollution. With

UNDP-GEF support, each o the Danube/Black Sea countries

Phase ITransboundary Diagnostic Analysis

(TDA)

Phase IIStrategic Action Programme

(SAP)

Phase IIISAP Implementation

Multi-country agreement priorityocean issues, barriers (1-2 years)

PublicInstruments

Technical assistance/support Prioritise - envir/econ impact Barriers/root causes Governance Analysis

Technical assistance/support Regional & national policies Regional & national legislation Regional & national institutions Priority investments Public, private

Ecosystem Quality Objectives

Policy reforms Legislative reforms New or strengthened institutions Investments: public, private Monitoring, targets, indicators Adaptive management update SAP

FundingSourc

es

International public Domestic public

International public Domestic public

International public Domestic public Private sector

Multi-country commitments to oceangovernance reforms & investments

(1-2 years)

Implementation of policy instruments& catalysed public & private sector

investments (10-15 years)


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took steps to reorm policies and legislation to address both

point (wastewater, manure storage, certain industries) and

non-point (agricultural run-o o ertiliser and manure)

sources o nutrient pollution to waterways. The UNDP-GEF

Pollution Reduction Programme, and similar eorts or the

Black Sea, identied nearly 500 projects totaling nearly $5

billion in needed nutrient reduction investments (UNDP-GEF

Danube Pollution Reduction Programme, 2006-2009); todate, over 60% o those investments have been completed or

are underway leading to sizeable reductions in Danube and

Black Sea pollution loads and to measurable improvements

in the ecosystem status o the Danube and, most notably,

the reversal o the major hypoxic zone in the northwest shel

o the Black Sea (STAP-GEF, 2011). Total catalysed investment

or the Danube/Black Sea was $2.98 billion compared to a

cumulative GEF investment o $51.9 m., representing a cata-

lytic ocean nance ratio o 57 to 1.

In the Yellow Sea, the multi-country TDA also identiednutrient reduction as a major transboundary threat, as well

as overshing and loss o key coastal habitat. The Yellow Sea

SAP committed the governments o China and the Republic

o Korea to a series o governance reorms and investments

targeting these agreed priority issues (Yellow Sea Strate-

gic Action Programme, 2009). Notably, the Yellow Sea SAP

committed these countries to reduce nutrient discharges to

the Yellow Sea by 10% every 5 years through 2020, to reduce

shing pressure by 25-30% through reduction o sheries

overcapitalisation and scaling up sustainable mariculture, and

to establish a regional network o Marine Protected Areas.These commitments represent cumulative investments total-

ing $10.86 billion compared to a GEF investment o $14.744

million or a catalytic ocean nance ratio o 737 to 1.

In South America, UNDP-GEF has supported the governments

o Argentina and Uruguay in joint preparation o a Transbound-

ary Diagnostic Analysis, and the adoption and subsequent

implementation o a Strategic Action Programme or the Rio

de la Plata and its Maritime Front (RPMF) (FrePlata Strategic

Action Programme, 2007). The TDA identied nutrient pollu-

tion, certain industrial efuents, and coastal habitat degrada-tion as priorities and the SAP committed both countries to a

set o policy and legislative reorms on pollution control and

integrated water and coastal resources management. UNDP-

GEF helped both countries to prepare an investment portolio

o 20 priority projects totaling $2.62 billion, ocused on reduc-

ing releases o untreated sewage and industrial pollutants

into the basin, as well as on reducing nutrient discharge in

key wetland protected areas. Many o these investments have

been completed or are underway; the total GEF investment in

the FrePlata programme is $9.31 million, delivering a catalytic

ocean nance ratio o 281 to 1.

2.2. Applying the Integrated Coastal Management(ICM) methodology to catalyse nance orcoastal and ocean management

Introduction

About 60% o the worlds population lives within about

100 km o the coast and this level is expected to increase

with continued trends towards urbanisation and coastal

migration. Coastal populations rely on the ocean or ood,

transportation, recreation, aquaculture, energy resources

(both renewable and non-renewable), building materials

and other amenities. Coastal habitats provide important

market and non-market ecosystem services including

spawning grounds and nurseries or commercial shspecies, protection rom storm surges, nutrient and carbon

sinks, etc. The associated high densities o human popu-

lations and economic activity in the worlds coastal areas

exert particularly acute pressure on the marine ecosystems

ound in the coastal zone such as coral rees, kelp orests,

mangroves and seagrasses. Coastal areas represent some

o the major pollution and habitat loss hot spots on earth

and are oten subject to intense shing pressure.

