Leading international arbitration and maritime lawyers from Cooley LLP discuss how states can build more resilient and sustainable maritime economies in the aftermath of the COVID-19 pandemic.
The COVID-19 pandemic continues to severely affect economies around the world. Coastal States heavily dependent on specific sectors of the economy, such as tourism, fishing or shipping, have been particularly hard hit.
However, not only has that impact shone a light on what is often a pre-existing need for states to build more diverse and resilient economies but it presents a real and unique opportunity for them to harness the power of ocean-based resources to ‘build back bluer’, so that the concepts of economic and environmental sustainability do not conflict.
While meaningful work is being done on this front throughout the world, it will be most effective if individual states develop coordinated plans to assess their maritime strengths and weaknesses in order to formulate their policies for building a blue economy that best suits the resources available to them and their strategic goals. In this article, we suggest three concrete steps states can adopt to strengthen their Blue Economies. First, assessment of oceanic territory and areas under their control: states should be able properly to delineate their maritime boundaries and understand the limitations of each maritime zone in accordance with international law. Second, states should develop plans based on a Marine Spatial Planning programme to build a sustainable Blue Economy that maximises and sustains the resources available to them. Finally, states should explore sustainable financing options such as the issuing of blue bonds in order to finance their Blue Economy expansion plans and their sustainability and environmental protection efforts.
Assessment: Maritime Delimitation and Maritime Zones
In order to determine where states can implement Blue Economy policies, they first need to optimise the limits of their maritime zones, ensuring they are claiming their maximum entitlement under the UN Convention on the Law of the Sea (UNCLOS) and thus maximise the resources available to them.
The starting point is the baseline from which the breadth of maritime zones is measured: normally the charted low waterline. Unfortunately, this is invariably the one part of a maritime chart which is least frequently updated; in many cases updates have not been made for decades. The primary function of a chart is navigational safety at sea - determination of baselines is usually a secondary consideration, for which funding may not be readily available, yet it is of crucial importance. Depending on the physical nature of the coast, the low waterline can be ambulatory; it is subject to changes brought about by natural forces acting on it - erosion or accretion can occur – and these changes can in some cases be significant.
A complete baseline survey may not in reality be required: depending on the physical nature of the coast it may be that it is perfectly possible to validate the critical coastal basepoints required by intelligent and accurate use of satellite imagery in the first instance. This does however require a high degree of relevant expertise.
Having validated the baseline, the next step is to calculate the extent of the various maritime zones to which the State is entitled. The zones which can be claimed are defined in UNCLOS, and are shown in the diagram below. All calculations must use geodetically robust methods to ensure optimum results.
Once the extent of the zones is determined, the next step is to check whether claims overlap those of another state. If they do, it does not necessarily mean a dispute – merely an unresolved boundary, which it is possible to resolve through negotiation with a neighbour. In the meantime, maritime zone claims can, and should be deposited with the United Nations. The matter of unresolved boundaries can be dealt with in the interim by determining a provisional median line between the two states and using that as the limit for the claim.
Graphic showing Maritime Zones and the relevant UNCLOS Articles
If negotiation fails, then there is always the option to fall back on third party dispute resolution, as provided for by Part XV of UNCLOS.
(Marine Spatial) Planning
Marine (or Maritime) Spatial Planning (“MSP”) refers to the process of managing and planning the social, human and economic use and development of ocean-related activities. European Union Directive 2014/89/EU determines that its purpose is to “promote the sustainable growth of maritime economies, the sustainable development of marine areas and the sustainable use of maritime resources”.
There are many benefits in developing an MSP, such as reducing conflicts between sectors and stakeholders, encouraging investment by creating more predictable, transparent and clearer rules and developing an environmentally sound framework to exploit ocean-related activities. In basic terms it is (or forms part of) a coordinated plan of where and how a state will develop specific ocean-based activities to enable the Blue Economy to grow most effectively and to reach sustainability most efficiently.
As part of a simplistic (but effective) step-by-step model to develop an MSP programme a State would:
● Step 1: Identify needs and assess the types of ocean-related economic activities the state is looking to develop. In this stage of the planning process, states should holistically consider the purpose behind pursuing an MSP. Is it diversifying the use of the oceans? Or is it further developing a specific sector? Further, states are also advised to define and analyse existing conditions and constraints already in place in relation to the Blue Economy. For example, mapping existing maritime boundaries and jurisdictional limits, biological ecological areas, and particularly exploring available resources in the oceanic waters.
● Step 2: Engage with relevant stakeholders in relation to their use of ocean space.
● Step 3: Consider existing national and international rules and the limitations therein contained in relation to ocean space. Of course, national legislation can always be modified in accordance with the state’s updated Blue Economy needs.
● Step 4: Create an MSP programme and a coordinated body overseeing the planning of Blue Economy activities. At this point, states should also consider the possibility of drafting legislation to create a national authority to oversee the policy plan.
● Step 5: Implement and enforce the MSP programme. In this final stage, states should look at monitoring and evaluation mechanisms facilitating constant revision and adaptation of the MSP plan to meet frequently urgent needs and challenges.
MSP is a coherent and coordinated approach to re-evaluation of states’ use of their oceanic space. As a result of undertaking this exercise, states will be able properly to assess their oceanic strengths and weaknesses and how best to maximize economic exploitation of their Blue Economy activities.
Sustainable Financing
While the aim is ultimately for a state’s Blue Economy to be both economically as well as environmentally sustainable, it can also potentially rely upon support from multilateral financing institutions whilst in the building process. For example, the World Bank has recently launched an entirely new initiative entitled PROBLUE, which it describes as: “A new umbrella multi-donor trust fund, housed at the World Bank, that supports the sustainable and integrated development of marine and coastal resources in healthy oceans (…). Projects range from implementing large regional fisheries programs in Africa and the Pacific, to tackling all sources of marine pollution, and supporting coastal development around the world, with emphasis on addressing erosion and the other effects of climate change on marine and coastal resources.” The World Bank stated in 2018 that about $75 million had been committed so far to the fund.
Alternatively, states can also issue “blue bonds” themselves. These are sovereign bonds whereby the funds raised must be exclusively used for sustainable ocean-related projects. For example, in 2018 the Seychelles issued the first sovereign blue bond with support from the World Bank. This type of sustainable finance is an extremely innovative way of aligning financing instruments with the United Nations Sustainable Development Goals (SDGs).
Huge support in achieving sustainable development goals capable of transforming the economies of maritime states through the issue of Blue Bonds is potentially available. However, investment in the development of offshore resources must be coupled with a structured legislative and regulatory regime designed to give potential investors confidence in the governance credentials of issuing states.
Conclusion
The challenges posed by the COVID-19 pandemic are unprecedented, but so are the opportunities that stem from this crisis. It is important to build back economically, yet it is as important to rebuild more environmentally friendly, sustainable and diverse economies. The three main sections covered by this article provide a roadmap on how to pursue that “blue recovery” balancing those seemingly competing propositions. The key for states is to undertake a coordinated assessment of their potential and develop a plan for the new world. Failing to do so runs the risk of being left behind as innovation and increasing public consciousness continues to change the world.
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