Value among the waves

The ocean is big business, and poised to become even bigger. The OECD estimates that the global value-added by ocean-based industries—including tourism, energy production, shipping, fishing and fish processing, and aquaculture—could double to US$3trn by 2030, up from US$1.5trn in 2010. In the US alone, the marine economy accounts for US$397bn (around 2% of GDP) and has been growing considerably faster than the overall economy.

As momentum towards an environmentally friendly future continues to grow, marine economic activity will become increasingly sustainable, also known as the “blue economy”. In the EU, the blue economy employed roughly 4.5 million people in 2018, creating €176bn (about $149bn) in economic value-added. With advocates looking towards post-pandemic opportunities for systemic change, there is optimism that the blue economic approach, spanning marine energy, sustainable seafood, clean shipping, eco-tourism and biotechnology, among other sectors, is poised to become the future of the ocean economy.

In tandem with the growth of the ocean economy, there has been a rapid increase in not only the amount of data collected about the ocean, but also in its variety and the frequency of information collection. One estimate suggests that the amount of ocean observation data collected per year is now greater than that gathered in the 100 years prior. While a great deal of work remains to be done in standardising and improving the usability of data products so they can more easily serve a wide variety of end-users, strides are being made. For instance, efforts are now under way to fully map the seabed by 2030. A growing fleet of floats, gliders, buoys, ships, unmanned vehicles, observatories, satellites, landers and more collect data on the state of the marine environment and its inhabitants.

The existing and expanding array of ocean observation data provides critical inputsfor marine economic activity, driving cost savings and revenue generation. For instance, marine transport is supported by forecasting of weather and ocean conditions, and energy production activities—from oil and gas to the offshore wind and marine energy set to eventually replace it—are heavily reliant on detailed observation data to support siting and design. Fisheries also benefit greatlyfrom data on local conditions and ecosystems. According to Melissa Iwamoto, director of the Pacific Islands Ocean Observing System and co-principal on a project aiming to improve access to ocean data for indigenous coastal communities, there is growing community-level demand for observations as well. She notes that “there is a lot of interest from communities to have more autonomy, more ownership of the instruments deployed in their waters.” Ocean observations are critical too for terrestrial business, especially through coastal and weather forecasting.

Ultimately, without ocean observation data, there would be no blue economy: ocean-based economic activity cannot take place without access to ocean observations of some kind. Ralph Rayner, professorial research fellow at the London School of Economics and past president of the Society for Underwater Technology, summarises the issue, commenting that “without ocean observation data, and in turn the information and knowledge that it generates, you cannot sustainably use the ocean or ocean resources. It’s not possible to even define what sustainable means without ocean data.” At the same time, the growth of the blue economy also provides the potential for ocean data to a more valuable economic product in its own right, although this potential remains underexplored. However, the vast majority of the ocean remains unknown and unobserved—with enormous gaps in important areas. Programmes for observing and sampling marine life, for instance, only address 7% of the ocean’s surface area. The deep ocean remains the least observed environment on earth, despite being its largest one and providing essential ecosystem and climate services. The UN has recognized the need for improving ocean data, establishing 2021 - 2030as the UN Decade of Ocean Science for Sustainable Development. This lack of data also links directly to economic losses, for instance, by reducing our ability to effectively track extreme weather events, which are closely linked to the ocean system.

There is a growing, if still limited, range of ocean observation data, broad recognition that these data hold great value for the blue economy, and ongoing work to improve the usability of such information. A lack of understanding about its actual worth persists though. As an article written by Mr Rayner and other experts from the OECD and the US National Oceanic and Atmospheric Administration explains, “the economic and societal benefits underpinned by ocean observations, measurements, and forecasts are large. However, they are difficult to quantify. There have been no comprehensive global attempts to describe and quantify these benefits.”

From the studies that do exist, it’s clear that these data hold extensive value. One estimate places the market size for value derived by US companies from offering commercial products and services related to ocean observation, measurement and forecasting at US$7bn per year. Such estimates offer clear validation of the economic worth of ocean observation. Without a baseline understanding of the value derived from all public and private ocean observation data, however, it is difficult to build a compelling economic case for expanding such activity. Moreover, given the current dearth of knowledge about specific linkages between the availability of data streams and the benefits derived from them—especially for data from the public-sector—decision-makers lack crucial information for prioritising specific ocean observations. Visibility into the benefits for the wider economy is also missing. As Mr Rayner comments, “because most people are not in day-to-day interaction with the ocean, they don’t think about the indirect impact of what happens in the ocean on weather and climate far inland.”