In particular, the East Asian Seas region has been acing

increasing stress over the past ew decades as a conse-quence o rapid economic growth coupled with the expan-

sion o maritime trade and global and domestic demand

or marine products, as well as population increases and

large scale migration o people and commerce to coastal

areas. As a consequence, 11% o the regions coral rees

have collapsed in the last 30 years, while 48% are listed in

critical condition. Mangroves in the region have lost 70% o

their cover in the last 70 years and the loss o seagrass beds

in the region ranges rom 20% to 60%. Only 11% o the

regions sewage receives any orm o treatment. Perhaps

most important, in East Asia, the contribution o the marineeconomy to national economies is much higher than in

other parts o the world. For several nations in the East

Asian Seas region, the contribution o the marine economy

to the national economy is in excess o 5%, and may reach

20% in two countries, Indonesia and Vietnam. This very

high dependence o East Asian economies on marine

resources underscores the critical importance o integrated

management o coastal and marine ecosystems or this


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region i livelihoods are to be maintained and a sustainable

development pathway ollowed. Maritime industries, ship-

ping and shipbuilding, are also a major component o the

economies o several East Asian Seas countries, especially

China, Japan, Singapore and Republic o Korea. The role o

shipping in supporting and enabling economic growth in

China in particular is signicant, both in the export o prod-

ucts, but also or the import o raw materials and commodi-ties iron ore, etc.

Methodology Integrated Coastal Management (ICM)

While TDA/SAP works at the scale o multi-country Large

Marine Ecosystems (and their drainage basins) in support-

ing groups o governments in joint diagnostics, barrier

analysis, strategic planning, governance reorm and invest-

ment, a complementary approach, Integrated Coastal

Management (ICM), has been developed in the East Asian

Seas region that ocuses on action primarily at municipaland provincial scales and upscaling via replication and

mainstreaming into national development policy. This

eort has built on the thirty plus years o international

experience in applying ICM as a tool to promote marine

ecosystem protection and restoration through improved

ocean and coastal governance. The objective o ICM is to

increase the eciency and eectiveness o coastal gover-

nance towards the sustainable use o coastal resources and

o the services generated by ecosystems in coastal areas.

It aims to do this by protecting the unctional integrity o

these natural resource systems while allowing economicdevelopment to proceed.

The WSSD JPOA called or the promotion o integrated

coastal and ocean management at the national level and

encouragement and assistance to countries in develop-

ing ocean policies and mechanisms on integrated coastal

management. Although the JPOA did not speciy any

explicit deadline or achieving this goal, much progress has

been made, including new ICM initiatives by national and

local governments, the development o new ocean and

coastal knowledge, data, and inormation systems, and thecreation o new ocean and coastal management unding

initiatives. As o around 2002, estimates indicated that over

700 ICM programmes have been implemented in over 100

countries, driven in part by ICM being recommended or

ocean and coastal management in key international rame-

works such as UNCED/Agenda 21, UNFCCC, CBD, GPA/LBA

and the Barbados Programme o Action or the Sustainable

Development o Small Island States.

The East Asian Seas - PEMSEA

Since 1993, UNDP-GEF has supported a programme now

called PEMSEA or Partnerships in Environmental Manage-

ment or the Seas o East Asia. PEMSEA has acilitated the

development and implementation o two important meth-

odological rameworks: (1) the Framework or Sustainable

Development o Coastal Areas (SDCA) and (2) the ICM cycle,

both o which serve as a conceptual map and an analytical/

decision-making tool that enable how ICM is operation-

alised and institutionalised in the sites.

PEMSEA has pioneered the application o these approachesinto successul, replicable and highly scalable methodolo-

gies or the nine GEF-eligible participating countries in East

Asia (Cambodia, China, DPR Korea, Indonesia, Malaysia,

Philippines, Republic o Korea (now no longer GEF-eligi-

ble), Thailand, Timor Leste and Vietnam); Japan, Brunei

Daressalam, Singapore and, most recently, Republic o

Korea, also participate at their own expense. With PEMSEA

support, dozens o ICM sites have been established and

sustained in East Asia; 26,829 km o East Asian coastline now

have ICM programmes active or initiated which represents

11% o the regions coastline against a near zero baselinein the early 1990s. Countries o the East Asian region have

urther agreed to achieve a target o 20% ICM coverage by

2015. As with TDA/SAP, PEMSEAs ICM/SDCA approach has

acilitated diagnosis and prioritisation o provincial and

local marine environmental issues; barrier analysis; local,

national and regional strategic planning (through national

ICM policies and local ICM plans); and implementation and

monitoring o ICM plans including agreed governance

reorms and required investments. The combined SDCA/

ICM approach has played a key role in East Asia in putting

in place the necessary enabling environment to catalyse awide range o investments needed to protect and restore

the marine environment. PEMSEAs ICM approach is gener-

ically summarised in Figure 6.


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Figure 6: The ICM Development and

Implementation Cycle *

(Source: PEMSEA)

* ICM is a continuous process, which addresses unresolved as well asemerging issues arising rom coastal development. The rst cycle o theprocess can take up to 5 years. With the rst cycle experience, subsequentcycles can take less time, depending on the issue(s) being addressed.

