Fishing companies could soon receive upfront investment in return for a temporary reduction in fishing pressure through a new financial product developed by Planet Tracker.
The non-profit financial think tank has launched its Blue Recovery Bond, together with an interactive tool through which fisheries can measure their eligibility. Via the bond, investors provide up-front capital investment to a group of collaborating fishers, who agree to reduce or stop fishing for a pre-agreed period to allow a fish stock to recover. This capital is intended to subsidise the difference in free cash flow compared to a “business as usual” fishing activity.
Once fish populations recover, companies repay the investors through a levy on the catch.
Planet Tracker’s new report, “Fishing for a Recovery”, proposes this financial product could improve the health of fish populations that billions of people depend on worldwide. It analyses 295 fisheries on factors such as the health of existing fish stock, quality of management and environmental compliance, and finds 65 of them are strong candidates for the bond.
“Fishers and investors in fishing companies rely on healthy ecosystems. With a Blue Recovery Bond, the interests of investors, fishers and fish are aligned. Returns can be high since fish populations regenerate quickly. We encourage participants in the fishing industry to try our new assessment tool to see whether it would benefit their fisheries,” said François Mosnier, Head of the Oceans programme at Planet Tracker.
According to Planet Tracker’s report, the demand for seafood is projected to rise to 267.5 million tonnes by 2050, up from 157.4 million in 2020, and it anticipates this is likely to push many fish stocks to unsustainable levels and increase the risk of food insecurity.
It states that economic incentives, such as catch shares have been shown to prevent and, in some cases, reverse fisheries collapse. As such, it suggests that incentive-based resource management may be a useful path to fisheries sustainability in certain cases. In this regard, it points to the use of individual fishing quotas (IFQs) in the US west coast groundfish fishery helping realign economic incentives among fishers to reverse the overexploitation of groundfish stocks and support their recovery.
Accordingly, interest in conservation finance approaches to recover depleted fish stocks is gradually increasing, Planet Tracker said.
By raising and managing capital, conservation finance can support the conservation of marine resources in different ways, varying by source of capital, type of capital and scale of capital, offered the report.
“Leading conservation organisations, such as World Wildlife Fund for nature (WWF), The Nature Conservancy (TNC) and International Union for the Conservation of Nature (IUCN) are now using conservation finance efforts to avert the climate crisis and reverse biodiversity loss. Similarly, many investment banks and hedge funds are now increasingly engaged with conservation finance ventures and many ‘blue funds’ have been launched,” it said.
Blue bonds are a relatively new investment vehicle that falls under the conservation finance umbrella. Like conventional bonds, investors lend money to a bond issuer, who agrees to repay the interest every year for the term of the bond plus the capital. Earnings are typically generated from the investments in sustainable blue economy projects. They can be issued by governments, banks or corporations.
