Fishing for Finance

Christiansen, Jens and Bigger, Patrick and Bettini, Giovanni and Hicks, Christina (2023) Fishing for Finance. PhD thesis, Lancaster University.

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Abstract

Can new financing mechanisms simultaneously generate economic growth and deliver environmental sustainability for the world’s oceans? The answer, according to the Blue Economy paradigm, is affirmative (Malinn and Barbesgaard 2020). Echoing and extending the discourse on the Green Economy, the concept of the Blue Economy took off at the 2012 UN Conference on Sustainable Development, promising to spur ocean development and conservation efforts that support environmental, social and economic objectives (Barbesgaard, 2018; Silver et al. 2015). The postulate of the Blue Economy is that the protection of migratory whales, fish stocks, coral reefs and mangrove forests can become compatible with continued economic growth if only oceans are subjected to natural capital accounting and more fully integrated with financial markets. Conservation finance has thereby emerged as one of the key mechanisms for tackling the triple bottom line challenge of the Blue Economy, bringing to the same table a set of stakeholders (each with their own agendas) such as consultancies, non-governmental organisations (NGOs), international organisations, governments and private investors. Impact investors and private finance more broadly have thereby been cast as a central part of the solution. Consequently, the Blue Economy represents yet another attempt to make continued economic growth compatible with sustainability objectives. Building on a heterodox political economy approach, this PhD investigates a series of innovative financing mechanisms that have gained traction within the Blue Economy paradigm, justified by the hope that innovative collaborations and novel financial arrangements (that can create tradable environmental assets and commodities) will lead the way in sustainable development. Depicted as socially inclusive, environmentally sustainable and able to generate profit, tools for economising marine environments such as blue bonds, debt for nature swaps, ecosystem-based insurance, individual transferable quotas (ITQs) and impact investor lending for marine protected areas (MPAs) are all heralded as ‘solutions’ in the best interest of all relevant parties. The PhD thereby contributes to the critical geographical literature on market-based environmental governance and the financialisation of nature. Three of the chapters explore novel approaches within conservation finance by focusing on the so-called “Blue Economy”: blended finance, ecosystem-based insurance approaches and Blue Bonds. In addition to analysing this new field of conservation finance, the final chapter analyses the project portfolio of the Global Environment Facility (GEF) to evaluate the extent to which this major development institution has facilitated for-profit and private investments in the environmental projects. The GEF is not only one of the largest sources of financing for environmental projects and a financer of Blue Economy projects, but is also driving entrepreneurial, market-based and for-profit approaches to environmental protection. The PhD thereby explores different innovative and for-profit financing mechanisms that are used to attract seemingly scarce financial resources to environmental projects; in other words, these attempts to innovate finance are all “fishing for finance”. By using concepts like risk, uncertainty, biopolitics, rent, fictitious capital and profit upon alienation (Veräußerungsprofit) from a heterodox political economy tradition, this PhD analyses blended finance in blue financial transactions, the first parametric coral reef insurance, the Seychelles Blue Bonds and the role of the Global Environmental Fund (GEF) as a promotor of environmental markets. While each paper contributes with theoretical syntheses and analyses of novel environmental finance phenomena, some overall conclusions can be drawn from the thesis as a whole. First, in light of fiscal austerity and limited official development assistance (ODA), the private sector becomes positioned as the problemsolver, which is highlighted especially in the first and the final analytical chapters. Yet, in the case of the Quintana Roo coral reef insurance and the Seychelles Blue Bonds, the state creates demand for private financial capital in an attempt to secure the wider economy and its own future revenues. The cases analysed in this PhD show how conservation finance in some respects can be understood as a reconfiguration of fiscal policy despite conservation finance often being seen as an alternative to the limited public spending. Even if private environmental finance is often presented as filling the gap left by insufficient public funds, the cases that are being analysed in this PhD thereby show how environmental finance actually interacts with public fiscal policy. Secondly, when considering the private financial incomes generated from the coral reef insurance and the Blue Bonds as well as much of the profit-seeking co-financing facilitated by the GEF, these incomes can best be analysed through the concept of “profit upon alienation”. What becomes particularly clear from the analysis of the coral reef insurance and Seychelles Blue Bonds is that these mechanisms detach the private financial sector’s economic interests from the conditions as well as “value” of underlying environmental assets. These two conclusions are therefore in stark contrast to the mainstream theory of change being promoted within a market-based environmental governance framework, which asserts that if only private actors are exposed to the “real value” of environmental benefits and assets, they will promote environmental sustainability.