VX2019: California Blue Economy Opportunities and Challenges

Tim McOsker

The ocean has vast potential to grow food and harness renewable energy to meet the demands of an increasing population and the need to transition from fossil fuels. In the following excerpt from VerdeXchange 2019, AltaSea President and CEO Timothy McOsker, moderated a conversation featuring Jerry Schubel, President and CEO of the Aquarium of the Pacific, Sandra Whitehouse, Chief Scientific Officer at AltaSea, Mark Gold, Associate Vice-Chancellor for Environment and Sustainability at UCLA, and Anne Baker, Deputy State Controller for Environmental Policy, to discuss the environmental and regulatory challenges of sustainably tapping into California’s vast coastal resources, along with the rich economic and scientific opportunities of the burgeoning blue economy.

Tim McOsker: What is the blue economy? According to the World Bank, it’s “the sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of the ocean ecosystem.” What’s significant about this definition is that it makes sustainable care for the resource itself—the ocean—a part of economic growth.

The Organization for Economic Cooperation and Development tells us that between 2010 and 2030, the ocean industry will double from $1.5 trillion to $3 trillion. Employment will go from 31 million to 40 million jobs or FTEs. Much of that growth will be in coastal tourism, port activity, and offshore wind. Maritime safety and surveillance are expected to grow, as well as marine biotechnology and seabed mining. Marine aquaculture, high-tech marine products, and offshore renewable energy are real opportunities for sustainable growth.

California accounts for 12 percent of the GDP of the United States’ blue economy, as well as 14 percent of the employment. Tourism and recreation are a big part of that GDP, as well as marine transportation, port work, and minerals. California has 2.1 percent of its economy in the blue sector, while LA County is closer to 3 percent.

There is, quite simply, a lot of opportunity for growth in the blue economy. The challenge is growing in a way that is sustainable and that protects the environment and the ocean for the future.

Sandra Whitehouse: As the Chief Scientific Officer at AltaSea, I focus on sustainability within the blue economy. A full 70 percent of the blue economy is directly dependent on healthy ocean assets. But while we’re dependent on a healthy ocean, we also face a lot of challenges.

We have many pollution challenges. Ocean plastic is one, with 8 million metric tons getting into the ocean every year. Nutrient pollution is causing low-oxygen zones around the world, both in coastal and offshore areas. About 90 percent of our fish stocks are not sustainably fished. And over the past century, invasive species have harmed our ecosystems: Killer algae has choked the San Francisco Bay, and the green crab has outcompeted crustaceans in estuaries all around the country. Meanwhile, we are rapidly destroying valuable habitat, such as mangrove swamps and salt marshes, that are needed to sustain a healthy ocean.

Of course, the biggest and most systemic challenge that we face in the ocean is climate change. The ocean has absorbed a full 93 percent of the heat and 30 percent of the carbon that has been put in the atmosphere since the Industrial Revolution, which is resulting in ocean acidification. We are just starting to learn about the risks of ocean acidification and where the tipping point might be.

The good news is that the ocean can be an important part of the solution, not only to climate change, but also to growing our economy. It can provide energy security through offshore renewables, either as wind or hydrokinetic projects. The Bureau of Ocean Energy Management has just put out two Call Areas for wind in Southern California, so this is already starting. AltaSea is also in discussions with a potential new partner called Resolute Marine, which has an interesting technology that captures wave energy with a giant flap on the bottom of shallow waters. We are very excited that the third cluster we are going to launch will probably be renewable energy.

The ocean can also help us address the challenge of food security with aquaculture, which clearly has to be done sustainably. Catalina Sea Ranch is the anchor tenant in our sustainable aquaculture cluster at AltaSea.

If we want to do new blue economy development, we need to optimize human benefits without compromising ocean health. So how do we find this balance and make sure that we have a sustainable blue economy?

We need to manage on an ecosystem basis. We’ve got to get out of our management silos of just fisheries or shipping or wind, and look holistically at the whole ecosystem. We also need to make sure that we base our decisions on the best available science.

The good news is that there is already a lot of information out there. The West Coast Ocean Data Portal now has almost 800 data layers that are publicly available. They include things like cargo vessel data, humpback whales in the summer, where are submarine cables, where are protected areas. These are all valuable tools for a developer looking to site a new facility.

