Global Island News

FINANCIAL SERVICESPremier Smith, BritiSh Virgin iSlandS

Prof. andrew morriSS, texaS a&m School of law

DEEP SEA MININGmike JohnSton, nautiluS mineralS

nii odunton, international SeaBed authority

FISHERIESÁrni mathieSen, fao

ruPert howeS, marine StewardShiP council

ENERGYdr. kandeh yumkella, Se4all

dr. Jon creytS, rocky mountain inStitute

TOURISMgail henry, cto

rachel mccaffrey, intaSaVe-cariBSaVe

SPring 2015

The world’s islands are the canaries in the Earth’s coal mine, alerting mainland neighbours to the coming danger and acting as the front line for pertinent, long-lasting

and meaningful global solutions that have at their heart the three social, environmental and economic pillars of sustainable development.

The world at large is coming to realise that we are in fact all islanders - that we live on a ‘Global Island’ where the fates of all of us are inextricably linked and that choices made on the other side of the world have the capacity to directly impact on our lives and welfare. Island jurisdictions have known this for some time and are shining a light on the path to follow.

It is a path marked by informed, purposeful, realistic and dignified partnerships which aim to mitigate common challenges related to globalisation, widening income inequalities and the deterioration of the global environment through the building of capacity, the transfer of knowledge and the delivery of prosperity for all stakeholders.

An unparalleled degree of activity is in evidence across the full spectrum of the world’s islands right now, where the threat to some low-lying jurisdictions’ very existence is, in many cases, acting to catalyse the process of institutional reform beyond recognition. This is creating the right conditions for public/private partnerships to flourish, investment to flow and adverse states of affairs in respect of people, planet and profits to be remedied both quickly and effectively.

We’re talking about nothing less here than a whole-scale revolution across a range of sectors, including, but not restricted to the financial services, deep sea mining, energy, tourism and fisheries arenas. This sea-change aims to accountably, transparently and responsibly deliver across a range of sustainable development criteria, while at the same time respecting and leveraging those very traditions and cultures that have come to define the various jurisdictions.

With unique editorial contributions from a host of inspirational captains of industry, leading UN and political figures and other illustrious commentators - all of whom share impeccable and quantifiable pedigree in terms of furthering island prospects - Global Island News draws the spotlight on to the key challenges, trends, initiatives and milestones across the international fraternity of island nations. In the process it formulates a roadmap to a future marked by collaboration and sustainability.

Editor: Dominic Hale

Business Development: James Wilson, Erik Herbert

Designer: Wallace Wainhouse

Production Manager: Claire Turner

Editorial enquiries: [email protected]

Advertising enquiries: [email protected]

All other enquiries: [email protected]

W: www.globalislandnews.com

SPRING 2015

Disclaimer: The information contained in this publication has been obtained from sources the proprietors believe to be correct. However, the publishers cannot be

held responsible for any errors or omissions. In no way does any of the content constitute legal advice and the publishers and staff accept no responsibility nor legal

liability for any loss or damage caused by or arising from reliance on it. Persons are reminded that independent professional advice should be sought before any

investment decisions are made.

Copyright: No part of this publication may be reproduced without the prior consent of the publisher. © Global Island News. Unless otherwise stated photographic

content is licensed under the Creative Commons (cc) attribution license. To view a copy of this license visit http://creativecommons.org/licenses/by/3.0/

Cover photo -Coral by

think4photop

CONTENTS

The Third International Conference on Small Island Developing StatesBy Hiroko Morita-Lou, Chief, Small Island Developing States (SIDS) Unit, Division for Sustainable Development, United Nations Department of Economic and Social Affairs (DESA).

Small Island Developing States: Shaping the Sustainable Development Agenda in a Terrestrially-Focused WorldBy Delia Paul, Thematic Expert for Poverty Reduction, Rights and Governance, IISD Reporting Services, International Institute for Sustainable Development.

BVI: Leading by ExamplePremier and Minister for Financial Services, Dr. the Honourable D. Orlando Smith, OBE discusses the reasons behind the British Virgin Islands’ success and enduring appeal.

Cook IslandsA leading international finance centre for nearly thirty years, the Cook Islands is a prime choice for sophisticated international services.

Small Island IFCs – Setting the Record StraightInterview with Professor Andrew Morriss Dean & Anthony G. Buzbee Dean’s Endowed Chair, Texas A&M School of Law.

Alderney: Gambling, Bitcoin and the Art of UnorthodoxyProfessor John Connell, School of Geosciences, University of Sydney, Australia, on how Alderney has sought to develop several service sector activities.

International Seabed Authority (ISA)Nii Odunton, Secretary-General, ISA, outlines the research to date that has informed the deep sea mining landscape.

Nautilus MineralsMike Johnston, CEO, Nautilus Minerals talks about how the company is leading from the front, in partnership with government, industry, environmental groups, the scientific fraternity and local communities.

Environmental Management Considerations for Deep Seabed MiningBy Alison Swaddling, Deep Sea Minerals Environment Advisor, Secretariat of the Pacific Community.

INTRODUCTION FINANCIAL SERVICES DEEP SEA MINING

6

9

12

15

16

18

27

30

34

The FAO Blue Growth InitiativeInterview with Árni Mathiesen, Assistant Director-General, Food and Agriculture Organisation (FAO) - Fisheries and Aquaculture Department.

Small Islands, Large OceanRupert Howes, Chief Executive Officer, Marine Stewardship Council (MSC), explains that ‘large ocean nations’ are at the centre of global issues such as climate change and safeguarding fish stocks.

The Pacific Fisheries SectorInterview with James Movick, Director-General, Pacific Islands Forum Fisheries Agency (FFA).

Sustainable Fisheries Partnerships in the Indian OceanInterview with Rondolph Payet Executive Secretary, Indian Ocean Tuna Commission (IOTC).

Sustainable Energy For All (SE4All)Dr. Kandeh Yumkella, CEO of the United Nations Secretary-General’s SE4All Programme talks about the initiative’s capacity to positively impact Small Island Developing States.

Islands in the Lead Toward a Clean Energy FutureJon Creyts, Managing Director of the Rocky Mountain Institute shows how rather than being victims of climate change, islands are instead helping pioneer the solutions the world needs to avoid its most severe consequences.

Travel Industry Develops New Partnerships with Communities to Secure Small Islands from the Threat of Climate ChangeBy Rachel McCaffrey Head of Sustainable Tourism, INTASAVE-CARIBSAVE Group.

Responsible TourismResponsible Tourism is about making better places for people to live in and better places for people to visit, in that order, says Dr. Harold Goodwin, Professor of Tourism at Manchester Metropolitan University, United Kingdom.

Sustainable Tourism in the CaribbeanInterview with Gail Henry, Sustainable Tourism Product Specialist, Caribbean Tourism Organisation (CTO).

TOURISMFISHERIES ENERGY

37

40

42

46

50

56

59

62

64

————— 6

The Third International Conference on Small Island Developing States held in Apia,

Samoa from 1 to 4 September 2014, was seen from the start of its preparations to have a historical significance as the first global conference of this magnitude to be held in the Pacific region. In my view, the unprecedented success of the Samoa Conference can be largely attributed to the following three aspects: a) the completion of the negotiation of the political outcome, the SAMOA Pathway, ahead of the Conference; b) the theme of the Conference being “genuine and durable partnerships” around which the international community and stakeholders have been mobilised and that the Partnerships Dialogues were organised to be an official part of the Conference; and equally important, c) the highest level of political commitment

demonstrated by the host country throughout the two-year preparatory process, inclusive of the Conference, and the support it has been able to rally around the necessary logistic and substantive preparations.

The national level preparations for the Samoa Conference, consisting of review, assessments and multi-stakeholder consultations, served as building blocks for the three SIDS regions: Pacific, Caribbean and the so-called AIMS (Atlantic and Indian Oceans, and South China Seas). The process allowed them to identify their respective priorities for the post-2015 development agenda, which they brought to the inter-regional level to coordinate and eventually consolidate as collective and strong “SIDS positions” on key issues of importance before coming to the global negotiating table. The successful adoption of the SAMOA Pathway as the SIDS

blueprint for the way forward was quite timely as the global negotiation for post-2015 and SDGs has only just begun.

The Samoa Conference yielded some 330 partnerships, some new, some expanded and some representing ongoing activities. These partnerships, and the Partnership Dialogues, side events and private sector forum where they were featured, constituted the highlight of the Conference that drew over 3,500 participants around the world, including 21 Heads of State and 40+ Ministers of Government, as well as a large number of representatives from the UN system, international, regional IGOs and Major Groups, including civil society and the private sector.

Since about a month after the successful conclusion of the Conference, the attention has shifted to the question

THE THIRD INTERNATIONAL CONFERENCE ON SMALL ISLAND DEVELOPING STATES

The Samoa

Conference

yielded

some 330

partnerships.

Photo Right -Samoa.

Hiroko Morita-Lou - Chief, SIDS Unit, DESA/Division for Sustainable Development, United Nations.

Global Island News

7 —————

of responsive follow up and monitoring. A crucial question posed to the UN system in particular, with DESA having the convening and inter-agency coordination mandate, is: how shall we do it differently from the past processes whose promises fell short of the original expectations, to ensure that the implementation of the SAMOA Pathway is effectively followed-up and that good-willed partnerships launched and/or highlighted in Samoa be kept energised, monitored and made accountable, with identified partners staying engaged?

Through brainstorming and a series of consultations, several steps are being taken to strengthen the existing monitoring and accountability mechanisms. One is the development of a SIDS Action Platform that would allow close monitoring not only by the Secretariat but also by all parties who have committed themselves to specific partnerships with

their respective timelines and deliverables. Second, the two existing inter-agency coordination mechanisms are being reinvigorated to perform distinct, but complementary roles in the follow up of Samoa outcomes as follows:

• ECESA Plus, which consists of all entities of the UN system to monitor the implementation of the Samoa Pathway using an Implementation Matrix, with reference to specific actionable paragraphs; and

• Inter-Agency Consultative Group (IACG) on SIDS to monitor and review the implementation of the SIDS-focused partnerships through the updated SIDS Action Platform, taking advantage of SIDS-focused membership from both UN and non-UN entities, active at national, regional and/or global levels.

The SIDS Action Platform will clearly differentiate new partnerships launched in Samoa and new aspects built, from those that have been ongoing without much change and are being concluded. One partnership project where the SIDS Unit has been involved and supported since its initiation in 2009, was the launch of the Joint Virtual (combination of in-class and online) Master’s Programme on Sustainable Development for SIDS among the 7 member regional and national universities of the University Consortium on Small Island States (UCSIS). They jointly developed common curricula, with the IT platform to be housed in the South Pacific University, while each member worked on the necessary technical, programmatic and administrative adjustments. Meanwhile, UCSIS announced the research partnership collaboration in Samoa building on the same network.

Several steps

are being

taken to

strengthen

the existing

monitoring

and account-

ability

mechanisms.

Photo CC

by neilsphotogrphy

————— 8

The political and substantive profiles of SIDS have certainly been enhanced in the last few years, thanks to the SIDS-focused intergovernmental processes in relation to Rio+20 and for the Samoa Conference. The SIDS Unit, serving as the core of the Secretariat on SIDS issues, has been intimately engaged with these processes to provide substantive support to the preparatory processes, particularly at SIDS regional, inter-regional and global levels, including in the context of the UN General Assembly, to provide substantive analysis, as well as opportunities for a broad range of inter-agency brainstorming and sharing of information, and to help strengthen “island voices” in the context of the International Year of SIDS.

The SIDS Unit published the second issue of the SIDS Trends Report, tailored to follow the priority areas identified by SIDS, just in time for the Samoa Conference. It was prepared in close collaboration

with the Statistics Division. Strengthening SIDS Data and Statistics have been among the priority areas in the SAMOA Pathway and it is no coincidence that along with the SIDS Trends Report, DESA published a SIDS Statistical Pocketbook, as well as the SIDS Demographic Wall Chart.

There are other initiatives that the SIDS Unit has initiated and continue to undertake. One such notable example is the development and piloting of the Vulnerability-Resilience Profile (VRP), in collaboration with the Indian Ocean Commission (IOC) and through inter-agency and expert consultations. The VRP is a national policy tool to help monitor the implementation of The Barbados Programme of Action (BPOA)/Mauritius Strategy of Implementation (MSI)/now SAMOA Pathway. It is based on priorities and vulnerabilities identified through multi-stakeholder consultations and VRP-related activities with relevant entities, including the Commonwealth Secretariat.

Seychelles and Mauritius became the first set of countries to pilot the VRP methodology, which will continue to be refined and applied in linking to their national planning and implementation, while lessons learned from these experiences will be shared with other interested parties.

The VRP approach also provides hopes for SIDS who are seeking so-called “beyond-GDP” assessment criteria vis-à-vis development partners, as VRP allows each country to profile and highlight its own vulnerabilities, regardless of their respective per capita income.

SIDS have made it clear that they do not wish to wait another ten years to have to mobilise global attention back to SIDS, nor do they wish to see the expectations and promises of Samoa remain empty. We are committed to do what we can to make the difference, based on the lessons learned from the past, while also being open to explore new, innovative ways of doing things.

VRP allows

each country

to profile and

highlight its

own vulner-

abilities,

regardless

of their

respective

per capita

income.

Global Island News

Photo CC

by neilsphotogrphy

Samoa.

9 —————

By Delia Paul, Thematic Expert for Poverty Reduction, Rights and Governance, IISD Reporting Services, International Institute for Sustainable Development.

Six hours from Sydney, or four hours from Auckland: the final leg of a long journey

from Europe, Africa, Asia or the Americas. Before even a word was spoken at the Third International Conference on Small Island Developing States (SIDS), host country Samoa had impressed on delegates the particularities of many SIDS as remote locations surrounded by acres of ocean, all too vulnerable to cyclones, storms and the rising tides.

The conference, organised as a result of the June 2012 Rio+20 outcome, sought to reinforce international recognition of SIDS as a special case for development. SIDS are on the front line of global stress in experiencing the effects of climate change, and in having limited financial resources and capacity to cope with those impacts, which are not only physical, but also social and economic. The conference advanced the idea of SIDS’ vulnerability as an outcome of global warming, and therefore a problem that is jointly owned by the international community.

So the conference, while focusing on the situation of SIDS, also aimed to set an agenda for other international processes. SIDS sounded the call for much stronger action on mitigation, expressing “profound alarm” at the continuing rise in greenhouse gas (GHG) emissions, in the conference outcome document, the SAMOA Pathway. The conference saw the launch of the Coalition of Atoll Nations on Climate Change, a political grouping led by Kiribati, which is poised to influence the forthcoming climate discussions. For such countries, the loss of landmass due to sea-level rise is a threat to their very existence, and, in the view of many, places climate firmly in the realm of security issues for the global community. The conference anticipated the potential of the UN Secretary-General’s Climate Summit on 23 September in New York for securing climate commitments, as well as of the December 2014 Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) in Lima, Peru, to lay the groundwork for a strong agreement at the 21st session of the COP in Paris, France, in 2015.

