National and International Issues

Blue Economy: The Untapped Pillar of Economic Security

National sovereignty and national security are the paramount requirements of any nation. The economy is one of the most important elements of national security which enables these to be achieved and ensured. Our economy has been struggling due to a variety of reasons. We need to come out of the routine thinking to boost our economy and thus ensure our national security. One untapped segment of economy with huge potential is the “Blue Economy”. Pakistan has been bestowed with more than thousand kilometers of coast and at a great geo-strategic and geo-economic location. It is one of the most important locations from maritime point of view. Located at the mouth of the Gulf, from where major sea lanes of communication pass, vitally important for the entire world; our coast has great potential to develop various maritime activities including coastal and marine tourism and boost the economy. Maritime economic activity in our region just off our coast is tremendous and it is bound to increase with the passage of time. It is up to us to benefit from this location and opportunity given to us by Allah Almighty. If we have the requisite maritime awareness and develop our Blue Economy in a proper planned manner, it can immensely boost our economy and thus the national security. Gwadar and China-Pakistan Economic Corridor (CPEC) are just one example. If we focus on and develop these along with other opportunities, it will be a real game changer and not just the rhetoric. In order to create maritime awareness and highlight the importance of Blue Economy, I have recently authored a book titled Elements of Blue Economy, published by Institute of Policy Studies (IPS), Islamabad.  Here in this article I have tried to put across various aspects of blue economy in general, to create a basic understanding of it. Hopefully, in a follow-up article I will focus on Blue Economy for Pakistan.

Importance of Water
Importance of water for every living thing is beyond any doubt. More than half of human body weight is composed of water. Animals, plants and everything on Earth needs and mostly consists of water. To put it straight we can say: ‘No water, no life’.
Apart from the scientific aspects, this fact is clearly stated in Quran in Surah Al-Anbiya [Quran 21:30]: 

 (And We made from water every living thing)

Seas and oceans are the biggest body of water, in fact it covers more than 71% of our planet earth and therefore is of great importance. 
Source of Fresh Water
Heated by the sun, a huge amount of water gets evaporated from the oceans. A big chunk of that then falls on the land as rain and snow. Every year, 300,000 cubic kilometers of water evaporates into the atmosphere.  This vast reservoir of open fresh water is vital for the life on earth.
Source of Oxygen
Oceans are also a major source of oxygen for our planet. Seas and oceans have large quantity of phytoplankton near the surface of the water. Planktons are the tiny creatures which are difficult to see with unaided eye. They capture sunlight and use photosynthesis to turn it into chemical energy. In the process they consume carbon dioxide, and release oxygen. There are various estimates of the amount of oxygen produced by the oceans, ranging from 50% to 80%. The rest is produced via photosynthesis on land by trees, shrubs, grasses and other plants.
Climate Regulator
Water absorbs and loses heat more slowly than the land masses. The big mass of water body of oceans retains and releases heat slowly and acts as a heat storage body. The oceans help balance global temperatures by absorbing heat in the summer and releasing it in the winter.  In this way the oceans regulate the global climate. Without the oceans to help regulate global temperatures, the earth’s climate would be super-hot in the summers and biting cold in the winters.
Economic Importance
In addition to all living things being dependent on water for their existence, seas and oceans are also of great importance for economic needs of human beings. 
Things related to seas and oceans are generally called maritime and related economy as ‘Maritime Economy’. As greater part of the earth is covered with water, many rightly call it the ‘Blue Planet’ and the economy related to it as ‘Blue Economy’. Although the term Blue Economy is relatively new, and its formal definition is not yet well-established. But in essence, it is the economy related to seas and oceans which is sustainable and environment friendly. 
Major portion of the seas and oceans is the common heritage of mankind, as it neither belongs to nor controlled by any single country or a group of countries. Thus, it provides flexibility of connecting with other countries round the globe, greatly facilitating global trade. There is an axiom: “Sea unites; land divides”. 
The importance of the maritime sector is well established in history, both from the perspective of economic development of a country and also from the strategic point of view. Lesson from history is that nations which had maritime awareness and used the seas became Great Powers and those which lacked maritime awareness suffered; unfortunately, we happen to fall in the latter category. 
Importance of the seas for the mankind has been greatly described in the Holy Quran and we must seek guidance from it. There are many verses in the Holy Quran that stress on the importance of the seas and the rich sustenance therein for mankind. One such reference is in Surah Al-Jathiya. [Quran 45:12]:

“It is Allah who subjected to you the sea so that ships may sail upon it by His command and that you may seek of His bounty; and perhaps you will be grateful”