We know that we need to collect more data and do more science. Not all of this is going to be done by humans in the future. A lot of it is going to be done by underwater robots, which is why we are very excited about our blue technology cluster at AltaSea.

Finally, we need to make sure that this science actually gets into the decision-making and governance process—whether it’s federal, state, or even local agencies that have permitting authority. These entities also need to make sure that they’re coordinating their efforts.

Looking worldwide, economists think that the United States rates about 85 out of 100 on coastal governance, or how well we are using science and putting it into management decisions. But an 85 is only a B—and I think we can do a lot better.

Tom McOsker: Dr. Gold, address the value of future research in driving and catalyzing the potential of the blue economy.

Mark Gold: California is not getting as much as we could out of California’s exceptional coastal resources. There is an opportunity for a wide variety of different expertises, including universities, to help California move forward with sustainable policy that helps grow the blue economy.

The role of universities is one of innovation and research that can help decision-making and management in the blue economy. UCLA and universities around the world are researching climate change impacts, coastal water habitats, sea-level rise impacts, ocean acidification and hypoxia, the impacts of pollutants on public health and marine life, and more. (Considering California’s $40 billion+ annual coastal tourism economy, public health issues matter a great deal.) The issues we see coming up more and more include the global plastic pollution crisis, as well as sewage discharges and polluted run-off.

The good news is that research on our oceans continues to increase over time. It’s not just field measurements, but also things like remote sensing and using environmental DNA to determine how well our resource management decisions are working in marine protected areas and coastal fisheries. Some of the new tools coming out of JPL and NASA are absolutely incredible.

One thing I’m proud to be doing at UCLA is partnering with NOAH, the Southern California Coastal Water Research Project, and the University of Washington to work on the first ocean acidification and hypoxia model for the Western United States. Why does this matter to the blue economy? The impacts of ocean acidification on the shellfish industry are quite substantial, and the impacts on local fisheries could be absolutely devastating. Our work should provide resource managers with a host of new information on what happens when we reduce pollution inputs to our coastal waters and how that will actually impact our ocean acidification and hypoxia on the West Coast.

For example, if Los Angeles moved our sewer treatment plants to 100 percent water recycling, as opposed to discharging high-nutrient-laden waters, would that even have an impact? Or is this really a global phenomenon? That’s why this research is so important: These management decisions could literally cost billions of dollars, and we want to make sure that the science backs them up.

We’re excited that AltaSea is here at the port and that the Southern California Marine Institute, which we’ve been a member of for over a decade, will move there. There is a real opportunity for collaborations among universities to do research to try to answer these difficult coastal resource management questions, like: What are the impacts of urbanization on our coastal resources? What can we do that is solutions-oriented? Having AltaSea in the LA area, where we have one of the largest port complexes in the world and tremendous research universities, will create all sorts of opportunities for students to work with blue tech businesses moving into that area, as well as partner with academics on research. It’s a very exciting time.

Tim McOsker: Anne, please speak to the importance of the state’s regulatory scheme in unlocking the potential of the blue economy up and down the California coast.

Anne Baker: One may wonder why the state’s Deputy Controller has an interest in this topic. The reason is that our office serves on the State Lands Commission, and every other year we chair it. This also means that we sit on the Coastal Commission and Ocean Protection Commission.

Three years ago, we were approached by the Maritime Alliance—AltaSea’s equivalent in San Diego—who said, “We want to do spatial planning three miles off the coast, and you, the Lands Commission, have the authority to permit us.” Then the Port of San Diego joined us. We just finished a two-year pilot that has had some successes and some, well, learning experiences. One success is that we now have very good mapping offshore, combining all the sources into one tool for the territory off of San Diego.

We had a number of challenges with other people who thought they should be in charge of this, but who didn’t want to do it. We had to spend a lot of time assuring the environmental community that this project wouldn’t lead to zoning the ocean, but that mapping is a useful tool to all the agencies. The Ocean Protection Council has a real conservation strain, and doesn’t want to hear about the economy. Scripps, who we partnered with in San Diego, loves the academic focus but has mixed feelings about how to proceed. The Port of San Diego wants to be in charge of this hot new thing, and the Port of Los Angeles is moving slowly toward becoming willing partners.