Through PEMSEA and its scaling up and implementation

o ICM programmes in dozens o sites throughout the East

Asian Seas region, some $9-11 billion in public and private

sector nance or environmental investments has been

catalysed. This represents a 277 to 1 return on the cumula-tive GEF investment o $36.1 million since 1993, underscor-

ing the tremendous value and impact o ICM as a tool that

can put in place the necessary enabling environment and

remove barriers to catalyse ocean nance rom the bottom-

up. Volume II, Chapter 2 o Catalysing Ocean Finance

summarises the ICM/SDCA methodology and provides an

in-depth case study o PEMSEA as a mechanism that has

successully applied ICM to put in place local, provincial

and national governance reorms that created the neces-

sary enabling environment to catalyse the public and

private sector investments needed to protect and restore

coastal ecosystems and associated livelihoods.

2.3 Transorming industries to address global

and regional ocean issues

Introduction

Some environmental and natural resource management

issues threaten ocean sustainability at large regional and

even global scales. These include unsustainable exploi-

tation o highly migratory sh stocks, persistent organic

pollutants, ocean acidication, marine plastics pollution,

pollution rom ships, and marine invasive species. The

international community has negotiated and adopted

a number o regional and global instruments targetingseveral o these ocean issues including the UN Straddling

Stocks Agreement, various regional sheries management

agreements, and global shipping treaties through the Inter-

national Maritime Organization (IMO) such as MARPOL,

OPRC, etc. The Stockholm Convention on Persistent

Organic Pollutants (POPs) and the UN Framework Conven-

tion on Climate Change (UNFCCC), while not specically

targeting ocean issues, have very important ramications

or ocean protection and restoration: POPs, which can act

as endocrine disruptors, have been widely demonstrated

to bioaccumulate in higher trophic level marine organisms(large sh, marine mammals, seabirds) and anthropogenic

emissions o CO2

are the principal driver o ocean acidica-

tion. While these diverse treaties have realised a range o

compliance and associated impact, it is generally acknowl-

edged that properly dened and broadly supported ocean

environmental legal agreements can have very posi-

tive eects in terms o reducing stress on the ocean. For

example, largely as a result o successul implementation

o several IMO conventions, the occurrence o ship-related

oil spills has declined signicantly over the last 30 years,

with spills o 700 tonnes or more declining by 85% sincethe 1970s (while the volume o shipping has more than

tripled over the same time period). Similarly, the recent

IMO ban on tributyl tin (TBT) paint or ships' hulls should

dramatically reduce the endocrine-disrupting impacts o

these toxic substances on marine organisms. Notably, o

the 53 maritime conventions adopted through the IMO, 21

or 40% are related to environmental protection.

PREPARING

Project management, stakeholder identication, establish M&E

(1 year)

INITIATING

Establish baseline, identify & prioritise issues and barriers, risk

assessment, info system, stakeholder consultations (1-2 years)

DEVELOPING

Policy and institutional arrangements, coastal strategy plan,

nancing/investment options (1-2 years)

ADOPTING

Organisational and legal mechanisms, coastal policy, strategyand action plans, funding mechanisms (1 year)

IMPLEMENTING

Programme management and coordination;

environmental monitoring (1-3 years)

REFINING AND CONSOLIDATING

Revising strategies and action plans, scaling up, M&E, planning for

next cycle (1 year)


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Approach Building on Regional and Global

Multilateral Agreements

Whereas Chapters 1 and 2 o Volume II review and document

via case studies the eectiveness o two very clearly dened

strategic planning methodologies (TDA/SAP, ICM) that help

to remove barriers and create an enabling environment

which can catalyse ocean nance, Chapter 3 explores a less

ormalised but equally successul approach that UNDP-

GEF has applied in two somewhat dierent contexts. The

approach involves building upon and helping to advance an

existing or anticipated intergovernmental process o negoti-

ating a new regional or global legal ramework to address a

major ocean issue and is summarised generically in Figure 7:

Figure 7: Generic approach to building on global or regional legal ramework to remove barriers and put in place

enabling environment or catalytic public and private ocean nance

For the two case studies examined, UNDP-GEF interven-

tions were designed to provide capacity building, advisory,

awareness raising and advocacy support that supported

and helped advance the negotiation, adoption and actual

or anticipated coming into orce o the respective regional

or global conventions. The enhanced public and privatesector capacities or and commitment to compliance with

the new legal regimes created the necessary enabling

conditions that helped to catalyse ocean nance and to

measurably transorm two major industries, international

shipping and West/Central Pacic tuna sheries.

Both case studies document catalysis o sizeable private

sector nancial ows but in notably dierent ways. For Case

Study #5, the W/C Pacic Fisheries, the principal source o

catalysed nance is the substantially increased revenue

over $3 billion over 14 years - enjoyed by the Pacic Island

Countries shing eets as a result o their increas

catalysing ocean finance volume i

Documents