It was a cruel summer for coastal fisheries. In July, scientists reported that ocean temperatures were the hottest ever recorded. Then in August, the Global Coral Reef Monitoring Network documented a nearly 10% decline in coral reefs globally from ocean warming.
It’s hard to imagine things getting worse for the 50 million small-scale fishers who operate in near-shore waters, or the 120 million people who depend on coastal habitats for their livelihoods. But things are likely to get worse before they get better. This year’s Super El Niño is expected to impact the distribution of fish – potentially cutting off supplies of commercially important species to coastal communities.
Small-scale fisheries are a very big deal. They employ and feed hundreds of millions of the world’s most climate-vulnerable people in the Global South. Overfishing in coastal waters is a chief threat to marine biodiversity. That should give us pause, given that more than 70% of marine biodiversity, 100% of mangroves and coral reefs, and most blue carbon is found along the coast. The three horsemen of the coastal apocalypse work in tandem to make the situation worse: overfishing, agriculture runoff and untreated sewage.
If ever there were a commons in need of greater, wiser investment, it’s coastal fisheries. Despite their societal and ecological benefits, coastal fisheries are one of the least investable economic sectors. And for good reason: most of these fisheries are remote. Most of the fishers are poor and lack bank accounts, insurance and collateral. Worse still: local fisheries are not well managed. More money often leads to more overfishing.
Reason for Hope
It’s a very urgent problem, but there are solutions. A growing network of NGOs and local governments is demonstrating that coastal fisheries can be improved by empowering local communities with rights and management know-how and by applying proven approaches to fishery and habitat recovery. As philanthropy and public support for this work expands, there are growing calls for greater private investment to help scale these efforts.
Whether in the interest of boosting food security, conserving biodiversity or reducing climate vulnerability and the likelihood of mass displacement, investing in coastal habitats and small-scale fisheries should be a priority.
Here are three necessary steps:
First, Invest in Good Governance
Putting more money into the system without changing the underlying conditions does nothing more than expand overfishing, agricultural runoff and coastal development. Changing these conditions is a critical role for philanthropy.
But capital only thrives when the rules of the game are clear and fair. Investors need confidence in the law. Fishers need assurance that if they conserve a resource today, somebody else won’t simply take it tomorrow. Communities need the authority and capacity to manage the resources on which their livelihoods depend — the waters where they fish.
Governments, supported by science and philanthropy, can empower coastal communities with the exclusive right to lead spatial planning, establish sustainable fishing rules and improve enforcement. Philanthropy can fund support organizations to improve local capacity, data gathering and usage, technology, policy, and overall investability — the necessary enablers that commercial investors typically can’t support. These philanthropic “investments” create the conditions for private investment.
A great example is Bloomberg Philanthropies, which is supporting Blue Ventures, Wildlife Conservation Society and my organization, Rare, in thousands of coastal communities across the Global South to help establish improved coastal management and enable fishery recovery.
Second, use blended finance, sequenced intelligently, to scale
Once good governance is in place, there are many ways to invest. Small-scale fishers have many funding needs, from fishing line to processing plants to market access and expansion. But each need requires a different kind of capital.
Once fishers develop reliable cash flows, debt can finance expansion and sustainable improvements — perhaps helping a fish buyer improve processing or cold storage and perhaps sell sustainably caught fish in higher-value markets. Impact investment funds like the Meloy Fund, which Rare helped launch 10 years ago with investors like the Global Environment Facility, the Walton Family Foundation and the Grantham Foundation, demonstrate the investability of small-scale fisheries in coastal areas.
As the ecosystem matures, equity investors can finance entrepreneurs who are building businesses with greater risk and potentially greater returns. SWEN Capital Partners and Aqua-Spark, along with the Meloy Fund, have helped expand interest in investing in the blue economy.
The goal isn’t to persuade commercial investors to accept philanthropic returns. The aim is to create conditions under which the whole capital stack can thrive.
Third, Support local leadership
For generations, many coastal communities have watched outsiders arrive with projects, money and promises, only to see them leave without results years later. Systemic change requires a different model, rooted in local leaders as change-makers.
These officials typically have the skills, authority and confidence to direct community-led conservation. They can make sustainable fishing a part of a community’s identity and economic ambition, rather than something forced on them by outsiders.
This doesn’t happen in a one-year grant cycle. It requires patient capital and a 10- or 20-year horizon. It requires governments, philanthropists and investors willing to back local leaders long enough for new institutions, behaviors and businesses to take root.
Coastal 500 is a fast-growing network of more than 500 coastal mayors, all committed to improving coastal governance, small-scale fisheries, climate resilience and food security. Over time, powerful networks like this can advocate for systemic improvements and legitimize global prioritization of coastal conservation and sustainable investment in coastal economies.
These early steps are stimulating a groundswell of emerging investment concepts and platforms that may not only buy coastal communities time to adapt but also ultimately enable coastal people and habitats to thrive.
Here are a few recent announcements of innovative investment ideas:
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- A first-of-its-kind impact bond for coastal fisheries
- A $100 million outcomes-based financing platform for coastal habitats, launched by the Ocean Risk and Resilience Action Alliance, Levoca and Rare
- A manta ray bond from Conservation International
- A $124 million debt conversion and credit guarantee for the Bahamas
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Philanthropy and public funding can prepare markets for investment. Debt and equity can then help sustainable enterprises grow. With the right plan in place, small-scale fisheries could become a new frontier for impact investment — and eventually for mainstream capital.
Coastal habitats and their inhabitants are entering the riskiest moment in human history. We see the possibility that reducing risk to attract private capital can also reduce risk to habitats and people.