It is amazing that the Quran, the holy book revealed 1,400 years ago to Prophet Muhammad (Peace Be Upon Him) who lived in the desert, tells us about the importance of the seas for mankind and guides us to benefit from the rich resources therein (bounty) and the trade carried over them. 
Needless to say that in order to optimally benefit from the seas as guided, we need appropriate ships and requisite platforms; a maritime industry to manufacture ships and related machinery and equipment; ports and harbors for embarking and disembarking, loading/unloading cargo; and to use requisite platforms and equipment to explore and exploit the oceans’ economic resources (seafood and minerals). And finally, in order to provide a secure and conducive environment for all this economic activity to go on smoothly, we need requisite naval forces in the shape of navies, coast guards, and maritime security agencies, etc. When we put all these elements together, these broadly make the elements of the Blue Economy.  
Blue Economy has many elements, some of them being ships and shipping, shipbuilding, fishing, seabed resources, waterways, ports and harbors, seaborne trade, marine and coastal tourism, Exclusive Economic Zones, laws of the seas and oceans, and marine spatial planning etc. These elements and their importance for Pakistan have been described in my recently published book Elements of Blue Economy. Some of these aspects are briefly described below:
Ships, shipping and related seaborne trade are few of the most important elements of Blue Economy and have grown tremendously over the period of time. 
Ships evolved from simple dugout boats made from hollowed tree trunks or simply a frame of sticks bound together and covered with sewn hides to present modern ships. Coming straight to present times, there are various types of ships for various purposes. Here while discussing Blue Economy we will just discuss cargo ships. 
Cargo Ships
Cargo ships are also of different types, dry cargo (general cargo, bulk cargo), wet cargo (oil etc.), and gas cargo (LNG & LPG) etc. 
Seaborne transportation is the cheapest and most environmentally friendly means of transportation. Additionally, it has global access due to seas being the common heritage of mankind. It is cheap primarily because of economy of scale. Ships can carry huge amount of cargo. Moreover, haulage through water needs much less power and it needs minimal infrastructure compared to what will be needed for overland transportation. 
Here are few examples and pictures to elaborate this point of economy of scale:
A container ship is specialized for carrying containers. The ship in the picture is the biggest container ship at present. It carries 21,413 containers (TEUs). So, to load or offload one ship we need 21,413 normal trucks and if put on a train it will need a train of about 114 km length. So, we can imagine the assets and infrastructure required to carry the load of just one ship, if all this cargo was to travel long distances over land. Then there are ships called Bulk Carriers, which carry items like grains (wheat), coal, iron etc. These cargoes are normally pumped in and pumped out of the ship.


The ship in the picture is MS Ore Brasil (formerly known as MS Vale Brasil), the biggest bulk carrier at present. It is huge and weighs 402,347 dwt. Coming to liquid cargo or the oil tankers, the ships are even bigger.





The tanker in the picture is one of the Ultra Large Crude Carriers (ULCC) but not the biggest. Its size is 440,000 tons dwt and it carries 3,085,000 barrels of crude oil. To load or offload it by normal road tankers, we will need 36,785 road tankers. Thus, an even bigger issue than the container ship we considered above. So, this is the type of economy of scale that makes sea transportation so much cheaper. 

Regarding haulage through water needing less power, the following picture makes it clear. A small tugboat is hauling around a huge container ship. 
Sizes of ships have increased manifold, especially in the last century. The following small comparison will depict the trend. Biggest tanker in 1886 was ‘Glukauf’ of 3,000 dwt and Suez Canal at that time could take ship up to 5,000 dwt. In 1950 the biggest tanker was ‘Spyros Niarchos’ of 46,000 dwt and by 1990s the biggest tanker was ‘Knock Nevis’ with 564,765 dwt. To show it in a table:

We have all seen or at least heard of the movie Titanic. Anything huge we say it is ‘Titanic’. If we compare the actual Titanic with the same type of a ship today, a cruise ship, this picture shows the comparison:

Titanic is shown in yellow rectangle compared to present cruise ship ‘Allure of the Seas’. This clearly shows there has been tremendous increase in the size of the ships, economy of scale, and cheap and reliable seaborne transportation. 
To have an idea of how cheap seaborne trade is compared to the other means of transportation, here is a comparison chart: 

It clearly depicts that transportation by pipeline is cheaper than rail, and rail is cheaper than road; but in comparison sea transportation is just a fraction of even transportation through pipeline. This is the reason all over the world, oil pipelines are from the hinterland to the nearest seaport used as an alternate to rail and road but not as an alternate to sea transportation.
Seaborne transportation has led to a tremendous increase in the global trade, especially since the 1950s. This has led to globalization of economy and increase in global GDP. Increase in seaborne trade along with global GDP and world population has been as shown in this chart.