We ended the first phase of our pilot in December, and now we are wrestling with what’s next. We think it will mean pulling together people from the agencies that are involved in regulations and people from the academic community who can talk about the science. There are a lot of various campuses, and we need to maximize what we do with them. We need to have a conversation about the various roles that we need to fill and the various people who need to be involved. Ultimately, the question is: How do we bring all of this forward so that there’s something to take to the governor that has some support up and down the state?

California is incredibly innovative in the environmental space. But once we’ve invented it, we tend to lock it down and become less flexible. We need to be open and not so fearful. We need to address the blue economy so that it’s broader than just tourism. And we need the leadership of LA, San Diego, and Humboldt in this effort. The length of our state’s 1,100 miles of coast is very different, with different interests and needs, and we need to pull it all together in a meaningful way.

Tim McOsker: We’ve talked science, economy, regulatory scheme, and governance. Now Dr. Schubel is going to bring us home.

Jerry Schubel: California is most creative states in the world. But creativity does not equal innovation. Innovation is application. And California is among the least innovative in our uses of the ocean, because any new proposal is strangled by the permitting process. The ocean remains one of California’s great untapped opportunities.

How does California stack up in meeting the World Bank’s definition of the blue economy? In terms of “preserving the ecosystem,” I would give us an A. In terms of “using the ocean for economic growth, improved livelihoods, and jobs,” I would give us a C.

California has the largest ocean economy of any state in the nation. The top segment is tourism and recreation. No. 2 is shipping and transportation, and No. 3 is offshore oil. Let’s look at what is going to happen to these pieces before the end of the century.

First, our offshore oil rigs have a lifetime of about a decade. We need to think about what we are going to do with them a decade from now. There will be enormous pressure to remove them; we should resist that. Instead, we should think of creative ways to put them to constructive use, consistent with environmental quality, that can help the economy.

In terms of shipping and transportation, our two ports will remain leaders; the enlargement of the Panama Canal will have very little effect on them.

Tourism and recreation is a different story, because it depends upon our beaches. California’s fourth climate assessment predicts that, even if we achieved a medium reduction in greenhouse gas emissions—which we’re not on track to do—all of Southern California’s beaches would be severely compressed or entirely eliminated before the end of this century. That will take a huge toll on our tourism; think about Surf City without a beach. We need to think now about how we are going to transform our ocean economy.

One opportunity is in aquaculture. We have one of the best-studied coastal oceans anywhere in the United States, and probably the world. It’s also quite unlike the East Coast or the Gulf Coast, where you have broad, gently sloping continental shelves; we have a continental borderland, deep water close to shore, and well-mixed waters. It’s a forgiving ocean.

This country and this state import 90 percent of all our seafood that we consume. Last year, this led to a $15 billion trade deficit. We have the potential, according to the UN, to be the leading nation in the world in terms of aquaculture production. Yet California has not issued a new shellfish permit in more than 20 years. We have never issued a finfish permit. We state that aquaculture is important to our economy, to coastal communities, and to jobs, but we have a law that says that no state land shall be leased for finfish aquaculture until a programmatic environmental impact review is completed. That programmatic review was started in 2003 and has yet to be completed.

There is a huge opportunity here, and California could be a leader. We have the markets. Moreover, most of our imports are either harvested or raised under unknown environmental or human rights conditions, whereas this state and this nation have some of the highest regulations for the environment and for human rights, and we have the scientific knowledge and technology. We ought to push forward in this area.

The very wealthy in California are getting richer. The middle class is shrinking, and the underclass is growing. Travel and tourism is a lousy industry in which to be a worker. You don’t make much money. You can’t live near the ocean. You have to drive long distances. Nearly one-third of all the people in this state, according to the U.S. Census Bureau, live very close to the poverty line. We are a better state than that. I believe that the ocean can play a major role in changing this dynamic, because it’s filled with opportunities that we have largely ignored.

The ocean remains one of California’s great untapped opportunities. But California is among the least innovative places in our uses of the ocean, because any new proposal is strangled by the permitting process. —Jerry Schubel