The Untapped Potential of BLUE ECONOMY


Pakistan’s route towards becoming an ocean-economy

Since time immemorial, oceans and seas have been the source of natural resources and wealth. Many great civilizations evolved, and got destroyed, due to their geostrategic location on the sea routes. The harbours, coastlines and beaches provided humanity with an unending access to abundant onshore and offshore resources that necessitated a fast-paced development of heartlands of the well-connected ports. Despite the passage of thousands of years when man established himself as the trading genius, the oceans continue to provide vital ingredients of countries and states’ soft and hard power. During the era of colonization, it was ocean-based military and economic strength that catapulted the countries of northwestern Europe into colonial powers as their advanced merchant and military fleets helped them exploit the markets of continental Africa and Asia, and their ability to choke the imports and exports of hostile nations proved the most decisive factor in their colonization drive. Even today, the sole superpower of the world – the United States of America – exerts its influence over the countries mainly because it has the largest number of aircraft carriers in the world – seven in service – that continue sailing in high seas, maintaining the reputation of the United States as an invincible naval power.

Currently, 38 percent of global population is estimated to live within 100 kilometres of the coast. Oceans play a very critical role in global communication as submarine cables cross the ocean floor to carry 90 percent of electronic traffic. Onshore and offshore oil and gas extraction provided for 30 percent of global consumption needs in 2014. As per a 2016 report of the Food and Agriculture Organization (FAO), the ocean-based fishery resources provided for 20 percent of animal protein needs to more than 3.1 billion people. Marine ecosystem process that is the product of interaction between biotic and abiotic factors of oceans generates marine genetic resources that help rapid advancement in the areas of pharmaceuticals, enzyme production, cosmetic products and biotechnology. The oceans have been estimated to contribute $21 trillion per annum to human welfare, 60 percent of that coming from coast and continental shelf and other 40 percent from open oceans. In addition to the economic significance, the social value of ocean as unifying factors due to vast transport lines that have helped cultural exchanges cannot be denied. It has helped foster a diffusion of innovations, religions and cultural norms and has also played a decisive role in the emergence of rules-based economic and political world order in the form of globalization.

As far as ocean economy is concerned, the oceans and seas produce four classes of capital: natural, produced, human and social, as well as net foreign assets. Natural capital includes stock of natural assets and resources such as water, soil and biodiversity. It consists of physical marine environment and renewable ecosystem assets that ultimately provide marine ecosystem services. These services, which, in turn, are the product of interaction between biotic and abiotic factors, are of four types: provisioning, supporting, regulating and cultural services. Provisioning services include provision of raw material, food and energy; supporting services ensure enabling and supporting environment for photosynthesis, nutrient cycle and sand formation; regulating services of marine ecosystem include natural regulation of marine environment such as natural hazard regulation, shoreline stabilization and carbon sequestration; and cultural services ensure the provision of recreational activities, spiritual values and education.

Another capital that is underpinning of the ocean economy is the produced capital, that is, machinery, building and urban land. Human and social capital is the third pillar of the ocean economy that is the value of skills, experience and efforts by working population over its lifetime and the net foreign assets is the sum of country’s external assets, e.g. foreign direct investment and reserve assets. These four types of capital support ocean economy that is comprised of many sectors which provide goods, services and assets. The important sectors include development and conservation of living resources, minerals, energy, desalination, marine safety and security, transport and trade, tourism and recreation, coastal development, waste disposal and carbon sequestration.

Given the above-discussed importance of oceans, human beings had long been involved in exploitation of marine resources for development, both national and local. The sum of economic activities in ocean-based industries, and the assets, goods and services of marine ecosystem is collectively called ocean economy. Blue and brown colours are used as metaphors to refer whether the exploitation of marine resources is sustainable or not. If activities are sustainable, it would be termed as blue economy; otherwise; it would be the brown economy. As per FAO, the blue economy can be defined as a “coherent approach for the sustainable, integrated and socioeconomically sensitive management of oceans and wetlands, focusing on capture fisheries, aquaculture, ecosystem services, trade and social protection of coastal communities.” Sustainability of natural, human and social capital can be understood as a long-term capacity of ocean ecosystem to support economic activities and remain resilient and healthy.