On the sidelines of the conference, the Alliance of Small Island States (AOSIS) agreed to the Apia Declaration, which calls for urgent global action to reduce emissions to well below 1.5 degrees Celsius

above pre-industrial levels, going beyond the current international level of ambition, the 2-degree limit agreed in 2010. The Declaration also calls for long-term stabilisation of atmospheric GHG concentrations at well below 350 parts per million CO2-equivalent levels.

While the climate agenda was a strong focus throughout the conference, the biodiversity agenda also received attention. To understand SIDS as early victims of a jointly owned problem (climate change) is to also recognise their role as stewards of a global resource (oceans): two sides of the same coin. The SAMOA Pathway conference outcome document recognises the extraordinary marine and terrestrial biological diversity of SIDS, and acknowledges the role of access and benefit-sharing in relation to genetic resources in contributing to the conservation and sustainable use of biodiversity, poverty eradication and sustainable development. The conference promoted SIDS as the custodians of oceans and drew attention to efforts such as the Coral Triangle Initiative, Kiribati’s gazetting of the Phoenix Islands Protected Area, the largest marine conservation area in the Pacific, and SIDS’ partnerships with UNEP and others on action to address the growing problem of marine litter. In a light-hearted

SMALL ISLAND DEVELOPING STATES SHAPING THE SUSTAINABLE DEVELOPMENT AGENDA IN A TERRESTRIALLY-FOCUSED WORLD

On the

potential for

SIDS to lead

the way, one

conference

delegate

noted, “We

might be

not SIDS,

but GODS –

Great Ocean

Developing

States!”

————— 10

take on the potential for SIDS to lead the way, one conference delegate noted, “We might be not SIDS, but GODS – Great Ocean Developing States!”

Many partnership announcements at the conference focused on reducing vulnerability and promoting the resilience of SIDS through avenues such as sustainable tourism, food security and nutrition, water and sanitation, and waste management – all facets of sustainable development. Disaster risk reduction was an important focus of discussions, looking ahead to the 3rd World Conference on DRR conference in Sendai, Japan, in March 2015, which will build a post-2015 framework to follow the Hyogo Framework for Action. Caribbean countries in particular stressed that achieving middle-income status does not reduce vulnerability, as their susceptibility to disasters – low-lying landmass, extensive coastlines and remote locations – remains the same.

Both the SAMOA Pathway and the Apia Declaration emphasise the need for SIDS to be active in shaping the international agenda in the coming months. The Association of Small Island States (AOSIS) specifically calls for the urgent operationalistion of the Warsaw International Mechanism for Loss and Damage associated with climate impacts, and for a permanent seat on the Mechanism’s Executive Committee to be allocated to SIDS.

In recognising SIDS as a special case for development – and they are the only country group to have had a UN Year of their own (2014) – the international community reaffirms our common future.

The many partnerships that were announced during the conference highlighted that by virtue of their small size and resource scarcity, SIDS themselves can model the prospects for sustainable development to be undertaken on a much larger scale. Renewable energy was a particular focus in this regard, including through the opening of the SIDS Dock treaty on cooperation among SIDS for accessing clean energy finance and technology.

Moreover, the wide-ranging agenda for the partnership dialogues in Samoa, which included health, social development and gender issues, illustrated the need to address sustainable development on multiple fronts – a practical accompaniment to ongoing discussions of the post-2015 development agenda. This aspect of the SIDS conference has already fed into the planning of the Climate Summit: UN Secretary-General Ban Ki-moon’s office announced the creation of two additional Ministerial sessions at the Summit, which he said are inspired by the focus on partnerships just seen in Samoa.

In a terrestrially focused world, SIDS are often said to be the canary in the coal mine, bearing

early witness to the impacts of climate change. The Samoa conference suggested that SIDS could also become bellwethers for sustainable development, modelling whole-of-society approaches to renewable energy, waste management and other aspects of sustainability, and acting as stewards of the oceans on behalf of all humanity.

Swedish diplomat Bo Kjellén, who chaired some of the Working Group discussions leading up to the first Rio summit in 1992, noted that a small group of Latin American countries influenced the content of the CBD, when it was negotiated, and that, similarly, the Convention to Combat Desertification would likely not have taken shape without the actions of some African countries. Could SIDS, located at the confluence of security and environment policies, be the moving force that brings the global community closer to sustainable development? Some participants in Samoa suggested that, through coalition building, SIDS may now be the ones who leverage their small size to swing an ambitious climate agreement in 2015.

© IISD. For more information, please visit sd.iisd.org, where this article originally appeared.

The International Institute for Sustainable Development is a Canadian-based, international public policy research institute for sustainable development.

Through

coalition

building,

SIDS may

now be the

ones who

leverage

their small

size to swing

an ambitious

climate

agreement

in 2015.

Photo Below -Climate change in

action, Kiribati.

Global Island News

11 —————

Responsible, well-regulated island IFCs play a central global role that goes beyond tax mitigation, offering fantastic opportunities for both corporations and

individuals alike. Under ever tighter scrutiny from various forces ranged against them, island IFCs have been quick to adapt to ensure compliance with new directives from various international bodies, and have made proactive efforts to combat tax evasion and illicit tax flows as part of a concerted effort to have legitimacy bestowed upon them.

In this section, we draw attention to the force for good credentials of this misunderstood and much maligned sector, which offers islands a rare opportunity to diversify, innovate and grow into fiscally independent jurisdictions, unchecked by the usual restrictions associated with geography.

FINANCIAL SERVICES

Global Island News Financial ServicesPhoto C

C by C

hris Potter

————— 12

The British Virgin Islands (BVI) is an international finance centre which allows

for legitimate risk management and financial planning and acts as an essential conduit for foreign direct investment (FDI) into developing regions of the world. Since the passing of its trailblazing IBC Act over 30 years ago, the BVI has worked in close consultation with the private sector at every turn to ensure its regulation and legislation are fit for purpose, therein lying the secret of the jurisdiction’s success and enduring appeal. In addition, the BVI has become the ‘go to’ IFC in China, thanks in part to its capacity to mitigate legal and financial challenges related to the successful management, ownership and control of investments into and out of that country.

Having taken a distinctly proactive stance in respect of compliance with the prevailing winds of the day, the BVI is leading by example and shining a light on the path for other IFCs to follow. It has also displayed a proven capacity to help facilitate highly skilled training and employment opportunities for locals, ensuring talent meets opportunity within the BVI and a brain drain is avoided.

Facilitating trade and growth

Premier and Minister for Financial Services, Dr. the Honourable D. Orlando Smith, OBE has a clear vision of the direction in which he wants to take the BVI and how he intends to perpetuate the jurisdiction’s pre-eminent global status. He is clear that the BVI’s financial services sector plays a significant role in the facilitation of global trade and economic growth by connecting markets and supporting investment and capital flow. This is in large part, Premier Smith points out, due to the 30 year success of its flagship product, the BVI International Business Company (IBC), which has provided an innovative legislative and regulatory structure based on English common law, and “allows companies to transact business across borders in an effective and efficient manner, while complying with international standards of transparency and regulation.” In addition, it has spawned a number of other products, such as BVI trusts, funds and captive insurance, which have further fuelled growth and development, both at home and abroad.

Collaboration and cooperation

In accordance with its status as a financial centre of major

global importance, Premier Smith stresses that “the BVI places great importance on collaboration and cooperation in order to ensure the strength, integrity and transparency of the global financial system.” He explains that the BVI cooperates with all jurisdictions, guided by the standards of bodies such as the International Monetary Fund (IMF), Financial Action Task Force (FATF) and the Organisation for Economic Cooperation and Development (OECD). Both in respect of these activities and all others, it is a jurisdiction that has become synonymous with transparency, regulation, collaboration, enforcement and cooperation.

Going forward, Premier Smith explains that “the BVI will continue to lead in working with other IFCs to uphold the importance of IFCs as an integral part of a stable and trusted global financial system.” Addressing the issue of the potential danger of diluting the BVI’s competitive edge, the Minister for Financial Services points out that this can be avoided whilst still achieving great things, by cooperating and collaborating on non-competitive issues, such as ensuring a level-playing field for all finance centres, whether they are onshore or offshore.

BVI LEADING BY EXAMPLE

The Premier

is particularly

enthused

about the

on-going

consolidation

of the

jurisdiction’s

relationship

with Asia.

Global Island News Financial Services

Premier and Minister for Financial Services, Dr. the Honourable D. Orlando Smith, OBE discusses the reasons behind the British Virgin Islands’ success and enduring appeal.

Photo Right -BVI Commercial

Court.

13 —————

Delivering on the home front

On the question of whether the 60% of BVI Government revenues, which the financial services sector contributes, are positively impacting BVIslanders’ and Belongers’ lives on the ground, Premier Smith explains that great efforts have been made to ensure that those who call BVI home can secure the requisite training to gain the skills required to access the specialised job opportunities that have come with the growth of the sector.

This is achieved by way of a strategy which promotes the use of scholarships, apprenticeships and other programmes that provide exposure, education and training to young persons.

With the financial services sector so central in driving the BVI’s socio-economic growth and infrastructural development, education and training have been placed centre stage. To this end, a BVI text to support the introduction of financial services at the secondary level has been provided. In addition, Premier Smith explains that “we have developed a strategic approach to increasing capacity within the industry through our Financial Services Institute (FSI), which is situated at our community college and delivers industry standard training provided by UK based training institutions.”

A public-private partnership

For many years the BVI has ensured it has met the evolving needs of the private sector by consistently working in close concert with it to inform the direction its financial sector has taken. This public-private partnership is perhaps best evidenced in the evolution of the BVI’s legislative structure that supports the industry, with landmark legislation, such as the 2004 BVI Business Companies Act, advancing the IBC and further enhancing

the BVI’s offer to international businesses. Premier Smith further remarks that “a full review into the existing legal and business framework of the jurisdiction is currently being finalised in collaboration with the private sector through a host of committees, to help diversify our offering and lay the foundation for sustainable growth into the future that is in line with the emerging market trends.”

The BVI and Asia

The Premier is particularly enthused about the on-going consolidation of the jurisdiction’s relationship with Asia, which has seen it now become the second largest source of FDI into mainland China after Hong Kong. Thanks to the BVI’s status as a successful, transparent, trustworthy and well regulated business hub, he points out that BVI Companies are “behind many of the most important infrastructure investments and transactions that have helped shape modern day China.”

The BVI’s trusted and established relationship with China was further strengthened in September 2013 through the launch of an office in Hong Kong, thereby creating a hub for China and the wider Asia Pacific region. Premier Smith explains that this “physical presence in Asia has given a new dimension to the BVI, enabling the jurisdiction to be even more responsive to the needs of businesses in these markets.” In doing so it has led to the development of innovative new products, services and legislation.

Compliance

Premier Smith is confident that the BVI will win the battle for hearts and minds in its quest for international validation, assuming regulation of the sector is global and on the principle of a level playing field. He explains that “setting the highest standards of

“The BVI places

great importance on

collaboration and

cooperation in order to

ensure the strength,

integrity and transparency

of the global financial

system.”

————— 14

transparency and regulation has always been and will always be a key part of the BVI’s plans for retaining its competitive edge.”

It is hard to argue with the evidence, the BVI having one of the most stringent anti-money laundering (AML) procedures to combat financial crime, as well as a clear and firm subscription to the initiatives of the OECD, FATF and United Nations. Moreover, in the process it has created an enviable reputation for responsiveness to the business community and a comprehensive approach to legislation and regulation. As the Minister for Financial Services puts it, the jurisdiction “currently meets and in some cases exceeds OECD standards and has a higher level of compliance than some OECD members.”

Conclusion

The BVI remains the international financial centre other jurisdictions aspire to be, not least because of its sound regulatory structure, compliance with international standards and consistent transparency practices, but how to sum up the secret of its success? Premier Smith puts it like this:

“The BVI offers a balance between a sound regulatory framework that meets and in

most cases exceeds international standards, a business friendly operating environment, and a government committed to the development of innovative legislation and policies; all backed by an efficient and respected court structure based on the English law and a cadre of world-class professionals supporting the industry.”

Dr. the Honourable D. Orlando Smith, OBE is the Premier of the Virgin Islands.

As the leader of Government business, his portfolio includes the coordination of government policies, economic planning, investment promotion, tourism, immigration, gender affairs, e-commerce, regional affairs, information and public relations, among other key areas.

As the Minister of Finance, Honourable Smith is responsible for the overall financial management of the Territory, its budget reporting, treasury, tax, long-range planning and transparency.

As the leader of the Financial Services sector, Premier Smith is tasked with ensuring that the BVI is a top-tiered

financial services centre, offering a range of services in investment and wealth management. Additionally, he is responsible for ensuring that the industry achieves effective implementation of, and compliance with, established financial standards, components he sees as critical to a robust legal, regulatory and enforcement machinery.

Before that, Premier Smith served as Chief Medical Officer, the leading medical position in the Territory and surgeon for 17 years from 1979-1995. In 2000, he was named in the Queen’s New Year’s Honours List and was awarded an Order of British Empire (OBE)

for his years of outstanding and dedicated service to his BVI community.

He entered the political arena in 1998, forming the new National Democratic Party. Following the party’s first election, he served as Leader of the Opposition. In 2003, his team won a majority and he was sworn in as the Territory’s first Chief Minister to be elected by the people. In 2007, after his party was defeated in the general elections, Honourable Smith became the Leader of the Opposition. In the 2011 general elections, his team rebounded, and won an overall majority.

“(The BVI) currently

meets and in most cases

exceeds OECD standards

and has a higher level of

compliance than some

OECD members.”


BVI Financial Services Commission.

15 —————

A leading international finance center for nearly thirty years, the Cook Islands is

a prime choice for sophisticated international services for the most discerning wealthy clients and corporate entities. Located in the South Pacific northeast of New Zealand, east of Tahiti, and south of Hawaii the country, comprised of fifteen islands and 13,000 people, boasts an ideal location and a global client reach for its legal and financial services. Part of the British Commonwealth, the Cook Islands has a stable Parliamentary system of democratic government. Popular with clients of countries with a Common Law legal system, the jurisdiction also attracts an increasing number of clients from Civil Law jurisdictions due to the country's strong legislation related to international financial services.

Close ties with New Zealand allow the Cook Islands access to the New Zealand judiciary from which it draws its judges in the High Court. This ensures a sophisticated and fair justice system providing confidence to the corporate entities and individuals who use the international financial services of the jurisdiction.