The above chart indicates that growth in various factors from 1950 to 2017 has been: 

In simple words, seaborne trade has increased more than the GDP and much more than the population growth. Thus, overall economic wellbeing and consumption in the world during this period has increased, facilitated in part by the seaborne trade.  
Seaborne transportation is also the most environmentally friendly. CO2 emissions in terms of grams per ton-km for waterborne transportation as compared to rail, road or air transportation is shown in this chart. 

Seaborne trade increases faster than the world population and GDP growth, as we have already seen. The more the seaborne trade more the requirement of ships, hence more the requirement of shipbuilding. Shipbuilding is a labor-intensive industry as also analyzed in the European Commission reports. It is very attractive and suitable for developing countries with relatively less labor costs. Additionally, shipbuilding is considered as a catalyst for the economic development of any country.
Before the World War II, most of the shipbuilding used to be in the European countries, Britain in particular. After the WWII, Japanese wanted to re-establish their destroyed industrial infrastructure and economy. After detailed deliberations they came to the conclusion to make shipbuilding the hub industry; as all other industries like steel, mechanical and electrical equipment, electronics and other ancillary industries will pick up along with shipbuilding. When they embarked on this path, within a decade or so Japan became the number one shipbuilder of the world. We all know how their other industries like automobiles, electronics etc. and the economy grew, making Japan as a leading economic power. Then in the late 1960s, early 1970s, when South Korea embarked on industrial and economic development; they decided to follow the Japanese model and made shipbuilding industry as the hub industry. By early 1990s, Korea surpassed Japan and became the number one shipbuilder of the world. Korean industry and economy grew tremendously in the process.  China started its economic reforms and opening of its economy in early 1980s. Around the turn of the century the year 2000, they also decided to follow the Japanese and Korean method and concentrated on shipbuilding. They announced that by 2013 they will become the number one shipbuilders of the world, which they achieved by 2011. Their economy in the same period grew phenomenally. Since then the three shipbuilding giants China, Korea and Japan built more than 90% of the ships worldwide and there is a strong competition between them. As shipbuilding is a labor-intensive industry, Japan and Korea realized that they cannot compete with the Chinese due to labor costs. They then adopted a strategy to build shipyards in countries where they can have their own management and technology but labor cheaper than China. Thus, Vietnam and Philippines have emerged as the new shipbuilding nations.  
Ocean/Marine Resources
There are huge economic resources in the oceans in the water and under the seabed. One way of categorization of these marine resources is:
▪ Non-extractive resources. These include use of seas and oceans for transportation and recreation. 
▪ Biological resources. These include sea food, marine animals and plants for food, drugs and other uses. 
▪ Physical resources. These include hydrocarbon (petroleum and gas), coal, minerals and fresh water extracted from seawater.
▪ Energy resources. These are for generating electrical power from tide waves and currents; wind and thermal gradients.
In non-extractive resources we have already discussed seaborne transportation. Now briefly about the recreation part.
Marine and Coastal Tourism
Tourism has seen continuous growth and increasing diversification to become one of the fastest expanding economic sectors globally. The business volume of tourism equals or even exceeds that of oil exports, food products or autos. 
Maritime and coastal tourism is among the fastest growing areas within the industry of tourism. 
Coastal tourism is basically land-based tourism and other recreational activities taking place on the coast for which proximity to the sea is a prerequisite.  Such tourism has a distinctive combination of resources at the border of land and sea environment: sun, water, beaches, outstanding scenic views, rich biological diversity (birds, whales, corals, etc.), seafood and so on. To optimize its benefits, a country needs to develop good transportation infrastructure, well-maintained beaches, bird watching tours, sports, culture, natural attractions, cuisine and restaurants, besides medical facilities etc.
Marine tourism refers to largely sea-based activities like swimming, surfing, sunbathing, yachting, sailing, diving, etc. as well as their land-based services and infrastructures.
Tourism has the potential to contribute to economic growth and poverty reduction, particularly in low-income developing countries. The sector’s capacity to generate employment and income owing to its backward and forward linkages makes it essential for economic diversification and expansion.
We have discussed the transportation part of the first category (non-extractive), the other important facets of Blue Economy apart from the above are:
Fishing Industry (Biological Resources)
Fishing has been a great source of sea food for human beings. In the olden days fishing used to be basically for own consumption. Incidentally, fishing or seafood hunting is allowed for Muslims even when they are in ahram and other types of hunting is prohibited. Commercial level fishing started in around 18th and 19th centuries.  Now the commercial fishing industry is one of the largest and oldest food market sectors in the world. As technology is improving, deep-sea fishing is being conducted in even deeper waters. Apart from marine fishing, aqua culture fishing is growing very fast and has a vast scope of expansion. Global fish production peaked at an estimated 177.7 million tons in 2018. According to FAO, the total marine capture fishing in 2018 was 94.5 million tons. The remaining 83.2 million tons was aquaculture production (51.4 million tons inland and 28.7 million tons marine). World trade in fish and fish products has grown significantly, with exports rising from $8 billion in 1976 to $163.1 billion in 2018.
From the economic point of view, fishing industry involves numerous activities including fish-catching, harvesting, processing, transportation, distribution and marketing. The industry also facilitates a number of other activities, such as the construction of fishing vessels, fishing gears, refrigeration or cold storage equipment, and much more. So, overall, it has a much larger economic footprint. It is estimated that about 60 million people are employed by the fisheries and aquaculture sector, and the value chain creates about 200 million direct and indirect job opportunities.
Physical Resources 
Oil & Gas

