Public Disclosure Authorized Approach Paper Making Waves: An Evaluation of the World Bank’s Support for the Blue Economy (2012–23) March 13, 2023 Public Disclosure Authorized 1.1 Marine and coastal resources are critical for human survival. Oceans provide at least half of the oxygen on Earth. They also regulate the climate by transferring about 10 gigatons of carbon from the atmosphere deep into the oceans each year (Lindsey and Scott 2010). To put that into perspective, an estimated 36.3 gigatons of carbon dioxide were emitted globally in 2021 (IEA 2022). Fish and other aquatic foods account for 17 percent of the average per capita intake of animal protein globally. In many coastal least developed countries and small island developing states (including Bangladesh, Kiribati, Mozambique, and Sierra Leone), aquatic foods contribute no less than 50 percent of total animal protein intake (FAO 2022). 1.2 The economies of many coastal developing countries and small island developing states rely heavily on maritime industries, associated trade, and tourism. Prior to COVID-19, it was estimated that the total export value of ocean-based industries was US$2.5 trillion (UNCTAD 2021a) and that ocean freight transport volumes would quadruple by 2050 (ITF and OECD 2015). Ninety percent of global trade is carried out on oceans, and developing countries account for 60–70 percent of this trade by volume (UNCTAD 2021b). Tourism contributes about 10 percent of global GDP, 80 percent of which includes coastal and marine activities. Coastal and marine tourism is an essential component of many small island developing state economies (OECD 2020). Public Disclosure Authorized Public Disclosure Authorized 1. Background 1.3 In coastal and island developing countries, small-scale fisheries and other ocean sectors support a significant number of jobs and livelihood opportunities. Most of the 3 billion people who rely on the sea for their livelihoods reside in developing countries (UN 2015). Forty percent of global fish capture and production is sourced from smallscale fisheries, and more than 90 percent of fishers and fish workers globally are engaged in small-scale production (FAO 2022). As a result, about half a billion people globally depend on small-scale fisheries for their livelihoods and nutrition. Most fishers and fish farmers live in Asia (80 percent), followed by Africa and Latin America and the Caribbean (10 percent and 4 percent, respectively; FAO 2022). Marine and coastal tourism is also an important source of jobs and livelihoods in developing countries. More than 80 percent of the 300 million people working in the tourism industry live in developing countries (WTTC 2022). 1 1.4 Marine and coastal resources also provide critical ecosystem services on which the ocean economy relies. These services include the existence of biodiversity, coastal protection, and carbon sequestration. Intact coral reefs substantially reduce coastal flooding and erosion by dissipating as much as 97 percent of incident wave energy. Mangroves provide flood protection benefits exceeding US$65 billion in avoided losses per year (Menéndez et al. 2020). Acre by acre, mangroves can also store up to four times as much as terrestrial forests do, while protecting communities from disasters and providing food and livelihoods (Donato et al. 2011). Protecting and effectively managing marine and coastal resources is therefore critical to achieving large economic benefits and livelihood effects. 1.5 Yet historically, ocean-based sectors have expanded without sufficient consideration for sustainability, negatively affecting marine and coastal environments. One million hectares of mangroves were destroyed between 1990 and 2020, mostly because of coastal development, agricultural policies (that is, rice expansion, shrimp farming), tourism, and extraction for local energy needs (FAO 2020; NASA 2020). The share of overfished stocks has tripled since the 1970s, threatening the food security and livelihoods of millions. The annual economic loss due to overfishing is estimated at US$83 billion annually (World Bank 2017). Marine pollution, such as sewage discharge, plastics, household chemicals and drugs, agricultural fertilizers, and petrochemical leakage, degrade the resilience of coastal and marine ecosystems that underpin the blue economy (UNEP 2021). For example, the cumulative mass of plastic pollution added to aquatic systems as a result of plastic mismanageme