Known best for its trust legislation, the Cook Islands also offers corporate entity formation through International Companies, Limited Liability Companies, Foundations, and International Partnerships. Legislation also allows for various insurance services including Captive Insurance, and the jurisdiction maintains access to premium banking services through relationships with international banks. Trust companies also provide a wide array of administrative services to allow centralised and efficient operation of client structures. The jurisdiction also has a strong Maritime Registry, with representatives in countries all over the world, including China. As the client composition of the jurisdiction continues to diversify, the integration of multinational wealth and corporate services in an international best practices framework strengthens the quality of industry work.

The first country to create legislation allowing for modern asset protection trusts, the Cook Islands is known for its innovative services and ability to respond quickly to changes in and demands from the global market. With the recent changes in the global banking environment, the Cook Islands finds itself ranked very highly for its regulations and oversight of the financial industry. With a supportive government and proactive industry, the jurisdiction has been able to maintain its sophisticated legal and financial services at competitive prices and, most importantly, with an outstanding level of service.

For more information, visit www.cookislandsfinance.com.

COOK ISLANDS

Known best for its

trust legislation, the

Cook Islands also

offers corporate entity

formation through

International Companies,

Limited Liability

Companies, Foundations,

and International

Partnerships.Jenner Davis, CEO, Cook Islands Financial Services Development

Authority (FSDA).

Photo CC

by benedict adam

————— 16

To what extent are reputable small island IFCs furthering the cause of sustainable

development, both locally and beyond their shores?

Finance is a sustainable industry for small islands – these are jurisdictions that mostly lack significant natural resources and are simply too small to sustain themselves doing anything besides finance and tourism. Finance makes relatively few demands on the local environment compared to tourism because it involves far fewer people. If a jurisdiction like the Bahamas or Cayman had to make up for the loss of their financial sectors by expanding their tourist sectors, it would vastly increase the environmental strains on those jurisdictions’ environment.

Would you like to see small island IFCs doing more to speak with one voice in defence of their force for good credentials, thus affording them greater leverage at the global regulatory negotiating table? Have you detected any reluctance to collaborate with other jurisdictions for fear of diluting their USPs and competitive edge?

It is tricky for IFCs to collaborate in defense of their industry, since they are often competing with each other for business. However, they do have some common interests in pushing back against some of the more unreasonable measures coming out of the larger jurisdictions. The US adoption of FATCA is protectionism pure and simple for the US, and I think both the US and many of the EU jurisdictions are engaged in a campaign (coordinated through the OECD) to raise the cost of doing business in IFCs in an effort to inflict “death by a thousand cuts” on them. So, working together more in the future may be necessary. In particular, I think they could collaborate more on developing the intellectual support for the case for regulatory competition among jurisdictions. Towards a Level Playing Field did a wonderful job in showing the intellectual poverty of the OECD’s earlier efforts to shut down tax competition. If a number of jurisdictions got together, I think they could fund more work like that and make a real difference.

Do you view the various international regulatory compliance criteria as draconian and over-zealous, or do you think the prevailing winds have, to a degree, acted

to compel small island IFCs to put their houses in order and provided them with an international platform to set the record straight as to their integrity?

Lotta Moberg and I have a paper that looks at the OECD’s efforts to shut down tax competition and I think the only reasonable conclusion one can draw from that is that the large jurisdictions are engaged in an anti-competitive effort to stifle competition from IFCs. It is certainly the case that the IFCs have invested a considerable amount in improving their regulatory efforts, but I’d hesitate to attribute too much of that to the anti-competitive activities of the UK, EU, and US. (The paper is Cartelizing Taxes: Understanding the OECD’s Campaign Against ‘Harmful Tax Competition’ ).

Are you satisfied that small island jurisdictions are sufficiently benefiting from their IFC sectors to the tune of revenues positively impacting their own citizens’ lives on the ground?

It is clear that IFCs generate substantial revenue for their governments, money that pays for all sorts of services for the

SMALL ISLAND IFCS - SETTING THE RECORD STRAIGHT


“I think (IFCs) could collaborate more on developing the intellectual support for the case for regulatory competition among jurisdictions.”

Professor Andrew Morriss Dean & Anthony G. Buzbee Dean’s Endowed Chair, Texas A&M School of Law.

17 —————

citizens. They have other impacts – there are lots more accounting jobs, for example, in a place like Cayman than there would be in the absence of the offshore sector. Caymanians have more professional jobs per capita, even without counting the expats, than the size of the population would otherwise support. And bringing in professionals does all sorts of good things for expanding the local market for services and goods, and so improving the local population’s access to everything from air transportation to restaurants. So, I think there’s little doubt that having an IFC is a significant benefit, even if it does tend to mean more traffic jams and higher real estate prices as well.

Are you confident that the battle for minds can be won by small island IFCs? Is there anything more they can do to

help the tide of opinion to turn in their favour, or are they at the mercy of external forces beyond their control, where political expediency must inexorably outweigh what is sensible, just and supportive of the global public good?

I think IFCs can fight back harder than they are now. Towards a Level Playing Field did wonders for the debate ten or so years ago - just getting people out there, telling the story about what these jurisdictions do. More recently, Jersey Finance has had considerable success getting the word out in the UK government about the contributions it makes to the UK economy by commissioning a solid study by a consulting firm. The problem is that politicians like Sen. Carl Levin and Pres. Obama in the US like to bully these small

jurisdictions as part of their domestic political agendas. To fight that, it is going to take a sustained effort to regularly correct the media in the US, UK, and EU when they make mistakes. IFCs need to address popular culture too – it is not just in The Firm that IFCs look bad. Hollywood loves to have bad guys flee to exotic locations, and IFCs need to push back when they are misrepresented in popular culture as well.

Which jurisdictions, in your view, are getting it right? What has made them models for others to aspire to, with respect to such issues as the growth and success of their IFC sectors being inextricably linked to institutional reform?

The two jurisdictions I know best are Jersey and Cayman. I

think both have done things that enhance their position. Cayman’s development of the captive insurance industry is a great example of how a non-tax driven regulatory competition produces huge benefits for everyone. Vermont is a stronger competitor because it has to compete with Cayman; more Americans get cheaper health care because of the growth of health care captives – often run by charity hospitals. Jersey has done a terrific job of providing business structures for doing business in the UK and in developing countries, especially in Africa. And they’ve done well by getting those stories documented in solid reports. In both cases, I think we see a collaborative model in which the local government and the financial industry work together to build something that works.

“Caymanians have more professional jobs per capita, even without counting the expats, than the size of the population would otherwise support.”

National flag of the Cayman Islands.

Photo by Huebi

————— 18

Introduction

Small island states have long sought to develop conventional export-based economies but are

disadvantaged by size, location and a range of other factors. The wide-ranging challenges faced by small island states, especially in succeeding in the world economy, have been widely documented, and include environmental, economic and social factors. Generating modern economic activity, let alone economic growth, has proved difficult for a range of reasons, stemming from limited human and physical resources, inadequate infrastructure, high energy costs and wages and the lack of economies of scale. Set against the range of disadvantages, the comparative advantages of smallness and isolation are

few. Conventional development proposals have thus encouraged small islands to develop niches where they have some form of comparative advantage. However, islands have inevitably faced competition from larger countries, with economies of scale and intervening opportunities for market access, hence only the most exceptional products, such as ylang-ylang in the Comoros, have uncontested markets. In the Channel Islands, Guernsey and Jersey respectively once had thriving tomato and potato industries, but these have largely disappeared. Tourism has been successful in many small islands, otherwise lack of success in achieving development through conventional means – local agricultural or manufacturing production (niche or otherwise) and thus trade – has contributed to

the emergence of a wide range of unusual and unorthodox strategies for achieving access to incomes, economic growth and development, primarily in a range of service activities. This paper seeks to examine a new variant and niche in the service sector from the small Channel Island of Alderney.

From the late 1960s, when international capital became more mobile and rapid global telecommunications were established, many small states became offshore financial centres of various kinds: ‘attempting to become a tax haven was a sensible livelihood strategy for many micro-territories faced with the end of colonial rule and the lack of other obvious sources of income or export earnings’. The Channel Islands, embracing the two Crown Dependencies of the

United Kingdom, Jersey and Guernsey (the latter including the islands of Sark and Alderney, each with their own parliaments), though not facing decolonisation, experienced similar economic circumstances, and its tax haven activities expanded. Tax havens experienced boom years from the 1970s when the electronic mobility of capital became particularly rapid, deregulated markets and privatisation were the norm, international trade and investment were expanding and rapid increases in global oil prices created a surge in the volume of Eurodollars that required deposit.

However, this century has brought a global assault on tax havens, from various states (including the United Kingdom), the EU and civil society, through pressures to reduce tax evasion

ALDERNEY: GAMBLING, BITCOIN AND THE ART OF UNORTHODOXY

Small islands are disadvantaged by conventional development strategies and have sought unusual means of achieving economic development and raising their global profiles. The small Channel Island of Alderney, with a largely non-existent physical resource base, and steady population decline, has sought to develop several service sector activities, increasingly involving the internet and virtual activities. Internet gambling has proved successful. Bitcoin minting offers unique possibilities. Alderney has achieved economic development without significant local assets other than creativity and ingenuity, and a somewhat distinctive political status.


By Professor John Connell, School of Geosciences, University of Sydney.

19 —————

and associated illegal activities, and to challenge legal but complex tax avoidance schemes which are seen to go beyond what is ethically acceptable, particularly since the financial crisis of 2008. Consequently, the activities of several offshore finance centres were significantly curtailed by external intervention. Corruption risks from poorly monitored offshore banking activities, rampant in the 1990s, substantially declined following global concern with terrorism and money laundering, but local economic benefits were greatly reduced, prompting countries with tax havens to seek to diversify into other areas.

At the same time, various small island states developed even more unusual strategies for generating revenue. Some, like Tuvalu and Marshall Islands, established shipping registries providing flags of convenience for ships that never enter their waters. Several states have sold diplomatic passports, mainly to Chinese entrepreneurs. Hosting ‘reality’ television shows has brought in occasional wealth (and tourist publicity). Fiji earned about $20 million from staging Celebrity Love Island in 2005,

and the Cook Islands, Vanuatu and Samoa have all hosted versions of Survivor and other series. For many years the sale of stamps, later ‘telephone-sex’ and the renting of its top-level internet domain (.tv) proved valuable economic strategies for Tuvalu. Throughout this century, .tv has generated US$4 million a year for Tuvalu. Making land available for second homes, military exercises and occupation, and refugee detention may provide substantial rental incomes.

Stamps and coins have long been important to many small island jurisdictions. Some of the smallest dependent territories, like Pitcairn and Wallis and Futuna, have had significant overseas markets (often for stamps whose designs had nothing to do with those territories, and which never actually emanated from there) while multi-island states such as the Cook Islands and Tonga brought out stamps for particular islands. Pitcairn, which markets both stamps and its domain name, has been described as a ‘postage stamp republic’. At least in the 1980s, stamps were valuable and successful forms of economic activity, but maintaining that has

proved impossible, because of the propensity of several states to bring out too many stamps of limited aesthetic value or local relevance and the global decline of philately.

Local coins have also been minted for many small states; Niue licensed the minting (in New Zealand) of SpongeBob SquarePants coins for Nickelodeon and Star Wars coins for Lucas Films in 2011. However, such gimmicks usually earned little and were quite unsustainable. Stamp, coin and passport sales, being a tax haven or providing flags of convenience are disproportionately more attractive to the smallest states, simply because even the little revenue that they generate has some value. Passport sales, as in Vanuatu, and casinos in the Marianas, have posed serious regulatory and management problems, while other activities can be hard to monitor and engender some social costs. Economic benefits may be small.

In such varied ways, rental incomes are particularly significant in smaller dependent territories, where autonomous

sources of income are few. Yet even service incomes are not easily won, and fluctuations in morality (that ended Tuvalu’s ‘phone-sex’ income), global tastes (the virtual demise of philately) and especially strategic interests alter their significance. That they remain of considerable significance is indicative of the limited status of conventional development strategies. That is particularly true for the very small island of Alderney where a number of distinctive strategies have been introduced.

Alderney

Alderney is the third largest island in the Channel Islands, some 16 km off the coast of France, and is part of the Bailiwick of Guernsey. Somewhat isolated from the larger Channel Islands, and with its own States government, it has a land area of just 8 km2 and a population of 1,903 in 2013. A trivial, residual agricultural and fisheries economy has given way to tourism and a number of other service activities. Alderney is a self-governing democracy, with a Parliament (the States of Alderney) of ten members, but is heavily reliant on Guernsey for

Small islands are

disadvantaged by

conventional development

strategies and have

sought unusual means

of achieving economic

development and raising

their global profiles. St. Anne High Street.

————— 20

public service provision, such as policing, health and education. Defence and foreign policy are covered by the United Kingdom; however the island is outside the European Union and is an offshore finance centre (much like Jersey, Guernsey and the Isle of Man, but on a much smaller scale).

In this century, the island population had declined rapidly. The population was 2,294 in 2001 hence decline is substantial, and ageing is problematic (with the population over 65 increasing from 24 percent to 33 per cent between the two census dates) and has posed questions about the sustainability of the island and its economy. There has been a steady immigration of retirees and an outmigration of those in working age groups, hence problems in maintaining and developing small businesses. However tourism is

slowly reviving with the island receiving about 3,000 visitors a year, but it is a high-cost tourism, and numbers are a third of what they were in the 1980s. Shops are closing faster than they are opening, and new ones tend to be run as hobbies, hence employ few people, and/or are seasonal. Thus a new bookshop, opened in 2010, ‘won’t exactly be crammed with customers; it is seen more as a service to the community’. Consequently, there are few local employment opportunities. While the island’s official webpage states ‘For a growing community of ambitious entrepreneurs Alderney offers a compelling mix of state-of-the art technical resources, supportive government, low taxation and a unique family-focused lifestyle’, in practice population decline is proving hard to redress.

Corruption risks from

poorly monitored offshore

banking activities,

rampant in the 1990s,

substantially declined

following global concern

with terrorism and money

laundering.


21 —————

Most immigrants are retirees who have moved because of Alderney’s status as a tax haven and because constraints on immigration are less than in the other Channel Islands. Alderney residents have a 20 percent income tax rate (substantially less than in the United Kingdom) and no VAT, inheritance tax or capital gains tax. Alderney is thus both a tax haven – with about 500 registered companies – and haven for those who seek to pay low taxes: simultaneously an onshore and offshore tax haven. A substantial consequence of a low rate of income tax is the need to generate additional income to provide the range of services that a somewhat isolated small island necessarily requires. As elsewhere, greater regulation of offshore finance centres has posed problems for the Channel Islands generally, and for Alderney; hence, a diversity of development strategies have been sought that both increasingly typify some of the trends and transitions that have occurred in several small island states, and have also gone beyond them, and indicate how in very small islands, unusual strategies, of little value in large states, can be of considerable benefit.

