Economies is a component of the Livelihoods and Economies goal. The Economies subgoal captures the economic value of marine-related industries. A score of 100 indicates that a coastal region has maximized their revenue from the marine sector.
Before embarking on the Economies subgoal, consider how you want to structure the larger goal. The global assessment is composed of two equally important sub-goals, livelihoods and economies, which are assessed across as many marine-related sectors as possible. Livelihoods includes two equally important sub-components, the number of jobs, which is a proxy for livelihood quantity, and the per capita average annual wages, which is a proxy for job quality. Economies is composed of a single component, revenue. We track the two halves of this goal separately because the number and quality of jobs and the amount of revenue produced are both of considerable interest to stakeholders and governments, and could show very different patterns in some cases (e.g., high revenue sectors do not necessarily provide large employment opportunities). The status of the livelihoods and economies goal is the average of the livelihoods and economies subgoals.
The marine-related industries that provide jobs and revenue often provide multiple benefits which are accounted for in different OHI goals. For example, the quantity of food from wild-caught fisheries and mariculture is included in the Food Provision goal; participation in tourism activities is accounted for in the Tourism and Recreation goal. The quantity and quality of jobs is captured in the Livelihoods subgoal.
STEP 1: Determine the sectors
You will first determine the marine sectors to include in the assessment. This may include: mariculture, fisheries, recreational fishing, bird watching, whale watching, tourism, sailing, kayaking, surfing, aquarium fishing, wave and wind energy, transportation and shipping, ports and harbors, ships and boatbuilding, and scientific research, among others.
You will need to determine whether to include industries that are not considered sustainable, such as oil and gas extraction. It is also important to determine whether to include industries that do not rely on healthy oceans to thrive, such as wind/wave energy, shipping, and boat-building. However, these industries may employ many people and generate large revenue for a region. Ultimately, whether and how to include these industries is a decision that should be made on a case-by-case basis by the individual OHI+ group. For the global assessment we excluded sectors that are not considered sustainable, but decided to include sectors that do not depend on a healthy ocean.
STEP 2: Find the data
This can be challenging! The Livelihoods and Economies goal has not been meaningfully updated in the global assessment since the original assessment in 2013. The data used in that year was discontinued and we have been unable to find a replacement.
Revenue data should be collected for each marine sector and coastal region. When these data are not available it is possible to use revenue data at a larger scale and adapt them to a coastal area based on the population distribution.
STEP 3: Identify the reference point
The reference point for this sub-goal is often a temporal reference point that compares current revenue to past revenue in the same region. In this case, the goal is to maintain revenue year after year. Another approach would be to use a locally established target for growth.
The temporal reference point can be obtained in many ways: e.g., maximum revenue achieved during the past 20 years; average of three highest years of revenue during the past 15 years; the revenue achieved 5 years ago, a slope estimate from a linear model using the past 10 years of data; etc.
STEP 4: Other helpful information
Studying the behavior of economic trends in your area can provide useful insights. For example, time-series data can be used to identify general economic cycles specific to your area that can be used to scale reference points or identify the more persistent patterns amid the noise. This may be useful if there is a lot of uncertainty or high variation in the data. For example, a sporadic event such as a large storm may negatively impact a year’s revenue, but this may not accurately reflect longer term patterns.
To smooth short-term fluctuations, the global assessment uses a five-year moving-window average to calculate each year’s revenue. There are other approaches to consider. For example, it may be helpful to buffer the reference point so revenues that fall under, but still within some range of the reference point, achieve a score of 100.
Also consider adjusting the reference point to track the overall market, such that the Economies goal will not be penalized if revenue is lower than the reference period, but the decrease is consistent with the decline in the overall economy. For example, if a country’s overall GDP drops by 25%, a loss of 25% of marine related revenue would still score 100.
| Assessment | Developing the Model | Setting the Reference Point | Other Considerations |
|---|---|---|---|
| Global 2012 | The status used the total adjusted revenue generated directly and indirectly from each sector at current and reference time points. | In the economies sub-goal, revenue had a moving target temporal comparison. A score of 100 would indicate that revenue has not decreased compared to its value five years previous. The years used for GDP data were based on the average current year and average reference year across the sector data sources. | The study accounted for a region’s GDP trend. The economic multipliers were used for jobs and revenue but not wages. The study assumed that sector-specific job and revenue multipliers were static and globally consistent, but distinct for developed versus developing regions. |
| Global 2013 - 2015 | The model was same as Global 2012, with a few simplifications: revenue data were adjusted by dividing by GDP per region, reported in 2013 USD. | The reference point was the same as Global 2012. | The approach was the same as Global 2012, with simplifications. |
| Brazil 2014 | The method was the same as Global 2012. | The reference point was the same as Global 2012. | The approach was the same as Global 2012. |
| U.S. West Coast 2014 | The method was the same as Global 2012, but with local sectors represented. | The reference point was calculated in the the same way as Global 2012. | The approach was the same as Global 2012. |
| Israel 2014 | See Global 2012 assessment. | See Global 2012 assessment. | N/A |
| Ecuador-Gulf of Guayaquil 2015 | Similar to Global 2013-2015. Value added (VA) was added as a measure of local economies, ie. earnings of each sector. | The temporal reference point was the Value Added by each sector in 2007. | Value added was used to replace GDP, which is more appropriate as measure of national economies. |
| China 2015 | Status model is the same as in global assessments. | The spatial reference point is the maximum revenue across all regions over all years. | Data on revenue generated from each marine sector is not available, and thus total revenue from all sectors are used for the assessment. |