Financing the Development of the Blue Economy: Considerations for Blue Finance Engagement

Abstract

The Blue Economy is the newest iteration of sustainable development. Originating from Small Island States, it serves as a model for ocean economic development grounded in themes of social equity and justice. To promote the development of a blue economy, non-traditional sources of private investments mixed with public investments are needed. These investment streams fall under Blue Finance; a relatively new term that incorporates the newly emerged financial mechanisms that are being used to develop the blue economy. Contrary to historical pathways of economic development, sustainable development models such as the green and blue economies have less straightforward trajectories. Applied to development in Small Island States, unique challenges emerge that traditional methods are ill equipped to solve, highlighting the need for new mechanisms. Novel financing instruments in blue finance are addressing these unique development needs, but they come with user risks that are not yet well defined, creating a need for a thorough analysis of these instruments. This project investigates literature on the potential user risks associated with emerging blue finance mechanism such as blue bonds and debt swaps and outlines a list of 15 questions for policy makers to ask if they are thinking about developing their blue economies using blue finance. These questions are not meant to provide a definitive method to approaching blue finance but should serve as a resource to help support informed decision making for the development of socially just, environmentally conscious, and economically prosperous ocean economies.