Alderney has issued its own commemorative coins since 1989, in conjunction with the United Kingdom Royal Mint. The coins, issued to commemorate important events in local history, have been popular throughout the world with coin enthusiasts and occasional collectors. The coins are sold in Alderney and through the Royal Mint. Alderney has marketed its own stamps since 1983. Alderney stamps are released annually as commemorative issues, backed up by a definitive set every decade. The stamps are produced by Guernsey’s Postal Administration. Since the first issue, unlike many comparable small jurisdictions, the stamps have largely reflected island themes, including the island’s military history (regiments that were garrisoned there and the forts which they manned),

ships (both naval and civilian) and wildlife (mainly birds, but also beetles and marine life). Concorde’s last flight and what would have been the 70th birthday of John Lennon have also been marked by special coins. The focus on locality, and the relative infrequency of production, has enabled them to retain a significant market. Neither coins nor stamps, however, constitute expanding markets.

Development opportunities expanded with superior electronic communications, the emergence of the internet and the arrival of two internet gambling companies who moved to the island in the 1990s and established state of the art IT links. The development of IT has enabled Alderney to become one of relatively few jurisdictions with internet gambling. At the margins of legality in some jurisdictions, internet gambling provides significant revenue for a small number of countries, notably Antigua and Barbuda, which famously managed to use WTO legislation to fight off massive legal pressures from the United States to successfully retain its industry. Other jurisdictions that have established internet gambling are few, but include Gibraltar, the Isle of Man and Alderney. Rather like Antigua, each are small jurisdictions, but backed by a powerful gambling industry, which raised questions over the extent to which internet gambling was a vice or a virtue. Indeed, critics have defined Alderney simply as ‘a playground for online, offshore gambling’. Internet gambling began in 1997 and was quickly attractive to gambling companies because of the island’s lack of gambling and corporation taxes. At the peak of gambling on Alderney in the early 2000s, in the sense that the number of gambling industry employees on the island was greatest, almost 100 jobs were generated on the island but these gradually disappeared as gambling became exclusively online.

A substantial consequence

of a low rate of income tax

is the need to generate

additional income to

provide the range of

services that a somewhat

isolated small island

necessarily requires.

————— 22

Alderney is reputed to transmit more internet e-gambling traffic than any other place on the globe, including Antigua, and is larger than the combined activity of its three European rivals: Isle of Man, Gibraltar and Malta. Likewise, it was reputed to have a higher degree of probity than many competing jurisdictions. The IMF reported that egambling licence holders on Alderney had over 3 million customers and conducted £2.1 (US$3.3) billion worth of transactions in 2009. Although the regulatory body, the Alderney Gambling Control Commission (AGCC), is based in Alderney (where it supports 19 jobs), all the high powered IT infrastructure is located in Guernsey, since Alderney does not have an adequate electricity

supply to power the necessary data centres. By 2011, it was estimated that the AGCC’s contribution to Alderney had amounted to £12 (US$20) million over the previous six years, which had helped repair the quay, provide a water filtration plant and rebuild the court house. The gambling industry was still steadily growing and by 2012 some 57 companies were registered by the AGCC, an increase from the 34 of 2007. In 2012, licence fees contributed £4.8 (US$ 8) million to Alderney, enabling an overall revenue of £2.8 (US$4.4) million, after the deduction of staff costs and other overheads. To facilitate establishing a global e-commerce, e-gaming or e-betting presence, the States of Alderney has passed legislation to further the development of ecommerce

on the island and to support the electronic transactions of businesses.

Bitcoin

Thus far, Alderney has followed a strategy broadly similar to that of the other Channel Islands and with a range of service activities with parallels elsewhere. Most recently it has sought to go beyond these into uncharted virtual territory. Late in 2013, Alderney announced that it would seek to mint Bitcoins. Bitcoin is ‘an open source peer to peer electronic money and payment network’ that has no visible presence and was invented by an anonymous American (or group of people) in 2009 (under the pseudonym ‘Satoshi Nakamoto’). Digital

currencies, like Bitcoin, are forms of electronic money that effectively act as an alternative currency. Bitcoin has thus been described as a ‘cryptocurrency’ because it uses cryptography to secure transactions. It differs from virtual money in being used in transactions with real goods and services. Cryptocurrencies have been designed to gradually introduce new units of currency, but placing a cap on the total amount of currency in circulation, to copy the scarcity (and value) of precious metals and to avoid hyperinflation. Specialised computers, using complex systems, prevent people from copying and spending the same bitcoin multiple times, a particular problem for cryptocurrencies. Bitcoins are stored by associating

The

development

of IT has

enabled

Alderney to

become one

of relatively

few

jurisdictions

with

internet

gambling.

Global Island News Financial ServicesPhoto C

C by B

TC K

eychain

23 —————

them with cryptographically generated addresses, which themselves are stored in ‘digital wallets’ on web services, on local hard-drives and mobile devices, or even on paper print-outs. No central control or regulation exists, hence it is not backed by a central bank, or by gold, reducing its acceptance as a means of exchange.

For the first two years of their existence, crypto-currencies gained gradually increasing attention from the media and public, but Bitcoin has been by far the most prominent. After 2011, interest rapidly increased. The publicity attached to Bitcoin led to its value increasing, reaching a peak for an individual ‘coin’ of US$1,242 in November 2013, having climbed from as low as US$40 in March. A month later, its value was around US$600, after China banned the country’s banks from trading in it, and hovered around US$870 in January 2014. That rise gave Bitcoin greater

positive exposure in a wider context, after a phase when some transactions were associated with illegal activities (with, in 2012, the FBI closing down one service – Silk Road – which specialised in illegal drugs), and Bitcoins have increasingly been used as payment for legitimate products and services. Businesses have an incentive to accept the currency because transaction fees are lower than bank fees and the 2 to 3% typically imposed by credit card processors.

Bitcoin has proved particularly attractive to libertarians who dislike quantitative easing and all forms of governement regulation. Speculators have however also been attracted to Bitcoin, contributing to volatility and price swings, and critics have warned of speculative bubbles. Its supporters, however, believe that it could be widely adopted as a means of making payments outside traditional banking systems. Nonetheless, in early 2014, the

use of Bitcoin in the retail and commercial marketplace was still relatively small compared with its larger use by speculators (e.g. Daily Finance, 2014). Its eventual future in trading systems therefore remains uncertain.

Centred on this novelty, and the growing interest in and publicity for Bitcoin, Alderney has sought to become a hub for controlled legal trading in Bitcoin, raising the idea of creating a physical coin to back the virtual currency, and with support from the United Kingdom Mint, its longstanding commercial partner in issuing commemorative coins. Alderney also sought to become a hub for Bitcoin businesses, offering a range of services and launching these by issuing a hard Bitcoin.

Alderney was therefore seeking to be the first jurisdiction to mint physical Bitcoins, amidst a global race to take advantage of the rapidly growing virtual currency, and thus become the

first international centre for Bitcoin transactions. That requires setting up a cluster of services that are compliant with anti-money laundering rules, including exchanges, payment services and a Bitcoin storage vault. It would be the world’s first international centre for Bitcoin transactions. Holders of Alderney Bitcoins would not be able to use them in stores but would be able to exchange them for virtual Bitcoins by travelling to Alderney. They would not otherwise be official legal tender. The virtual Bitcoins backing the physical coins would be held in digital storage in Alderney. Alderney would receive royalties from sales of the coins which could be redeemed for sterling at any point in Alderney for the price of the Bitcoin at that time.

Cryptocurrencies have been designed to gradually introduce new units of currency, but placing a cap on the total amount of currency in circulation, to copy

Alderney is

reputed to

transmit

more

internet

e-gambling

traffic than

any other

place on the

globe.

————— 24

the scarcity (and value) of precious metals and to avoid hyperinflation.

The special physical Bitcoin was intended to be part of the Royal Mint’s commemorative collection, which includes limited edition coins and stamps that are normally bought by collectors, thus enabling its arrival to gain wider publicity and a means of legitimisation. The coin would have a gold content – a figure of £500-worth (US$830) was proposed – so that holders could conceivably melt and sell the metal if the exchange value of the currency collapsed. The physical coins, like other similar tokens, would be collectors’ items rather than circulated, with a gold content that would further their appeal and allow them to retain value should Bitcoin’s price crash. More importantly, they would also serve as promotional tokens for the more ‘serious’ Bitcoin payment and exchange services.

However, Bitcoins, and other digital currencies, still have no

legal recognition as currencies in any major jurisdiction. Although the UK government does not recognise Bitcoin as a currency, during 2013 it became more open to hearing the case for its regulation by a jurisdiction like Alderney. Like the UK, many legal authorities are still struggling to understand this crypto-currency, let alone develop appropriate legal regulation for it. No legislation has yet been tabled specifically for digital currencies, though exchanges and payment processes generally fall under anti-money laundering regulations. While Bitcoin is legal, it is a step back from making financial transactions more traceable in an age of electronic banking; hence, Alderney’s proposal may not gain Royal Mint acquiescence. There is also concern in Guernsey about the potential reputational downside of this project for the financial industry of Guernsey which is dependent on a ‘whiter than white image’ where the Bitcoin initiative may be just a bit

of ‘financial quackery’. The head of Guernsey Finance, responsible for promoting the island’s financial industry globally, has commented,

We are in an ever-changing world … if the Bailiwick can play a part in addressing concerns by developing the currency, including its regulation, that could be very positive. In turn, we may enhance our image as an innovative place to do business and may even be recognised as a leading jurisdiction in the field; but any move in this direction may need to carry the label ‘proceed with caution’.

Moreover, if Alderney’s proposal succeeds, this would be a major development for Bitcoin, which has struggled to be recognised by governments as a legitimate form of payment due to its early association with illegal activities.

Alderney has sought to become a hub for controlled legal trading in Bitcoin.

Still, given the real problems attached to developing a physical bitcoin (notably that the value of the two things separately – gold and Bitcoin – would be higher than the value of the two together), it may be that the proposal never leads to the creation of a physical entity. Yet, already it has proved a valuable means of publicity for Alderney moving towards becoming a legal jurisdiction for trading and managing bitcoins. It is an innovative and intriguing proposal that may succeed and so combine financial benefits with tourism and a new place branding.

Conclusion

Global governance and participation in the international economy have provided opportunities for small states and islands but also challenges. In the long run, and thus far, these challenges have outweighed the costs, hence small islands have sought increasingly ingenious ways of responding to conventional


25 —————

disadvantages in an increasingly global economy. Inability to compete successfully in the more obvious components of the modern economy, other than tourism, has resulted in less conventional strategies. Over time those strategies have increasingly involved variants on ‘invisible’ service economies – such as banking, insurance and internet gambling – where physical impacts on the islands are usually non-existent. In short this has meant breaking out of the physical resource trap.

Alderney has gradually devised a range of means of intersections with the global economy that have increasingly taken virtual form. Alderney currently generates £40 (US$65) million a year from online gambling, but must pay £37 (US$60) million to Guernsey, on which it relies to provide public services for its 1,900 inhabitants. The Bitcoin proposals would not only provide a path towards greater financial independence, but also diversify the economy on the island. Alderney’s approach to Bitcoin emphasises intriguing

synergies between numismatics, e-commerce, tourism and offshore finance. While the United Kingdom handles the foreign relations of each of the Channel Islands, and Alderney is without fiscal independence, the details of such matters as the legal restrictions and controls over online gambling and trading in bitcoins, or other virtual internet activities, are subject to island law. Alderney’s small but significant political distinctiveness – even as a dependency of a dependency – has given it unusual scope in a global system.

Alderney has gradually devised a range of means of intersections with the global economy that have increasingly taken virtual form.

Governments in small island states and territories are constrained to make seemingly improbable and unorthodox economic choices, resorting to ‘pseudo-development strategies’ – such as internet gambling and Bitcoins – especially where overseas aid is non-existent and

tourism stagnant. Such options are more likely to be taken by the smallest islands, like Alderney, rather than Guernsey, where other more ‘mainstream’ options exist. The IT revolution has transformed some island development strategies. Islands that have benefited from such invisible service economies are mainly those in dependent territories where some degree of security is provided by attachments to distant metropolitan nations. Virtual finance, if backed by the UK Mint, represents a secure development. For a very small island, Alderney has been able to use its separate legislature, a measure of independence, plus legal and technological expertise in the quest for a distinct identity and a distinct structure of development: an excellent example of the ‘creative political economy’ that exists in a number of other dependent territories. Globalisation is thus both prerequisite and outcome, while global strategies both benefit from and undermine distinct political status.

However unorthodox, Bitcoins have placed Alderney – perhaps briefly – on the global map. That alone cannot be a disadvantage for a small island with a declining population. Yet it requires approval from the Royal Mint. However improbably, such apparently bizarre development options suggest that even the smallest islands, as long as they have minimal distinct political status, and an abundance of creativity and ingenuity, have the means of making some choices that enable a contemporary form of development that, beyond tourism, would otherwise be unobtainable, and which otherwise have no tangible link to local human and physical resources.

This paper first appeared in Island Studies Journal, Vol. 9, No. 1, 2014, pp. 69-78 © 2014 – Institute of Island Studies, University of Prince Edward Island, Canada.

However

unorthodox,

Bitcoins

have placed

Alderney

– perhaps

briefly – on

the global

map.

————— 26

Following a comprehensive exploration period, commercial extraction of seabed minerals is set to

begin soon.

Capital-intensive investments like these act to catalyse infrastructural development, whilst offering an unparalleled opportunity for economic diversification and a widening of the tax base. In addition, they generate skilled training and employment opportunities, create demand for local goods and services, precipitate further investment, and offer scope for building up national sovereign wealth funds.

The deep sea mining industry is a prime example of where government, industry, environmental groups and the scientific community are collaborating to forge and implement partnerships, projects and new development, which have the capacity to deliver prosperity to host territories in a responsible fashion. It’s potential to act as a pivotal driver of GDP growth for island states and territories cannot be overestimated.

DEEP SEA MINING

Global Island News Mining

27 —————

Can you provide an outline of research to date to determine the impact of deep sea

mining, with a view to assessing and mitigating its effects?

A: In the absence of test mining or commercial mining, the available information is from “Benthic disturbance experiments”. A number of these were conducted, starting in 1975 when the United States National Oceanic and Atmospheric Administration initiated the Deep Ocean Mining Environmental Study (DOMES). This five year project was organised as a collaborative effort between the National Oceanic and Atmospheric Administration and four US registered industrial groups. The project

consisted of two phases: the first, to characterise the region environmentally, and the second, to monitor the effects of industrial pilot-scale equipment tests therein. The specific objectives of the project were to develop:

(1) environmental baselines (biological, geological, physical, and chemical) at the three sites chosen as representative of the range of environmental parameters likely to be met during mining;

(2) predictive capabilities, to identify potential environmental effects of nodule recovery; and

(3) an information base, to prepare environmental guide-lines for government and industry.

