Australia is surrounded by a vast wealth of oceans. More than 70 per cent of our territory lies under water – the third largest and most biodiverse marine estate in the world. So far we’ve stepped up to the challenge of managing one important marine resource – our fish stocks – better than most countries in the world. However, given that 63 per cent of the world’s stocks are overfished, that’s a bit like saying our economy is in a better state than that of Greece – true, but not very reassuring. Despite adopting smart management methods like tradable quotas in several fisheries, 42 of Australia’s fish stocks are still either overfished or of unknown status – not a robust position to be in when increasing ocean temperatures and acidity are threatening to push marine ecosystems over the edge worldwide.
There are also gaps in our official accounts, which record only a fraction of the real, long-term value of our oceans. We know that our oceans support 9,000 direct jobs in commercial fishing and a marine tourism industry worth $11 billion per year. Yet Australia currently accounts for only $44 billion out of a total of $69 billion in annual economic value.
A new report released by the Centre for Policy Development reveals a shortfall of $25 billion per year that nature provides for free as ecosystem services – clean water, fish nurseries, and food and recreation for the one in five Australians who fish at least once a year. A company that neglects to account for a third of its annual production value should expect wildly unpredictable returns. The same is true of the returns we can expect from our natural resources.
The federal government has committed to put a representative system of marine protected areas in place by 2012. Without proper accounting for ecosystem services we’re in danger of drawing lines on maps that fail to protect our most valuable assets. The current proposal for a South West marine park, for example, covers a lot of open ocean but very little seagrass. Seagrass areas sequester 10 to 40 times as much carbon as forests and are particularly important as nurseries for young fish. Adjusting the policy to meet scientific recommendations for areas of coastal shelf, seagrass and coral reef could protect a further $1.1 billion in ecosystem services a year.
A good understanding of the fundamental drivers of value and risk can be a useful guide for long-term investors – whether public or private. With the global population heading towards 9 billion on a finite planet, food prices will continue to rise rapidly over the medium to long term, while environmental pressures are likely to pose increasing risks to natural resource bases.
In this context Australia needs a responsible investment strategy to ensure that our portfolio of ocean wealth increases in value over time and rides out the booms and busts of the environment and economy. A common way to achieve more stable returns is to include a balanced mix of assets – our marine portfolio should follow this approach. Investment options available to Australia include:
» A well-managed commercial fishing estate. Currently providing low financial returns, with half of Australia’s fisheries struggling to cope with high fuel prices and the high Australian dollar, it is however a valuable source of employment and provides a product that is likely to rise in value in the near future.
» Marine Protected Areas (MPAs). This investment has been shown to provide very high returns, with immediate benefits to high-value tourism, medium-term benefits to recreational fishing, and longer-term benefits to commercial fishing through more stable and resilient stocks.
» Highly Protected Areas (within MPAs), where no fishing or oil and gas exploration takes place. Just as banks keep some capital in reserve to hedge against unexpected losses, it makes sense for Australia to include highly protected areas in its marine estate. High capital reserves protect banks from GFC-like shocks to financial systems. Highly protected areas will help protect Australia’s marine portfolio from ecosystem shocks.
This is a time of great risk for our marine economy, but there are also opportunities if we get our policies right. Our report finds that the value of sustainably managed Australian fisheries could increase by 42% over 20 years if global fish stocks collapse. We have the scientific knowledge to identify and protect key marine areas. We have the policy opportunity. We need to make sure that this opportunity is not missed through the failure to recognise that a strong marine economy depends on a healthy marine environment.
This article was first published in The Australian Financial Review on 13 September 2011.