Mangroves - Financing the Blue Carbon Wealth of Nations

Article by Prof Raimund Bleischwitz, Scientific Director of the Leibniz Centre for Tropical Marine Research (ZMT)

Mangroves: an asset in decline

A mangrove is a shrub or tree that grows mainly in equatorial climate, typically along coastlines and tidal rivers. As natural infrastructures, mangrove forests protect nearby populated areas by reducing erosion and absorbing storm surge impacts. In Australia, for instance, they provide almost AUS $ 2bn in value in avoided damages to coastal property. Mangroves are unsung heroes in coastal prosperity. As multi-service provisioning coastal ecosystems located in more than 110 countries across the world, they host habitats for fishes, birds, and other species, thus enhancing biodiversity. Plus, they help counteracting pollution through filtration. Accordingly, they support important socio-economic-cultural services for livelihoods of over 4 million fishers and human well-being.

Their deterioration is ongoing, albeit it has been slowing down in recent years. Over half of the world’s mangroves have been lost to degradation and deforestation due to urbanization and extractive activities. The ‘Global Mangrove Alliance’ estimates a net loss of 5,245 km² since 1996. There are estimated 147,000 km² of mangroves remaining worldwide, an area about the size of Bangladesh. Around 818,000 ha are currently considered as restorable area. Their decline needs to be reversed – finance is needed for an uptake of mangroves world-wide.

Carbon-storing superpower

Recognizing their contribution for ‘blue carbon’ is a future driver, i.e. the amount of carbon that could be sequestered for climate change mitigation in coastal ecosystems of mangrove forests, salt marshes and seagrass meadows. Mangrove forests store up to ten times more carbon per hectare than terrestrial forests. According to ‘Conservation International’ this carbon-storing potential makes mangroves an essential solution to climate change.

“Mangrove forests store up to ten times more carbon per hectare than terrestrial forests.”

Being characterized as ‘blue carbon wealth of nations’ (Bertram et al. 2021), countries in the Global South could be receiving substantial transfers based on carbon offsetting. On top of large countries like Indonesia or Brazil, a range of small developing countries with almost zero emissions could be benefitting from substantial compensations.

Global potential to store carbon emissions is tentatively estimated in the order of 3 % of cur-rent emissions (Macready et al. 2021), i.e. it is unlikely to be the solution. However, the overall climate solution provided by mangrove forests is roughly equivalent the current emission amount of Germany. Comparing the massive finance needed for ongoing climate mitigation in industrialised countries would dwarf much-needed investments into the natural capital of mangrove forests.

Drivers from policy: a momentum for mangroves

Policy-makers are lining up to protect mangrove forests. The delivery of the Paris Agreement on Climate Change, the Convention on Biological Diversity and the Ramsar Convention on Wetlands are leveraging on the precious role of mangroves. The 2023 COP in UEA proposed a global target to restore and protect 15 million hectares of mangroves and halt mangrove destruction by 2030. Australia now uses the approach in their ‘Nationally Inventory Report’ (NIR), i.e. as part of their acknowledged policy measures against climate change.

Establishing standards and benchmarks will be key

Setting a transparent and verifiable standard with independent review is key. So far, voluntary standards are provided by few consultancy-based organisations: ‘VERRA’ has been strong, however others such as ‘Climate Action Reserve’, ‘Plan Vivo’, and ‘FairGrove’ are emerging as like-minded players. The ‘High Level Ocean Panel’ provides a handbook on the topic to facilitate action. Investors should pay attention when shovel-ready mangrove (re-)establishment projects are being set up: it’s not that easy! Durability of carbon storage, monitoring parameters, transparency, and independent verification need more and continuous rigour. In the long run, an affiliation of standard-setting bodies at UN-level is desirable (Van Dam et al. 2024).

The Mangrove Breakthrough Financial Roadmap

Launching the ‘Mangrove Breakthrough Financial Roadmap’ in late 2023 has been a galvanizing call to action. Supported by multiple countries and stakeholders, it pledges that unlocking $4bn investment by 2030 could secure the future of mangrove forests and their eco-system services. A Blue Mangrove Fund has been set up by a Belgian NGO and their counterpart from Bangladesh. In line, Microsoft has been investing in ‘Delta Blue Carbon’ in Pakistan as the world’s largest project and shares updates on lessons learned. The High-Level Ocean Panel concludes that all such measures to protect and restore mangrove forests could have a cost-benefit ratio of 1:3, i.e. €1 investment yields brings a benefit of €3 (Konar & Ding 2020).

The Global Mangrove Alliance has been setting up a restoration tracker tool for practitioners to enable knowledge sharing. The investor tool ‘mangrove transition curve’ maps this landscape of opportunities. It identifies phases of development and emerging business models: ranging from aquaculture to eco-tourism, to Marine Protected Areas and Marine Spatial Planning. Waste infrastructure and clean energy matter too. Critical enablers are the legal conditions for traditional landowners and users, especially indigenous people and local communities, and confidence in inclusive and responsible blue carbon projects. Impact investing would address those measurable socio-ecological benefits. Business becomes nature-positive. Policy frameworks would set the scene on transparency and accountability.

Quick starts for business and investors

What business and investors can do is the following: (i) set a science-based quality bar and a sound evaluation framework with stakeholders, (ii) determine alignment with business and local priorities towards prosperity enhancement, (iii) leverage financial multipliers by de-risking in form of blending grants with other funding sources. Commercial finance can contribute to the mangrove financial roadmap.

Outlook: buy-in needed with both eyes open

For years and decades to come, combatting climate change will be on the agenda. Renewable energies won’t do it alone. Evidence is increasing on the need for smart adaptation combining resilience with mitigation. Investing in mangrove forests re-establishment comes across as a no brainer through coastal protection, blue carbon storage, and multiple local benefits for livelihoods and biodiversity. The financial roadmap paves the way. It needs delivery and upscaling around the world. Measuring co-benefits with biodiversity and livelihoods via impact investment will be key in delivering on the blue wealth of nations for coastal communities around the world.