As a part of the second phase, the National Oceanic and Atmospheric Administration monitored test mining operations conducted by the industrial groups in the Pacific Ocean in the late 1970s. For example, Ocean Mining Associates conducted on 10 November 1978 an integrated test of approximately twenty hours of continuous mining at 15,000 feet, during which time 400 tons of nodules were collected and lifted to the ship as various system concepts were examined. Ocean Mining Associates employed a passive towed collector unit for the tests, while another industry group, Ocean Minerals Company, used an active self-propelled collector unit for its integrated tests. In 1981 the National Oceanic and Atmospheric Administration published the first comprehensive Deep Seabed Mining Environmental Impact Statement.

The Deep Ocean Mining Environmental Study concluded, inter alia, that there was a need to look more closely into the environmental impacts on the deep seabed — including the effects of the collector unit in and near the mining tracks, and the effects of the benthic (bottom) plume on benthic life, and its food supply, away from the mining activity.

THE INTERNATIONAL SEABED AUTHORITY (ISA) Nii Odunton

Secretary-General, ISA outlines the research to date that has informed the deep sea mining landscape.

“In the

absence of

test mining or

commercial

mining, the

available

information

is from

“Benthic

disturbance

experiments.”

————— 28

The National Oceanic and Atmospheric Administration worked actively to establish collaboration with other countries. Research collaboration has been established with Japan, the Commonwealth of Independent States, and France; an exchange arrangement for scientists with the German project (see below) has taken place. The collaborative project between the USA and the Commonwealth of Independent States is a large-scale Benthic Impact Experiment.

The German ‘Disturbance and Recolonisation Experiment’ (DISCOL) was conducted in 1989 as the first long-term, large-scale disturbance

recolonisation project. The programme was financed by the German Ministry of Research and Technology and co-ordinated by the University of Hamburg. After obtaining pre-impact baseline environmental data, an area of 10.8 sq. km. in the eastern South Pacific was disturbed in February–March 1989 using a ‘plough harrow’ device. An initial post-impact sampling series was carried out immediately after disturbance; the site was revisited again for renewed post-impact sampling six months after the disturbance. Plans called for repeated visits to the site at two-year intervals to monitor the anticipated slow recolonisation process until the area was inhabited by a new, stabilised community.

“I believe that the SIDs are

taking the steps required

to secure the necessary

environmental due

diligence to enable them to

enjoy the benefits that will

accrue from the common

heritage of mankind.”


Hydrothermal vent.

29 —————

Other experiments include the Japan Deep-Sea Impact Experiment (JET) which was conducted in the western part of its license area in the Central Pacific Ocean over twelve years, from 1989; the Indian Deep-sea Environmental Experiment (INDEX) starting in 1995 in the Central Indian Ocean basin; the Russian Experimental Polygon (REP) to create a relatively large disturbance of the upper sediment layer by using a mining-simulator device, and to investigate the ecosystem response to this disturbance immediately and some years afterward, and the Chinese Environmental impact studies and equipment tests (EISET) in a lake 120 metres deep.

How does the ISA Endowment Fund promote collaborative marine scientific research?

The International Seabed Authority’s Endowment Fund promotes and encourages the conduct of collaborative marine scientific research in the international seabed area through two main activities:

By supporting the participation of qualified scientists and technical personnel from developing countries in marine scientific research programmes and activities, and

By providing opportunities to these scientists to participate in relevant initiatives.

The International Seabed Authority does not initiate the research. It identifies and obtains proposals from researching institutions who are undertaking research activities of relevance to the Authority’s work and who indicate the availability of berths and of spaces for researchers from developing countries. If applicants from developing countries apply to participate in the research programmes offered

and are qualified, the fund supports their participation.

With such an intoxicating medley of rewards now within striking distance, have you been given any cause for concern that island governments may not undertake sufficient environmental due diligence, or consult as necessary on proposed DSM activity, in their eagerness to access these new riches?

The Cook Islands, Tonga, and Fiji have enacted legislation to govern deep seabed mining, and other island governments are in the process of developing theirs. The Deep Sea Minerals (DSM) Project - a collaboration between the Secretariat of the Pacific Community and the European Union is helping Pacific Island countries in their policy, legislation and regulation development, with particular attention to the protection of the marine environment. Member countries of this project include: Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste, Tonga, Tuvalu and Vanuatu. The Project was established in 2011 and will run until 2016.

In a nutshell, I believe that the SIDs are taking the steps required to secure the necessary environmental due diligence to enable them to enjoy the benefits that will accrue from the common heritage of mankind.

Photo Right -Deep seabed

manganese nodule.

————— 30

For the global mining industry, 2018 is set to be a momentous year, as the world’s first deep

sea mine, in the waters off Papua New Guinea (PNG) at a prospect known as Solwara 1, begins production. Nautilus Minerals, an underwater mineral exploration company headquartered in Toronto, Canada and with offices in Australia, PNG and Tonga, is successfully driving the Solwara 1 project forward. In the process it is delivering economic, social and environmental solutions through a range of partnerships with government agencies, technology companies and environmental groups, opening up a vast array of valuable opportunities for a diverse range of investors.

Nautilus is the first public company to commercially explore the ocean floor for polymetallic seafloor massive sulphide deposits and has been granted the first mining lease for such deposits at Solwara 1, where it is aiming to produce copper, gold and silver.

A key partner in the Solwara 1 project is the PNG government. In December 2014 it fully funded its 15% interest in the project,

releasing a sum of US$113 million to Nautilus, and a joint venture was formed between Nautilus Minerals and the PNG state’s nominee, Eda Kopa (Solwara) Limited, a wholly owned subsidiary of Petromin PNG Holdings Limited.

Nautilus had first submitted its mining lease application after completing its environmental impact statement (EIS) in September 2008. The environmental permit was granted by the PNG government in 2009, followed by the mining lease in 2011. After a change of government in PNG in 2012, a commercial dispute emerged with Nautilus about certain elements of the joint venture, in particular the ownership of the intellectual property.

However, Mike Johnston, CEO at Nautilus, stresses that the “situation with the PNG government has now been completely resolved. I’m 100% sure that the government will remain committed to the project.” He adds that the final part of the process is the building of the production support vessel, which is now set to get underway, and is expected to take three years,

with production at Solwara 1 scheduled to commence in the first half of 2018.

Johnston explains that the PNG government is keen for the Solwara 1 project to go ahead due to the potential of deep-sea mining to bring significant economic benefits to the country, as well as Nautilus’ deep engagement with local communities and its meticulous approach to its environmental commitments.

Observing that 70% of the planet is covered by water, Johnston says: “It only stands to reason that the 30% of the planet covered by land that we keep trying to extract resources from is eventually going to be overly stressed as demand keeps rising. The mining industry is in the same sort of situation that the oil and gas industry was in 40 or 50 years ago when it started to first go offshore.”

Johnston explains that deep sea mining offers enormous potential in meeting the world’s growing demand for metals and minerals, with elements including copper, as well as nickel, cobalt and zinc, already found in large abundances. Aside from Solwara

NAUTILUS MINERALS

Nautilus is

the first

public

company to

commercially

explore the

ocean floor for

polymetallic

seafloor

massive

sulphide

deposits.

Mike Johnston, CEO, Nautilus Minerals.

With the commercial extract ion of deep sea mineral resources soon to be a real i ty, CEO of Naut i lus Minerals , Mike Johnston talked to Jonathan Dyson about how the company he heads i s leading f rom the f ront , in par tnership wi th government , industry, environmental groups , the sc ient i f ic f raterni ty and local communit ies .


31 —————

1, Nautilus holds 450,000 sq km of exploration territory, or tenement applications, in PNG, Tonga, Fiji, Vanuatu, the Solomon Islands, New Zealand and the Central Pacific, with 19 mineralised seafloor systems identified in the Bismarck Sea, and 19 in Tonga.

Johnston says that there are a number of myths surrounding deep sea mining which he describes as being “borne largely out of ignorance.” He explains that the environmental impact of deep sea mining is actually significantly less than mining on land, noting that Solwara 1’s area of impact is around 0.1 sq km, whereas for a comparable mine on land, the impacted area is just under 8 sq km.

He explains that the footprint of land-based mines includes additional facilities such as waste dumps and tailing dams, and

adds: “the beauty of sea floor mining is that we’re not having to strip large areas of overburden [waste rock or materials overlying an ore or mineral body that are displaced during mining without being processed] and we don’t produce tailings [the materials left over after the process of separating the valuable fraction from the uneconomic fraction of an ore] in PNG.”

“So the whole process is an order of magnitude better than mining on land,” says Johnston. “Overall, in a holistic sense, it gives a better outcome for the whole planet.”

In addition, while Nautilus is not directly involved in the processing, distribution and sale aspects of the supply chain, it has established a partnership with Tongling Nonferrous Metals Group, one of the largest copper smelting companies in China,

and which according to Johnston has one of the most eco-friendly smelters in the world.

Johnston stresses that Nautilus has taken a pro-active approach to each aspect of its environmental commitments. Nautilus’ EIS has been reviewed externally for the PNG government and is being used as the standard for the

proper execution of a deep ocean EIS by the International Seabed Authority (ISA) and the Secretariat of the Pacific Community (SPC)’s Applied

Solwara 1’s area of impact

is around 0.1 sq km,

whereas for a comparable

mine on land, the impacted

area is just under 8 sq km.

An assembled bulk cutter, built by Soil Machine Dynamics (SMD), one

of the world’s leading builders of seabed trenching systems.

————— 32

Geoscience and Technology Division (SOPAC), which provides technical advice to the majority of the Pacific Islands. According to Johnston, every sq cm of the ore body at Solwara 1 has been photographed and recorded.

Nautilus is also working closely with the provincial governments in the area around Solwara 1, and has signed memoranda of understanding (MoUs) with the New Ireland and East New Britain governments to implement programmes designed to help local communities. These include recently completed sanitation projects in two schools on the west coast of New Ireland - one of the most remote and poorest parts of PNG; the sponsoring of books and other school resources; and an annual Marine Science Short Course in Kavieng, New Ireland, in partnership with the University of Papua New Guinea and the North Carolina, USA-based Duke University.

Nautilus has also given mini remotely operated vehicles (ROVs) to the National Fisheries Authority on Nago Island, with a view to monitoring the potential impact of the human activities on the local environment. “Our dream going forward is that people from local villages will use these mini ROVs to collect

data about the potential impacts or otherwise of human activity in relation to their reef systems,” says Johnston.

He adds that Nautilus is working closely with the National Fisheries Authority to ensure the fishing industry is not negatively affected. He explains that large tuna stocks are not found in the area around Solwara 1, and that tuna are unlikely to be affected as they generally don’t swim deeper than 200 or 300 metres below sea level, while the small plume from the Solwara 1 mining will not rise above 1,300 metres.

He adds that Solwara 1 can also benefit the tourism industry due to the increased flight frequency and shipping in these relatively remote areas.

Another myth surrounding deep sea mining is the extent of the technical challenges which, says Johnston, are minimal compared with extracting ore bodies from many mines on land.

“Deep underground mines are enormously complicated, it’s a dangerous occupation, and the mines are incredibly expensive,” he says. “A shaft of 1,500 metres costs tens of millions of dollars and the thing is fixed – you can’t move it. In deep sea mining, we don’t have those challenges. The ore bodies we access sit proud

on the sea floor. We don’t have people down at the faces. The extraction process is all done robotically and brought up to the surface.”

Johnston observes that while the oil and gas industry is routinely working at 2,500-3,000 metres below sea level, Solwara 1 will involve mining at around 1,500 metres below sea level. “When you talk to the oil and gas guys, 1,500 metres is just a piece of cake for them,” he says.

For Solwara 1, Nautilus is partnering with an extensive range of engineering and technology companies from the offshore oil and gas and metals and minerals sectors, and is adapting technology already in use in those sectors.

The Solwara 1 offshore production system will have three main components - seafloor production tools (SPTs), a riser and lifting system (RALS), and a production support vessel. For the seafloor production tools, the power units are based on large trenching units used in the oil and gas industry for laying pipelines and cables, while the cutting technology is used in underground coal mining technology. The SPTs are being built by Soil Machine Dynamics (SMD), one of the world’s leading builders of seabed trenching systems.

Through its

technical

partnerships,

expertise and

continuous

innovation,

Nautilus

has become

the “go-to”

company

for sea floor

mining.

Photo Top -State-of-the-art control room for

the seafloor production tools.


33 —————

Johnston explains that the RALS is “straight out of the oil and gas industry - Chevron is using essentially the same system in the Gulf of Mexico.” The RALS for Solwara 1 is being built by GMC, which specialises in advanced innovative tubular solutions from seabed to surface, while GE Oil & Gas, a world leader in advanced technology equipment and services for all segments of the oil and gas industry, is building the subsea slurry pump for the RALS, using its Hydril Pressure Control subsea pumping technology.

The production support vessel, meanwhile, will be similar to offshore production support vessels used in the oil and gas industry, with Marine Assets Corporation (MAC), a marine solutions company based in Dubai which specialises in the delivery of new build support vessels for the offshore industry, owning and providing the marine management of the vessel.

Through its technical partnerships, expertise and continuous innovation, Nautilus has become the “go-to” company for sea floor mining, according to Johnston. “We’ve got some really good technical people, really bright guys,” he says. “We’ve created new drilling systems, new geophysical techniques, new ways of logging ore, and new ways of sampling.”

He adds that with regard to security of tenure, the system for deep sea mining is largely similar to land-based mining, explaining that in most countries the state has rights to all resources out to the edge of its exclusive economic zone (EEZ), and that

in international waters the area outside of national jurisdiction is administered by the International Seabed Authority, tasked by the United Nations to administer the development of the open ocean for the benefit of mankind.

Johnston says that with deep sea mining set to be a major game-changer in the international mining industry, the return on investment for interested parties

is set to be extremely high, and that aside from Solwara 1, while its additional projects on its other tenement holdings across the Western Pacific region had been on hold pending the resolution of the dispute with the PNG government, it is also now set to continue pursuing its other exploration projects in 2015.

“Now that we have resolved the dispute with the state, the PNG

government is very keen to see us get reinvigorated in exploration,” he says. “They are eager to partner with us and a lot of other countries in the Pacific have also expressed an interest in seeing seafloor mining happen in their countries.”

For more information please visit www.nautilusminerals.com.

Photo Right -Nautilus Minerals’ seafloor production

system.

————— 34

As the world’s demand for metals and rare-earth minerals increases, the concept

of obtaining these resources from the deep seabed is becoming a reality. In the Pacific, where some small island developing states have significant potential for deep seabed minerals, many governments see this new industry as a way of obtaining much-needed revenue.