Important scientific rationales, along with a general sense of deep value for non-scientific end-users, provides sufficient evidence for some expansion of ocean observation data, but establishing a concrete economic estimation would bolster the case for more. Ms Iwamoto comments that qualitative metrics are essential, as is a stakeholder-first approach, but improved economic understanding would “add another layer.” She explains that “the economic aspect would greatly assist us in trying to get more funding to meet stakeholder needs, because there is often economic benefit.” Taking stock of the relationships between ocean observation data and the ocean economy will establish robust evidence for both private and public actors to collect more ocean data and make existing data more usable, catalysing the blue economy’s ongoing development. At present, it even remains unclear whether the private or public sectors collect more ocean observation data, rendering such assessments more difficult.

A more detailed investigation of the value of ocean observation—econometrically estimating the contribution of ocean observation data to the blue economy and aligning specific data streams to dollar-denominated economic output—would support both the long-term development of these activities and the blue economy. Estimations will not be easy, as there are a wide range of users taking advantage of myriad data sources, with unclear value chains. However, this research holds immense value. “If you can quantify the benefits that you derive from ocean observations in dollar terms…you make an absolutely cast-iron and compelling case for making sure that your observing capability is properly sustained and is truly operational,” observes Mr Rayner. He also notes the flip side of this relationship, explaining that it’s not just about building a case for more observations, but also ensuring understanding of the ocean so that its fundamental benefits to society can be maintained in a sustainable manner: “You cannot deliver those societal benefits without having sustained observing capacity.”

Beyond just catalysing the next stage of investment in ocean observation and increasing access to data products for end-users, credible economic measurement would help stakeholders understand where investments in observing can provide the most benefits, and to whom those benefits flow. In addition, this measurement could support multi-stakeholder efforts for encouraging value creation from ocean observation data, and for tracing the flows of ocean observations from creation to use. The value of ocean observation remains under-explored and untapped, but with co-ordinated efforts the tide can be turned.

Ocean data can be surprisingly valuable, even for those generating it. Consider Blue Ocean Gear, a California-based start-up offering fishing buoys with simple sensors.

The data provided by Blue Ocean Gear’s buoys provide the main value proposition for their customers, and are likely to form the core of their business model within the coming years. Fisheries use data from the buoys primarily to keep track of their gear—helping with faster retrieval, monitoring equipment after foul weather or understanding when gear have been lifted from the water—but in other cases also to monitor the location of fish stocks through temperature data or to help with avoiding whale entanglements. While the bulk of their revenue currently comes from hardware sales, Peter Macy, chief business officer, explains that “we're looking at getting to 50-60% of our overall company revenue being driven by core customer data and software, plus third-party data sales, within two to three years,” up from 15-20% at present.

Both Mr Macy and Kortney Opshaug, founder and CEO, express their encouragement from the continuous requests they receive to add new sensors to their existing hardware and the popularity of the data products overall. As Ms Opshaug comments, “even we underestimated how valuable this data was to our primary market, the fishing industry.”

The firm sees potential not only in the value of these observation data from individual devices, but also the benefits of scale once these data can be aggregated into local networks. According to Ms Opshaug, “the data becomes more valuable the more sensors you have out on the water. That’s why we’re focusing on building networks by adding our technology to fishing gear that is already out on the water.” She adds that “if we have the expected growth from our hardware sales, now, within the next 18 to 24 months, we’ll have one of the largest ocean data networks out on the water.”

Examples like Blue Ocean Gear demonstrate both the still-untapped demand for observation data from the marine industry, as well as the economic benefits that end-users of data can see—in this case, according to the firm, from users not losing expensive fishing gear and saving on fuel costs.

Value among the waves is an article from Economist Impact’s World Ocean Initiative, commissioned by the Ocean Frontier Institute. It was researched and written by Wade Islan, with editorial input from Vaibhav Sahgal and Martin Koehring. Amanda Simms edited the article, and NWC Design contributed layout and design.

This article is part of a larger research project focused on understanding the value of ocean observations for the blue economy and the growth of ocean innovation. To learn more, contact Tatiana Der Avedissian.

We would like to thank the following experts for their time and insights:

• Melissa Iwamoto, director, Pacific Islands Ocean Observing System

• Peter Macy, chief business officer, Blue Ocean Gear

• Kortney Opshaug, CEO and founder, Blue Ocean Gear

• Ralph Rayner, professorial research fellow, London School of Economics; past president, Society for Underwater Technology