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Pakistan is an important maritime state in the Indian Ocean. It is blessed with 1050-km-long coastline and Exclusive Economic Zone – the area within which a state has exclusive rights regarding exploration and use of marine resources, as per the United Nations Convention on the Law of the Seas – that covers an area of 240,000 square kilometres. Pakistan succeeded to increase its EEZ area by 150 nautical miles in 2015. The EEZ must be distinguished from territorial waters as it is the area where a state can exploit seabed and subsoil resources of the sea and surface water. An EEZ is considered high sea where other nations have the freedom of navigation and overflight, subject to regulations of the coastal state. The territorial seam, which extends 12 nautical miles from the baseline, enjoys the full state sovereignty as the relevant coastal state may set laws, regulate use of and use itself any resources – surface or subsurface – in that area. In terms of coastline length, Pakistan is ranked 74th among the 142 coastal states. Save Sir Creek, Pakistan’s marine boundaries are settled. In this era of globalization and unhindered flow of goods, capital and labour, geostrategic location is a key factor in national development. Therefore, Pakistan is fortunate that it enjoys close proximity to the Strait of Hormuz, the jugular vein of global trade and transport, and the world’s most strategic choke point.

Pakistan’s geostrategic location confers on the country unlimited opportunities in the area of transport and trade. In this area, policymakers and planners in Pakistan need to take initiatives in the maritime and coastal freight transportation, maritime and coastal passenger transportation, navigation services to shipping, port and harbour operations, marine cargo handling, production of navigational products, ship building and repair, ship breaking and boat building and repair. It is also worth mentioning here that Pakistan’s Gadani ship-breaking yard, which is located on a 10 km stretch of beach at Gadani, about 50 kilometres northwest of Karachi, is the world’s third largest ship-breaking yard but, unfortunately, Pakistan has failed to fully exploit the potential due to lack of personal safety tools and non-implementation of labour laws. CPEC-related investment and Chinese vast expertise in this area must be channelized to increase public and private investment to enhance our institutional and infrastructure-related capacities to fully absorb the benefits of CPEC amidst the fast-changing regional dynamics.

A sustainable exploitation of living resources could be another area where Pakistan can earn huge foreign exchange. In this regard, fishing, marine aquaculture (the growing of organisms in water for food) such as rearing of finfish, shellfish, growing of sea plants that have medicinal and commercial values, processing and retailing like marine aquatic product preparation, packaging and canning, fresh and frozen seafood processing and fish and seafood merchant wholesalers can be targeted as the areas for public investment or public-private joint ventures. The substantial extension in EEZ area of Pakistan has provided us with the window of a plethora of opportunities to increase our ocean-based fish capture and expand our export volume by value addition in abovementioned areas. Moreover, increased and cheap availability of fish would help overcome the menace of food insecurity and will, resultantly, improve physical and cognitive growth of millions of Pakistani children.

Pakistan is an energy-deficit country, and to meet its consumption needs, it relies massively on import of oil. Given the fast-increasing prices of crude oil, Pakistanis import bill is expected to soar a whopping $18 billion. In this scenario, it has become a matter of life and death for Pakistan to explore venues for domestic production of oil and gas. In addition to inland crude petroleum and natural gas exploration, our Ministry of Energy must incentivize the offshore oil and gas exploration, field development and extraction. Coastal electric-power generation like wind, wave, tidal and ocean thermal energy conversion must be prioritized in order to meet our energy demands as well as the Nationally Determined Contribution commitment made under the Paris Agreement.

Marine tourism and recreation could also be major avenues for revenue generation as well as the projection of the soft image of Pakistan abroad. There are many areas where state intervention could bring about positive outcomes like scenic transportation, recreational sports activities, recreational fishing competition, zoos and aquaria, nature parks, hotels and motels, restaurants, etc. The 1050-km-long coastal areas of Pakistan can provide numerous places where investment could generate revenue from recreational activities and could also create employment opportunities for local people. It would go a long way in alleviation of poverty and eradication of anti-state sentiments, especially in Balochistan.

Since its establishment, Pakistan has been under the claws of an unending balance of payments crisis. The underlying reason of recurring financial crises is the narrow base of our exports: textile and rice. Now that the world is exploring unconventional means for diversifying their export volumes so as to have buffer against looming threat of another 2008-like depression, it is high time we explored indigenous sources of oil and gas to meet our energy demand and expand our exports potential by investing in highly-untapped potential of blue economy. In this regard, the enactment of holistic national maritime policy is a pressing need of the hour. Such a policy must encompass all sectors of ocean economy. Moreover, under this policy, the provinces should be directed to undertake economically sustainable, socially acceptable and environmentally friendly initiatives to improve dilapidated coastal ecosystem, build infrastructure to connect ports to the heartlands and establish well-funded research centres which would explore and find better ways of exploiting marine resources for the maximum benefits. Protection of mangrove forest must also be the top priority as such well-conserved forests are the bulwark against sea-intrusion and also provide habitats to different marine species. Effective governance and management of available marine resources and conservation of marine ecosystem with an aim to ensure continuity of its wide-ranging services is a pressing urgency to provide the country a much-needed cushion against severe balance of payments crisis arising out of depleting exports and increasing imports.

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