The Deep Sea Minerals Project – a collaboration between the Secretariat of the Pacific Community (SPC) and the European Union (EU) – is assisting Pacific Island countries in their policy, legislation and regulatory developments with particular attention to the protection of the marine environment. To date, Cook Islands, Tonga, Fiji and Tuvalu have enacted legislation to govern deep seabed mining, and other interested Pacific Island governments are in the process of developing theirs as well.

While there are many positive benefits this industry can bring in the form of increased revenue,

education and employment opportunities, economic development, advancements in science and technology, etc., it is of critical importance that the industry is managed effectively from a legal, social and environmental perspective.

Understanding the Deep Seabed Environment

The mineral deposits currently targeted for deep seabed mining, namely: seafloor massive sulphides, cobalt-rich crusts, and manganese nodules (other shallower mineral deposits, such as iron sands and phosphate

nodules have some overlap, but are not discussed here), occur in vastly different environmental circumstances. Understanding these environments is the critical first step in determining if mining should proceed. There are organisations and academic

institutions conducting research in these deep sea environments and significant advancement in this field has been spurred by mining companies conducting exploration for deep seabed minerals.

A key legal environmental component of deep seabed mining

legislation is the requirement to conduct a prior environmental impact assessment for each proposed development. Although there can be some general environmental characterisations inferred for a particular mineral deposit type, a thorough individual environmental baseline, including physical, oceanographic, biological and existing activities assessment, is required. This baseline is not only needed to determine the potential environmental impacts and gain government approval, but will also be relied upon for effective monitoring of mining activities.

Potential Environmental Impacts

As we can make some general inferences about the environments of mineral deposits, there are also some general environmental impacts that are expected to occur, though their extent and severity will be site specific, depending on local conditions and the methodology of mineral extraction.

As with land-based extraction, the most immediate impact will be the

ENVIRONMENTAL MANAGEMENT CONSIDERATIONS FOR DEEP SEABED MINING By Alison Swaddling, Deep Sea Minerals Environment Advisor,

Secretariat of the Pacific Community.

It is of critical importance

that the industry is

managed effectively

from a legal, social and

environmental perspective.


35 —————

physical removal of the minerals from their existing location. This affects the local biological communities by removing/disturbing the seafloor and the animals that directly inhabit the area. The process of removing the minerals from the seafloor will also create sediment plumes, likely to spread to areas outside of the direct mining footprint. This plume will smother the seafloor and the remaining biological communities, with decreasing severity from the mine site. The sediment plume may also affect deep pelagic species. In the case of seafloor massive sulphides and manganese nodules, the removal of hard substrate will have knock-on effects for the recruitment of animals, which require hard substrate to repopulate the area.

Fish and other mobile animals will potentially be attracted to the lights, noise and vibrations of the seafloor machines where they could be trapped in the machinery. However, the machine’s noise, light, vibrations,

and the presence of a sediment plume may cause other animals to actively avoid the area.

It is likely that the immediate negative impacts of mining operations will be limited to the seafloor and the area just above it. Whilst the technology for the different extraction methods is still being developed, it is expected that the systems for lifting the material to the surface will be fully enclosed, thereby minimising impacts to the mid-water and upper-water column, and that any seawater that is recovered with the material will be treated and sent back down to the deep seafloor.

This returned seawater will itself create a water plume with slightly different characteristics to the surrounding seawater, such as turbidity, temperature, elevated dissolved metal concentrations, etc. It is highly unlikely that any proposal would gain government approval if the material recovery system is not fully enclosed, or the

returned seawater discharge depth is at shallow water depths, where surface environments could be impacted.

In the Pacific, commercial exploration and academic marine scientific research is underway to study the impacts of deep seabed mining. The first deep seabed mining environmental impact assessment has been conducted by Nautilus Minerals, Inc. for a seafloor massive sulphide site in Papua New Guinea. The report and supporting studies are available at: www.cares.nautilusminerals.com/Downloads.aspx.

Management and Mitigation Measures

A major concern for this new industry is the potential for rare or endemic species to be lost. Whilst these species should be identified in the environmental impact assessment process, the establishment of set-asides (areas of similar seafloor habitats that are

not to be commercially developed) can help mitigate species loss and maintain overall regional biodiversity.

Another major concern is the potential conflict with tourism and fisheries industries. In many Pacific countries these industries are the largest contributors to national gross domestic product. Deep seabed mine sites, by their nature, will occur far offshore and their impacts are not expected to affect coastal tourism or fisheries. However, the location of the mine site will need to be considered in relation to migration routes, spawning sites, feeding grounds, and juvenile areas of fishes and also marine mammals. Separation of activities by depth and distance will be possible, as well as a probable management technique to be used by governments.

This is a new industry and new learnings and discoveries will be made along the way. It is, therefore, important to take a precautionary approach and incorporate adaptive management to ensure appropriate reactions to monitoring programmes and that up-to-date best environmental practice is adhered to.

The SPC-EU Deep Sea Minerals Project is working with Pacific Island countries to develop comprehensive deep seabed mining specific regulations that include such measures that are also harmonised across the region. With this new industry, it is important for countries to learn from each other and work together to ensure balance is reached between financial opportunity and environmental risk.

Additional information about seabed mining, impacts and environment management in the Pacific region can be found on the SPC-EU Deep Sea Minerals Project website:www.sopac.org/dsm.

The establishment of set-asides can

help mitigate species loss and maintain

overall regional biodiversity.

Photo CC

by Alex

————— 36

In the fisheries sector, regional cooperation is leading to the forging of new markets, improved nutrition, healthier oceans, enhanced Monitoring, Control and

Surveillance (MCS) and a more powerful global trading voice.

Island jurisdictions face unique challenges, particularly related to policing their sometimes vast exclusive economic zones (EEZs). Moreover, given how pivotal fisheries is to driving GDP growth, generating political buy-in regarding sustainable limits on catches is no simple task. It is, however, vitally important that greater efforts are made in respect of conserving stocks and the optimum utilisation of the resource. In the following pages we look at what more needs to be done to improve levels of compliance, as well as noting flagship achievements to date.

FISHERIES

Global Island News Fisheries

Photo CC

by Christopher K

emp

37 —————

How is the Blue Growth Initiative set to positively impact SIDS

and how do you envisage the private sector being sufficiently incentivised and reassured to take the lead on this?

Fisheries and aquaculture make a significant contribution to food security and the livelihoods of millions of people along the world’s seashores and waterways. The FAO Global Blue Growth Initiative seeks to put the spotlight on that contribution by providing a coherent framework for the sustainable and socio-economic management of our aquatic resources. Our initiative focuses on promoting and conserving the importance of living natural resources of the marine and fresh-water environment, as well as linked ecosystems, for the benefit of present and future generations.

The FAO Global Blue Growth Initiative is composed of four key components: (i) marine and inland capture fisheries; (ii) aquaculture; (iii) livelihoods and foods systems; and (iv) economic

growth from ecosystem services. These components are further described below, with particular consideration being paid to their relevance for SIDS, which cover much of the tropical and subtropical Pacific Ocean, Indian Ocean and the Caribbean.

As we know, fish and fisheries are the mainstay of food security and the wealth of most SIDS. Many SIDS are heavily dependent on their oceanic and coastal fisheries resources for economic growth and development, as well as food security and livelihoods, and are vulnerable to any change in the state of these resources.

The physical, biological and social diversity of SIDS; the demography of the regions; the nature of local economies and limitations to economic development; and the importance of oceanic, coastal and freshwater fisheries and aquaculture to economic development and government revenue, all provide opportunities for fisheries, aquaculture, livelihoods, food systems and economic growth from ecosystem services, to be

further developed. At the same time, it is essential for the SIDS to protect, restore and improve the health, productivity and resilience of oceans, coastal and inland ecosystems and to maintain their aquatic biodiversity

The FAO Global Blue Growth Initiative for SIDS is a shared opportunity and responsibility and is expected to create a new sense of ownership of oceanic and island spaces, so that fisheries and aquaculture will be developed sustainably.

The initiative focuses on creating strong and meaningful partnerships, so that no one group will take the ‘lead’, yet all will have a vital role to play. In this way, the private sector can help forge strategic partnerships with the public sector and civil society. As well, the private sector can help shape and influence behaviour, practices and technologies, looking at both short-term and long-term opportunities and gains.

With the private sector on board, we will be able to reach a wider

THE FAO BLUE GROWTH INITIATIVEInterview with Árni Mathiesen - Assistant Director-General, Food and Agriculture Organsation of the UN (FAO) - Fisheries and Aquaculture Department.

“Many SIDS

are heavily

dependent on

their oceanic

and coastal

fisheries

resources

for economic

growth and

development.”

Photo CC

by Magnus Fröderberg

————— 38

range of stakeholders – from fishers to consumers – to promote, recognise and strengthen those actions and decisions needed to ensure sustainable fisheries.

There is great potential for private sector entities to partner with SIDS towards ensuring the sustainable management and utilisation of fish resources? Which partnerships are you currently most excited about?

As already mentioned, the role of the private sector is paramount to providing wider ecosystem stewardship and improved governance of the sector that will allow us to all move towards a goal of sustainable management and utilisation of fish resources.

The range and variety of potential partnerships with whom we can engage is wide. You can imagine that over the years that the FAO Fisheries and Aquaculture has been operating, we have forged excellent relations across all aspects of the sector and beyond. Today, it is simply unthinkable to envisage any project or programme or activity without including the private sector. The Third International Conference on SIDS underlined this point.

For many SIDS, the promotion of aquaculture development for food security will be crucial. That is why we have developed the Global Aquaculture Advancement Partnership (GAAP) and why we look to other networks already in action, such as the Network for Aquaculture in Micronesia (MASA). We already work very closely with many private sector organisations – from Conxemar, to ICFA, NASF and ISSF, just to mention a few – though this is very far from being exhaustive.

We are also involved in developing a Voluntary Blue Growth Network which seeks to improve people’s food security and nutrition and sustainable economic growth in the face of climate change and which will support governments, fishers and aquaculturists, scientists, businesses and civil society, as well as regional unions and international organisations, to adapt fisheries and aquaculture practices, food systems and social policies, so that they take better account of climate change and the efficient use of natural resources.

Do you believe it is inevitable that climate change will lead to fish stocks migrating away from traditional fishing grounds, such that fish

consumption in many SIDS will be drastically reduced? What, if anything, can be done to ward off such a state of affairs or is it a question of mitigating its effects?

Those who depend directly on agriculture, fisheries and forestry for their livelihoods are often the most vulnerable to natural hazards that affect the islands’ natural resources base, which supports local food systems. Climate change is likely to have a bigger effect on food supply than any other factor and agriculture will

be affected more than any other economic sector in the developing world. The implications of climate change for food security and livelihoods are profound and it is clear that fishers, fish farmers and coastal inhabitants will bear the full force of the impacts of climate change. Many poor fisheries-dependent communities already live in a precarious and vulnerable state because of poverty, lack of social services and essential infrastructure, and suffer from overexploited fishery resources and degraded ecosystems. Climate change is modifying the distribution and productivity of marine and freshwater species and is already affecting biological processes and altering food webs.

Although efforts have been taken to create sustainable livelihoods that are climate resilient in some countries, these have tended to be fragmented. Changes in the environment need to be addressed through integrated and systematic ways that link the different SIDS into a common strategy that builds on their mutual support and help. For this, a pluralistic approach is a pre-requisite, as including stakeholders from various sectors will increase coordination and convergence towards a common objective. The FAO Global

“Climate change is

modifying the distribution

and productivity of marine

and freshwater species

and is already affecting

biological processes and

altering food webs.”


39 —————

Blue Growth Initiative will help facilitate putting this need into action.

We at FAO are working closely with our partners (especially the 25+ strong Global Partnership for Climate, Fisheries and Aquaculture) and our Member states to examine and discuss the best mitigation and adaptation strategies that could be promoted.

What would you describe as the FAO Fisheries and Aquaculture Department’s flagship achievements to date, in respect of furthering the cause of sustainable development in SIDS?

We recognise that the health of our planet and our own health and future food security depend on how we treat the blue world. Promoting responsible and sustainable fisheries and aquaculture is central to FAO’s work and purpose and much anchored in the Code of Conduct for Responsible Fisheries.

Adopted by all FAO member countries on 31 October 1995, the Code has become a global reference – and benchmark - for fisheries and aquaculture development. Its 12 articles, and associated technical guidelines, provide a comprehensive blueprint from fish to fork. It can be credited with introducing new governance concepts and teaching a new vocabulary to fisheries managers.

As such, the Code is also the cornerstone of the recently-launched FAO Global Blue Growth Initiative.

In my opinion, the Code is hands-down our Department’s flagship achievement. It has proven to be extremely forward-looking and a truly living document which remains relevant and central to responsible and sustainable fisheries. Even though it is non-binding, compared with other international fisheries instruments, the Code has achieved an unprecedented level of endorsement by international organisations, regional fisheries bodies, governments and other stakeholders that gives it a strong moral and political footing - planners, policy-makers and managers at all levels pay attention to its principles and standards.

In concrete terms, we see that management practices in some areas around the world are starting to change. Many countries have implemented national plans of action that embody certain aspects and principles of the Code. This is particularly true with regards to the international plans of action concerning IUU fishing and the November 2009 treaty on Port State measures against IUU fishing. And I would emphasise that the Code’s principles, standards and guidelines must now – more than ever before – be fully taken into account and put into action.

Since the 1992 Earth Summit, SIDS have placed sustainable development prominently on the global agenda, with the 1994 Barbados Programme of Action and the 2005 Mauritius Strategy of Implementation clearly outlining the way forward. The outcome document of Rio+20 reaffirms the special case of SIDS for sustainable development and calls for continued and enhanced efforts to assist SIDS. As such, our FAO Global Blue Growth Initiative indeed concentrates on assisting countries in developing and implementing their respective blue economy and growth agendas. We have already begun working with several focus countries – Algeria, Indonesia, Morocco, Gabon and Senegal to name a few - to help support blue growth concepts in their national policies and strategies. This will be complemented by strengthening and working closely with Regional Fishery Bodies and Management Organisations and, of course, by putting the accent on partnerships.

Through the FAO Blue Growth Initiative, FAO will assist countries to develop and implement blue economy and growth agendas. It will contribute to the global debate and decision-making process, including in the post-2015 agenda.

For more information, visit www.fao.org.

“Promoting

responsible

and

sustainable

fisheries and

aquaculture

is central

to FAO’s

work and

purpose.”

Photo CC

by Hafiz Issadeen

————— 40

PNA

Just before Christmas 2011, an announcement was published that many in the fishing industry had been eagerly awaiting. After

two years of rigorous assessment against the Marine Stewardship Council’s standard for sustainable fishing, the Parties to the Nauru Agreement (PNA) Western and Central Pacific skipjack tuna had achieved certification.