Crude oil and gas on land have been extracted since the 18th century, but offshore (sea based) oil extraction began around 1947. Offshore exploration activities have become very common these days. Offshore drilling, exploration and transportation is very difficult compared to onshore (land based), but as technology and knowhow is improving, offshore oil and gas is also picking up pace. Some reports indicate that offshore oil extraction already accounts for 37% of global production. In a 2012 report, the International Energy Agency (IEA) estimated that almost half of the remaining recoverable conventional oil is in offshore fields and a quarter of that in deep water. As technology improves, the share of offshore oil and gas will also increase.
Sea Based Minerals
Lawrence Cathles, professor of earth and atmospheric sciences at Cornell University, says in a review paper published online in the journal Mineralium Deposita on June 23, 2010, that while land-based deposits may be a dwindling source of valuable minerals, deposits on the ocean floor could power humanity for centuries.
Seabed minerals are broadly divided into the following categories:
▪ Methane Hydrate is a potentially important future source of gas. As per scientific estimates, seafloor methane clathrate reserves may be more than twice as abundant as all other forms of hydrocarbon deposits combined.
▪ Polymetallic Nodules, also called manganese nodules, are small potato-sized lumps of minerals found at the bottom of the sea. These are potential source of manganese, cobalt, nickel and other minerals. These are considered to be the most feasible of the seabed minerals to be extracted in commercial quantities.
▪ Polymetallic Sulphides contain copper, lead, zinc, gold, silver and other precious and trace metals. Massive sulphides occur at plate boundaries around the world. It was predicted in 2014 that there are 500 to 1,000 sites around the world with massive sulphide deposits.  As per these estimates, the earth's seafloors are loaded with mineral wealth. Nautilus Minerals, one of the biggest seabed mining companies, estimated in September 2009 that "thousands of underwater sulphide systems exist," and "if only half of underwater systems are geographically viable, seafloor production would represent several billion tons of copper per annum". 
▪ Cobalt-rich Ferromanganese Crusts are rock-hard, metallic layers. These mainly consist of manganese and iron with cobalt crust over them. Extracting cobalt crusts is a relatively difficult process. However, cobalt crusts contain large amounts of cobalt, nickel, manganese and other metals and therefore hold great promise. Presence of cobalt, nickel and rare earth elements are more significant in them. International Seabed Authority (ISA) has signed exploration contracts with a few countries like Japan, China and Russia.
Typical seabed mining is depicted in this picture:

Energy Resources
The movement of water in the world's oceans creates a vast store of kinetic energy. Some of this energy can be harnessed to generate electricity to power homes, transport and industries. The oceans represent a vast and largely untapped source of energy.
As per an IEA report “Ocean—potential", there is the potential to develop 20,000-80,000 terawatt-hours per year (TWh/y) of electricity generated by changes in ocean temperatures, salt content, movements of tides, currents, waves and swells. As per "Implementing Agreement on Ocean Energy Systems (IEA-OES), Annual Report 2007" the world ocean energy potential is:

Some of the development in the Marine and Hydrokinetic (MHK) or marine energy includes projects using the following devices:
▪ Wave power converters in open coastal areas with significant waves;
▪ Tidal turbines placed in coastal and estuarine areas;
▪ In-stream turbines in fast-moving rivers;
▪ Ocean current turbines in areas of strong marine currents;
▪ Ocean thermal energy converters in deep tropical waters.

To conclude, Blue Economy with so many of its facets is a great source of economic development. It needs to be developed in a sustainable and environment friendly manner as described in the UN Sustainable Development Goals, specifically goal 14, which is titled "Life Below Water".

The writer is a retired Vice Admiral from Pakistan Navy. He also remained Managing Director of Karachi Shipyard & Engineering Works. He is a regular speaker at NDU, Staff Colleges and other forums on maritime subjects.
E-mail: [email protected]

Read 51 times