Blue finance is a term that refers to the financing of projects and initiatives that support the conservation and sustainable use of marine and coastal resources. Blue finance can help address some of the most pressing environmental challenges facing our planet, such as climate change, biodiversity loss, pollution, and overfishing.
One of the sectors that can benefit from blue finance is tourism, which is a major source of income and employment for many coastal communities. Tourism can also have negative impacts on the environment, such as habitat degradation, waste generation, water consumption, and greenhouse gas emissions. Therefore, it is essential to promote sustainable tourism practices that minimize the environmental footprint and maximize the social and economic benefits of tourism.
Sustainable tourism strategies
- Developing and implementing environmental standards and certification schemes for tourism operators and destinations
- Promoting ecotourism and nature-based tourism products that support conservation and local livelihoods
- Investing in green infrastructure and technologies that reduce energy use, water consumption, and waste generation
- Enhancing the resilience of coastal ecosystems and communities to climate change and natural disasters
- Engaging stakeholders and raising awareness on the importance of marine and coastal conservation
However, implementing sustainable tourism strategies can be challenging due to the lack of financial resources, technical expertise, institutional capacity, and political will. This is where blue finance can play a key role in providing the necessary funding, incentives, and guidance for sustainable tourism development.
Blue finance forms
- Grants and donations from public or private sources
- Loans and guarantees from banks and other financial institutions
- Bonds and equity from capital markets
- Impact investing from social and environmental investors
- Blended finance from a combination of public and private sources
Blue finance can also involve different mechanisms
Blue finance can provide innovative and flexible mechanisms to mobilize public and private funds for sustainable tourism projects that have positive environmental and social outcomes. Some examples of blue finance instruments are:
These are debt instruments that raise capital from investors for projects that support ocean conservation and sustainable use. For instance, in 2018, the Republic of Seychelles issued the world’s first sovereign blue bond, which raised $15 million for marine protected areas, sustainable fisheries, and blue economy development.
Blue carbon credits
These are tradable certificates that represent the reduction of greenhouse gas emissions by conserving or restoring coastal habitats, such as mangroves, seagrasses, and salt marshes. These habitats store large amounts of carbon in their biomass and sediments, and thus help mitigate climate change. For example, in 2019, the Mai Po Nature Reserve in Hong Kong became the first site in Asia to sell blue carbon credits, which generated $1.3 million for wetland conservation and management.
These are pools of capital that invest in a portfolio of blue projects or businesses that have positive environmental and social impacts. For instance, in 2020, The Nature Conservancy launched the Blue Bonds for Conservation initiative, which aims to unlock $1.6 billion in ocean conservation funding over the next five years by restructuring the debt of coastal and island nations.
These are loans that offer preferential terms or incentives to borrowers who implement sustainable tourism practices or projects. For example, in 2021, the Inter-American Development Bank approved a $25 million loan to Belize to support the recovery and resilience of the tourism sector amid the COVID-19 pandemic. The loan includes a blue credit line that will finance investments in energy efficiency, renewable energy, water conservation, waste management, and biodiversity protection.
Example of Blue Finance in Tourism Development
What are some examples of blue finance in action? Blue finance is a relatively new and emerging field, but there are already some successful cases around the world that demonstrate its potential for sustainable tourism development. Here are some examples:
The Seychelles Conservation and Climate Adaptation Trust
The Seychelles Conservation and Climate Adaptation Trust (SeyCCAT) is a public-private partnership that aims to mobilize funds for marine conservation and climate adaptation in the Seychelles. In 2016, SeyCCAT issued the world’s first sovereign blue bond, a debt swap that converted part of the country’s external debt into a $15 million bond to finance marine conservation projects. The bond also leverages grants from international donors and revenues from a new environmental levy on tourism operators. SeyCCAT supports projects that enhance marine biodiversity, improve fisheries management, promote sustainable tourism practices, and empower local communities.
The Mesoamerican Reef Fund
The Mesoamerican Reef Fund (MAR Fund) is a regional initiative that supports the conservation and sustainable use of the Mesoamerican Reef System, which spans four countries: Mexico, Belize, Guatemala, and Honduras. The MAR Fund provides grants and technical assistance to local organizations that implement projects that protect coral reefs, mangroves, seagrasses, and coastal wetlands. The MAR Fund also facilitates the development of innovative financing mechanisms that generate revenues from ecosystem services. For example, the MAR Fund helped establish a trust fund in Belize that collects fees from cruise ship passengers to support marine conservation activities.
Blue finance can offer multiple benefits for sustainable tourism development
- Leveraging additional resources from diverse sources
- Reducing the financial risk and uncertainty for tourism operators and investors
- Enhancing the environmental performance and competitiveness of tourism products and destinations
- Creating positive social and economic impacts for local communities
- Contributing to global environmental goals and targets
However, blue finance also faces some challenges and barriers, such as:
The complexity and diversity of blue finance instruments and mechanisms
- The lack of data and information on the costs and benefits of sustainable tourism practices
- The difficulty of measuring and monitoring the environmental impacts and outcomes of blue finance projects
- The need for coordination and collaboration among multiple stakeholders and sectors
- The lack of awareness and capacity among tourism operators and investors on how to access and use blue finance
Therefore, it is important to address these challenges and barriers by:
Developing clear and consistent definitions and standards for blue finance
- Conducting comprehensive assessments and valuations of the environmental services provided by coastal ecosystems
- Establishing robust indicators and frameworks for reporting and verification of blue finance results
- Building partnerships and platforms for dialogue and exchange among blue finance actors and beneficiaries
- Providing training and technical assistance for tourism operators and investors on how to access and use blue finance
In conclusion, blue finance is a promising tool for supporting sustainable tourism development in marine and coastal areas. By applying blue finance principles and practices, tourism operators and investors can not only improve their environmental performance but also create positive social and economic impacts for themselves and their communities.