You may never have heard of PNA, the world’s largest sustainable tuna purse seine fishery. But together, the waters of these eight small island nations of Papua New Guinea, Kiribati, the Federated States of Micronesia, Marshall Islands, Nauru, Palau, Solomon Islands and Tuvalu provide 50% of the world’s total skipjack, the type of tuna which often ends up in sandwiches and salads.

Eating your way to sustainable solutions may seem somewhat unusual, but consumers in Europe, where much of this tinned skipjack ends up, can help protect the oceans and support livelihoods 7,000 miles away by choosing a tin of tuna or pack of sandwiches with the blue MSC ecolabel.

Consumers aren’t just making a choice for sustainable seafood, they are making an investment in the future of the world’s fish stocks for generations to come.

MSC’s program was designed to reward fisheries for fishing sustainably and incentivise others to follow their example. It is also the only global sustainable seafood initiative that systematically reports on the improvements that fisheries are making – from changes in gear type to increased data collection, an essential part of fisheries management. So far, there have been 575 recorded benefits, with a further 650 to follow by 2020.

MSC-certified PNA skipjack tuna is caught without Fish Aggregating Devices (FADs) to reduce bycatch of juveniles and endangered species. PNA also introduced closures to fishing on the high seas, bans on setting nets within a nautical mile of whale sharks and 100% observer coverage on purse seine fishing vessels.

SMALL ISLANDS, LARGE OCEAN

Consumers

aren’t just

making a

choice for

sustainable

seafood,

they are

making an

investment

in the

future of the

world’s fish

stocks for

generations

to come.

By Rupert Howes, Chief Executive Officer, Marine Stewardship Council (MSC).


41 —————

But PNA’s work does not end with certification. Skipjack stocks in the Western and Central Pacific are at healthy levels but maintaining certification requires the fishery to undergo annual audits to check its progress on conditions to allow skipjack stocks to recruit and limitations on ecosystem impacts.

PNA is not alone, but one of a growing cohort of fisheries based in Small Island Developing States (SIDS) seeking to achieve certification. Introduction of tori lines to avoid seabird bycatch, turtle relief gear and training for crew on bycatch release helped Fiji’s longline albacore fishery achieve certification in 2012.

Certification expanded the Fijian fishery’s range of export markets and it is the first Pacific tuna fishery to sell its premium loins to Europe.

Sustainability credentials can often be a valuable differentiator for export markets in developed countries. In 2013, the iconic Maldives pole and line skipjack fishery became MSC-certified to help secure routes to market.

In the Maldives, fishing is an essential part of livelihoods, accounting for 6% of its GDP, 11% of employment and 98% of the country’s export commodities. Kalhubilamas, as Maldivians call skipjack, comprise around 70% of the total catch.

As these fisheries succeed in the MSC program, so others will follow their example. An albacore longline fishery based in the Cook Islands is approaching the end of assessment and the Seychelles, Mauritius and Indonesia, the

world’s largest fishing nation, have also expressed interest in engaging with the MSC to improve access to markets in the developed world.

SIDS & Globalisation

As the world’s most traded food commodity, seafood has a greater economic importance in the developing world than other commodities such as coffee, tea, bananas, cocoa, rice and rubber.1

Globalisation also exposes these fishing island nations to volatility on the global markets, so secure long-term contracts are vital for the economy. Third party certification like the MSC program that recognises and rewards good fisheries management can secure economic stability through access to export markets, while sustaining livelihoods and providing food in the region.

Despite their geographic remoteness, these ‘large ocean nations’ are really at the centre of global issues such as climate change and safeguarding fish stocks. And as the world’s populations boom towards 9.6bn by 2050, their role will only grow in importance by proving that sustainability is no longer a choice; it is the only option in protecting the oceans and the livelihoods of those who rely on them.

Rupert Howes is the Chief Executive Officer of the Marine Stewardship Council, which operates the world’s leading certification standard for sustainable seafood.

1 State of the World Fisheries and Aquaculture 2014, figure 20.

Despite their geographic remoteness, these ‘large ocean

nations’ are really at the centre of global issues such as

climate change and safeguarding fish stocks.

MSC-certified Maldives pole and line skipjack fishery.

————— 42

What can the Pacific fisheries sector teach the rest of the word

in respect of collaboratively developing systems for Monitoring Control and Surveillance (MCS), pertaining to vast tracts of ocean?

In short: the importance of cooperation between member countries – sharing information and making the best use of surveillance assets; and to a lesser extent, the opportunities created by new technology.

Promoting cooperation between our members in MCS has always been a core function of FFA, and we see this as essential, given the international nature of the region’s tuna fisheries, the number of distant water vessels operating and the limited resources of individual countries. We were the first multi-country region to introduce a vessel monitoring system – in which all commercial fishing vessels are tracked by satellite. We have standard ‘minimum terms and conditions’ for access by foreign vessels covering reporting requirements, compliance, etc. – which are agreed between our members and insisted on by all of them in negotiations with all fishing operators. We also operate a regional register, which makes

it possible to blacklist vessels in all member countries when they have committed an offence in one country and evaded prosecution. This has been very effective in bringing cases to justice.

Sharing of assets includes a regional fisheries observer programme – so observers from one country continue to work wherever a vessel is operating; endorsement of patrol boats and officers from one country undertaking surveillance operations in another; ship-rider agreements (in which an officer from one country may be carried on a patrol vessel of a third country to carry out boardings and make arrests) and so on.

In terms of new technology – we see no reason why small countries should be backward countries and technology cannot supplement limited financial resources. Real-time reporting of catches and fishing operations, satellite communication with observers placed on board vessels, and integrating data from different sources are playing an increasing role in combatting illegal fishing and ensuring that consumers can trace fish products back to when and where they were caught.

In terms of overcapacity in the industrial tuna fishing fleet, how can this best be addressed

in a manner which is fair to all, yet acknowledges the rights of Pacific SIDS to determine the allocation of tuna fishing opportunities within their own EEZs?

Firstly, I would like to make the point that the problem of overcapacity in the Western and Central Pacific Tuna fishery is not comparable with the global average. In the rest of the world, we are told, many fish stocks are already overfished and there are around three times as many boats as there should be fishing for them. Here in our region, only one of the four main tuna stocks

accounting for about 5% of the catch (Bigeye tuna), is overfished; and the size of the fishing fleets does not yet seem to be greatly excessive. Of course one cannot be complacent – there are more vessels under construction, and the efficiency of both the new and existing vessels is increasing all the time. We also know that, in the Southern Albacore fishery, for example the growth in fishing effort is making it very difficult for domestic fishing fleets to make money. There can be economic overfishing, even when the stock is quite sustainable.

THE PACIFIC FISHERIES SECTOR

“We see no reason why small countries should be backward countries and technology cannot supplement limited financial resources.”


Interview with James Movick, Director-General, Pacific Islands Forum Fisheries Agency.

43 —————

In terms of the solution, the normal measure to prevent overcapacity is to cap vessel numbers – no more boats. As your question suggests, this tends to benefit established (and in our region foreign) fishing fleets and does not allow development of SIDS domestic industry. Our approach is rather different: to set limits for each island country’s EEZ which are compatible with the stock status – which they can then allocate to domestic vessels if they want to develop domestic industry, or sell to the highest bidder if their priority is just to maximise rent from the fishery.

The best known example of this is the purse seine vessel day scheme, implemented by the nine parties to the Palau

arrangement. The total number of fishing days has been set based on scientific advice, and is then allocated between the parties based on estimates of their share of the stock and fishing effort in each zone. The countries can then allocate days, as a priority, to domestic fleets; sell days to foreign vessels; and can also trade days among themselves. Provided it is adjusted for increases in efficiency of vessels (so called ‘effort creep’) it is an effective capacity measure which puts control of the fishery firmly in the hands of the SIDS.

Would you like to see the international drafting of conventions, procedures and requirements devolved to regional level to reduce the

administrative and financial burden on SIDS? Alternatively, is the solution to make binding global regulation less complex and technical, yet still fit for purpose?

There is no doubt that participating in all the international processes can involve a heavy workload for small island administrations – frankly it is impossible to cover everything. Also, the product

“There can be economic overfishing, even when the stock is quite sustainable.”

Photo by Netfalls - R

emy M

usser

————— 44

of these global initiatives is not always appropriate – often the process of reaching a global consensus results in an outcome that is not as hard-hitting as we would like. Sometimes the product is something that we do not feel is appropriate to our region, especially when imposing a large administrative burden on small administrations – an example is the FAO port state measures agreement – but we get caught up in an expectation that we will sign up as good global citizens.

We also face problems with regulations that are introduced unilaterally, but with global reach. Meeting market access requirements for fisheries products into the European Union is something that is really tough for our members. So yes – regulation that is less complex would certainly be welcome. Certainly, all such measures must take account of the impact on

SIDS administration and provide real financial and technical assistance, not just rhetoric, to enable these small countries to develop and support such processes. I think there is also scope for more of a risk-based approach – which can match the solution to an assessment of the scale of the problem - rather than trying to roll out a completely uniform set of detailed regulations in countries and regions that are very different.

What more can be done to ensure a greater proportion of tuna caught in the Pacific finds its way into local diets, thereby enhancing nutritional intake and reducing the incidence of non-communicable diseases amongst these populations?

This is an important issue, which risks being forgotten in the drive to increase the collection of access fees from foreign fleets. At

present, most of the fish consumed in Pacific Island countries comes from inshore areas, but the production of inshore fisheries is limited and the populations of the larger Pacific Island countries are growing quite rapidly, particularly in urban areas. Projections suggest we will face a shortfall of around 100,000 tonnes per year of inshore fish across the region by 2050. Fortunately we have a tuna resource which, if managed sustainably, yields over a million tonnes a year from our EEZs – so it is a case of seeing that more of this comes onto the local market. There are three main opportunities for this, all of which are already happening to some extent:

1) In the atoll countries that already have to address the problem of limited inshore fish resources, there is a long tradition of small scale fishing for tuna. These small

scale fishing methods can be protected by excluding industrial vessels from the area close to shore where they operate; and their efficiency can be improved with nearshore anchored fish aggregation devices which allow them to catch more fish with less fuel. This can boost affordable tuna supplies.

2) The requirement for purse-seine fishing vessels to tranship in port means that a lot more fish is passing through some of the major towns near the fishing grounds. These are some of the urban areas with the greatest unsatisfied demand for fish. At the moment some of this finds its way onto the local market through informal channels – but there is scope for improved distribution and marketing. For example there is around 20,000 tonnes a year of by-catch (species like rainbow

“Participating in all the international processes can involve a heavy workload for small island administrations.”

Global Island News FisheriesPhoto C

C by Lazlo Ilyes

45 —————

runner) which cannot be sold to the canneries but are quite good eating, although we also need to encourage the fishing vessels to handle this by-catch in a more sanitary manner, as well as to utilise alternative freezing methods with no, or more limited salt content. Incidentally, this technological development would also assist purse seiners to position some of their catch toward the higher value fresh-frozen products market.

3) The development of domestic tuna fishing and processing industries provides many opportunities from the sale of sashimi grade longline caught tuna to local restaurants, as well as the production of low-cost canned products like dark meat (bloodline) tuna (which is very popular here in Solomons Islands). So, as well as developing export industries, we see a lot more fish coming onto the local market. Sometimes this may need to be managed to protect local small scale fisheries – but typically the products are very different and large ocean-caught fish do not compete directly with small reef fish caught by the latter.

What would you describe as the FFA’s flagship achievements to date, in respect of furthering the cause of sustainable development?

The Agency is an advisory body, so while we have designed, encouraged and supported many initiatives, the credit for implementation rests with our member countries. I have mentioned some of the highlights in response to earlier questions on MCS. Certainly, the strong advocacy and maintenance of national and cooperative Zone rights based management practices is the cornerstone to PIC management effectiveness. The most successful such arrangement, the Vessel Day Scheme, now managed by the PNA Office, was designed and supported by FFA staff. We hope to implement very soon a harvest strategy which will take a similar approach of zone-based limits for the southern albacore fishery. Meanwhile, we are supporting work on harvest control rules for all of the four tuna species, to set targets and limits for sustainable management of the stocks across their range.

Overall, we aim to be responsive to the needs of our members and undertake a lot of work in support of their own sustainable development goals. This can range from facilitation of new investment and helping to meet market access requirements; to advising on limits on fishing opportunities under their national tuna

management plans and supporting the training of fisheries observers. We have a wide range of work in management, development and MCS. The continued and enhanced role of the FFA as a regional secretariat is testimony to the on-going effectiveness of its role.

“Small scale fishing methods can be protected by excluding industrial vessels from the area close to shore.”

Photo CC

by Takashi Hoshim

a

————— 46

In your view, is tangible progress being made in respect of industry, environmental groups

and the scientific community collaborating to forge and implement sustainable partnerships, projects and new development in the fisheries sector?

There has been an immense effort from all angles (Industry, Environmental and Scientific groups) in the past few years to forge and implement sustainable partnerships and to look at new developments that would also allow more sustainable practices. These include the MSC certification of the Maldives Pole and Line Fishery and efforts made by the industry to test and develop ecological Fish Aggregating Devices (FADs) under the

Project MADE (Mitigating ADverse Ecological impacts of open ocean fisheries), funded by the European Union. Also, the engagement of the World Wide Fund for Nature (WWF) in enhancing the participation of developing States in the IOTC process; the International Seafood Sustainability Foundation (ISSF’s) support in innovation towards FADs and fleet capacity management; Birdlife International working with IOTC members with regard to mitigation of seabird bycatch in the longline fisheries; as well as the PEW Charitable Trusts supporting initiatives for mitigating IUU fishing in the tuna fisheries in the Indian Ocean and reducing shark bycatch.

These initiatives represent a renewed interest in making a

SUSTAINABLE FISHERIES PARTNERSHIPS IN THE INDIAN OCEAN

Interview with Rondolph PayetExecutive Secretary, Indian Ocean Tuna Commission (IOTC).

“A series of IOTC

Resolutions have

been adopted, with

a view to conserving

and managing

tropical tuna stocks

in the IOTC Area of

Competence.”


47 —————

difference in the Indian Ocean Tuna Fisheries, including from the Contracting Parties that provide the enabling environment, to ensure that these partnerships can flourish. Notwithstanding the above efforts, there is still room for improvement, in particular through promoting and securing the participation of other industry and environmental groups - that have so far operated on the margins of the IOTC - in the joint work that other agencies are undertaking.

Given the fisheries sector’s importance in driving GDP growth amongst IOTC members, has generating political buy-in and consensus around limits on catches proved to be an uphill task, or can they see the long-term merits of determining a binding optimum sustainable yield?

Tuna fisheries in the Indian Ocean is unique compared to the other oceans, whereby there are two very important sectors; industrial and semi-industrial/artisanal. The semi-industrial/artisanal sector, practised mostly in developing coastal States, catches about 60 per cent of the total tuna landed, while the industrial sector, dominated by the distant water fishing nations, catches the remaining 40 per cent. The two sectors are at different ends of the spectrum, and developing consensus around catch limits would always be an uphill battle. While both sectors recognise the need to ensure the sustainability of the IOTC stocks through the implementation of management measures, they have yet to agree the type of measures to be implemented and the fleet components that should be the focus of those measures.

“Improved governance

positively impacts the

quality of the scientific

advice and consequently

the management

and sustainability

of resources and the

communities that

depend on them.”

Photo CC

by Bill B

rine

————— 48

My view is that you cannot treat the two in the same way, since they have different priorities. However, the Commission acknowledges the need for long-term benefits and improved contribution to the GDP of the respective countries, and an active engagement on how best to manage these tuna resources.

To this end, a series of IOTC Resolutions have been adopted, with a view to conserving and managing tropical tuna stocks in the IOTC Area of Competence, leading to discussion concerning allocation criteria and examination of alternative management measures, in combination with clear management objectives on the part of the contracting parties. Although, to date, no agreement has been achieved, the Commission is committed to the process and to aid it, is adopting

interim target and limit reference points for the main five market species managed by the IOTC.

Meanwhile, the IOTC Scientific Committee validates these points through the implementation of Management Strategy Evaluation (MSE) and develops and assesses potential Harvest Control Rules, which take into account changes in stock status. MSE work is currently ongoing for the Albacore and Skipjack tuna stocks and will be initiated soon for other stocks, including yellowfin tuna, bigeye tuna and swordfish. A recently adopted resolution on Enhancing the Dialogue between Fisheries Scientists and Managers, expects to provide a formal forum to discuss these issues.

How are the IOTC’s capacity building activities monitored to ensure the special needs and interests of developing

countries are appropriately served and that people’s lives are positively impacted on the ground?

Our capacity building activities are designed for the IOTC members, in particular, to assist

developing countries to meet their obligations to the organisation. The resulting improved governance positively impacts the quality of the scientific advice and consequently the management and sustainability of resources and the communities that depend on them.

“There is still room for

improvement, in particular

through promoting and

securing the participation

of other industry and

environmental groups.”

Global Island News FisheriesPhoto C

C by G

eorge Alexander Ishda N

ewm

an

49 —————

Small island states and territories are heavily dependent on expensive imported fossil fuels for their

energy needs and find themselves highly exposed to oil price volatility, which can divert resources from other much-needed areas and so paralyse development. It is essential that such barriers to change are identified and these impediments removed, thereby catalysing an island energy revolution which will bring with it manifold positive economic, social and environmental impacts.

Fortunately, international pressure and pertinent partnerships are beginning to bear fruit. In this way, island energy initiatives, such as those related to wind, solar, geothermal and ocean energy, are now constituting something of sufficient commercial interest to attract private sector backing, without leaving host nations financially in thrall to such investors.

ENERGY

Global Island News Energy

Photo CC

by nosha

————— 50

While aid and government money can help build capacity

and create the right market conditions for investment, it’s the private sector who must be relied upon to front up the capital and technology to help deliver SE4All. You’ve talked in the past about this not being a charity but a business opportunity. However, in the case of SIDS have you found that they offer too low a potential future customer base to be interesting to private investors?

Some SIDS spend 20-30% on importing energy products just to power their economies. We believe that with the wind and sun protection they have - in a few cases hydro - that is value that can be captured by renewable energy entrepreneurs. One of our partners, the International Renewable Energy Agency (IRENA), has just launched an initiative, ‘Lighthouse’ to address the development of

renewable energy markets just for SIDS. So, while we believe their small size creates problems in terms of economies of scale, they are already spending on energy products that which they really cannot afford, because it ties up their export revenue. So, there is already some degree of value to be captured by renewables.

With regard to securing that capital investment necessary to effect the changes, given their low credit ratings and tardy recovery from recession, do you envisage problems, or are the mechanisms in place to overcome those existing issues?

One instrument we are considering is aggregation. How do you aggregate renewable energy projects across a number of SIDS and securitise them, especially those that are close together in the Pacific and in the Caribbean?

You have financial institutions look at some of those projects, aggregate them and put them as

a portfolio, rather than as single projects, because we believe that helps in dealing with some of the risk elements for projects for renewables in SIDS. Not easy to do, but I know some financial institutions are beginning to discuss that concept.

In terms of the long-term existing contractual agreements with, for example, diesel providers and utilities, do you see that being an issue in terms of preventing a shift to clean energy solutions?

That could be an obstacle, but let’s take an initiative we are calling ‘Wind for Prosperity’, for example, which is an initiative put together by the likes of Vestas, Masdar and the Carbon War Room. Part of the concept there is integrating renewable energy solutions with diesel technology as a viable economic model, because for some of those island countries, such an integration might make a 1MW or 5MW project more economically viable and deal with intermittency

SUSTAINABLE ENERGY FOR ALL (SE4ALL)

“Some

SIDS spend

20-30% on

importing

energy

products

just to

power their

economies.”

Dr. Kandeh Yumkella, CEO, SE4All.

Dr. Kandeh Yumkella, UN Under-Secretary-General and former Director-General of the United Nations Development Organisation (UNIDO), has been tasked by UN Secretary-General Ban Ki-moon to spearhead one of the key priorities guiding his second five year term, that of delivering ‘Sustainable Energy For All’ (SE4All). In his capacity as the Secretary-General’s Special Representative and CEO of that initiative, Dr. Yumkella talked to Dominic Hale about how SE4All can positively impact Small Island Developing States (SIDS), in line with the programme’s three goals of achieving universal energy access, improving energy efficiency and increasing the use of renewable energy.


51 —————

problems than just saying, “go completely wind”. But, you scale that wind technology down and integrate it with diesel, so we believe that is doable in some small island states.

So, ‘incremental change’ - you’re not opposed to that in principle? SE4All accepts that it’s an imprecise, imperfect process?

Yes, we believe that in some cases you will need that gradual transition and therefore integrating energy systems will be important. Renewables and gas, for example, in some locations, or two renewable energy technologies, or renewables and diesel until they can fully transition, the market has matured and prices have gone down enough so that stand alone renewable technology projects can work.

In terms of aid being used to build capacity and change policies, so as to leverage private finance for these initiatives, for SIDS such as Samoa and the Maldives, who’ve graduated from Least Developed Country (LDC) status, much of that assistance is no longer there. Do you advocate additional special

assistance for SIDS based on vulnerability, as opposed to exclusively using per capita income to address this?

I believe they need continued assistance, by way of supporting them to ensure resilience to the negative impacts of climate change - particularly extreme weather events. I think it would be wrong to say that just because their income level has reached a certain level, we pull back, because we do know that for some of those countries, and particularly for island communities, all it takes is one hurricane to undo infrastructure they’ve probably built over ten to fifteen years, and then their revenues go back into restoration, but they can’t invest in additional growth. They need support for climate proofing their infrastructure - they need support for climate resilience in general in their economies.

As to reconciling that with other UN bodies’ criteria, is there integration - for example, with the other institutions within the UN to advance that - or would you accept that there is some disagreement as to the merits of incorporating vulnerability into the criteria?

What I can say is that based on messages I heard from UN agencies, but also from key donor countries, the whole issue of resilience and vulnerability has returned to the top of the agenda, and of course emergency preparedness, because we do know that the frequency of extreme weather events is higher now. We do know that all it takes is one of those to reverse growth and development, so I believe there is a change in attitude within our development agencies now to say we must look at resilience, we must look at vulnerability issues much more than we did before, because the increased frequency of these extreme weather events is real.

Regarding the terms of the commitment that SIDS must provide in respect of SE4All to access the counsel, the financing and the capabilities provided by international partners to catalyse transition, what sort of commitments are they required to give?

Generally, the commitments we’ve asked countries including SIDS to give is that solid commitment to energy sector reform. Energy issues are sensitive in any country and so we need governments that will commit themselves to really

“We believe

that in some

cases you will

need gradual

transition

and

therefore

integrating

energy

systems

will be

important.”

Photo Below -SIDS like Haiti need support

for climate resilience.

Photo CC

by Marion D

oss

————— 52

look at deeper sector reforms to encourage the private sector, and to formulate stable long-term policies that will be predictable over time, and also to take the issues of climate-proofing investments into consideration. There are no quick fixes. We need that solid commitment. However, I think that their commitment has to be backed with some degree of certainty that if they do what we ask them to do, that financing is available to cover that incremental cost. For example, to ensure financing for climate-proofing investments, to ensure that there is technical assistance to help in their planning processes, that there is funding for capacity building to help them in formulating those policies that we are advocating, because in many cases they don’t have that capacity. Somebody has to support them to do these things.

Getting back to the incremental changes, with reference to gas and its lure of financing, infrastructure and cheaper commodity prices from suppliers, is there a danger that it could repeat the financial stranglehold of the past. Or, does it offer a

short term solution to provide energy and save lives, that being the key goal in this instance?

For me, gas has always had a place in SE4All. Compared to other fossil fuels, it has low emissions. Five years ago we called it the transition fuel to the low carbon energy economy we want to see going into the future. To also ensure that base load we need. Additionally, when it comes to clean cooking fuels, gas is a primary source of fuel. It has to be considered as part of the key solutions, because we need to save lives. 4.3 million premature deaths every year due to household air pollution as a result of the use of charcoal firewood and kerosene. LPG (Liquified Petroleum Gas) can solve that problem for us overnight. We can make that number zero within a decade. So, it has to be part of the solution.

Would you accept that it’s easier to get some consistency with regulation in locations where there are unchangeable political conditions, where a new government won’t

come in and start repealing legislation?

It’s about predictability of the policy - where the vision is clear, they’re going to do it and the population wants it. A good example is Cape Verde where the EU and others have invested well in energy systems, that can also be taken to another level. Also, if you look at the Caribbean there are examples where you can see a combination of renewables and gas, which can give them not only universal access, but improve energy efficiency tremendously too.

However, much more needs to be done, although I think that we have developed within sustainable energy, tools now to track that progress. The World Bank is our knowledge hub. We have twelve people focused entirely on tracking and monitoring. In other words, it is about keeping the initiative honest and keeping member states when they make commitments, honest, to see whether they are really approaching our three targets over time and also checking the investment flows. What

“It would

be wrong

to say that

just because

their income

level has

reached

a certain

level, we

pull back.”Photo Below -

Dr. Yumkella’s experience as Minister of Trade and Industry

of Sierra Leone made it clear to him that energy drives

economies.


Photo CC

by unmeer

53 —————

is working? How come some countries are able to approach any one of these three targets, or combinations of them, successfully? What made it happen? What were the drivers? And in other cases, why it’s not working.

With this in mind, we have developed a tool called a global tracking framework. The database is developed, well funded, well oiled and 23 agencies are collaborating. Secondly, we have another instrument called ‘RISE’ - ‘Readiness for Investment in Sustainable Energy’, where we rank countries. The ranking always helps, because you can praise those that are moving up the rank and they can benchmark themselves in a way their citizens can see. For those that are always hogging the bottom, citizens can ask their government why they’re not moving up the ranking? Is it public policy barriers, is it something else?

In terms of the targets of SE4All, do you believe they are sufficient to save low-lying SIDS?

Well, there’s been enough analysis by the International Energy Agency, by the World Bank, by the International Institute for Applied Systems Analysis over the last five years to show that if, collectively, the world takes those three targets as a package – access, efficiency, renewables – as we at Sustainable Energy For All define them, it keeps us within a 2 degrees Celsius increase in global temperature. This has been proven in all kinds of simulation analyses by those institutions.

It means that Sustainable Energy For All is not just about helping poor countries, it is a compact with rich countries as well, because if OECD countries decide to double the annual rate of improvement of energy efficiency, they can

“If you look at the

Caribbean there are

examples where you

see a combination of

renewables and gas,

which can (bring about)

not only universal

access but also improve

energy efficiency

tremendously.”

Cape Verde has a target of getting 50% renewable energy into the mix by 2020.

Photo CC

by No R

ain Corp

————— 54

lower emissions by 40% within two decades. That’s a lot of achievement. So, we are very confident that if the countries move aggressively on those Sustainable Energy For All targets, it creates innovation, it creates economic opportunity, new markets and of course it keeps us within 2 degrees.

But, without seeing that immediate danger in front of them, the larger onshore states, the regional groupings, the economic blocs, do you see them being as compelled by this or running with it as you’d like, since it’s not in front of their eyes in the same way as it is for the likes of Kiribati, for example?

For sure, I would say we are not doing as much as we should do, not at the scale we want, not at the speed we want to move towards a really low carbon economy. Emissions increased in the last three years, so if we were doing enough that would not happen. However, we know that renewable energy accounted for 50% of new power generation projects in the last two years. That’s good, but it’s not good enough. Investments were between 200 – 240 billion. We believe we should do much more than that, but again, it’s a good start showing that it is possible to scale up and it is possible to speed up.

As regards you being at the helm and the driving force of this initiative, do you think it helps that you’re from a part of the world where lack of access to modern energy services traditionally has retarded economic growth, and limited life expectancy? Do you have to have a personal stake in it to emotionally commit and to truly see how fundamental energy is to dignity and hope?

I believe my origins have helped me a lot in a number of ways

because for me it’s not theory, it is reality. I know the reality, so I’ve had to dedicate myself fully to driving this. Secondly, my origins have helped me make the advocacy because I have no vested interest in any big or small corporations. It is rather because of my experience of what lack of energy has meant. So, you combine that reality check with the lack of real vested interest in any technology, and it has really helped me build partnerships and coalitions, helped me bring together countries or entities that would not necessarily speak with each other, or that are competing. Thirdly, there is my experience having been a Minister of Trade and Industry in a very poor country (Sierra Leone), trying to create jobs for people. Also, my experience spending 17 years in an agency that was trying to promote industrial development. This gave me the opportunity to go to the likes of China, India, Norway, Denmark and Brazil and made it very vividly clear to me that indeed energy drives economies. So, I knew then that my advocacy for energy should not be energy for the sake of energy, but energy as an enabler of development, but even more importantly, energy as an enabler of sustainable development. You need energy to drive economic transformation. You need energy to run the hospitals, to get the clean water to a rapidly urbanising global population. You need energy for water desalination, and so on, so my background really helped me get the narrative right and gave me the passion to drive it, because energy is a politically sensitive issue in any country around the world.

For those captains of industry or political leaders who have the resources to action that change, will they always struggle to see the long term merits of diverting resources away from vote winning initiatives or share price raising potential? Or, do you

“You need energy

to drive economic

transformation.”

Global Island News EnergyPhoto C

C by Jerem

y Levine

55 —————

see them ready to embrace enlightened self-interest and deferred gratification, where rather than adopting a mercantilist approach, they see the merits of LDCs and SIDS creating wealth and sharing in that bounty of inclusive economic growth and globalisation?

I see the challenges of reconciling short term gains with a long term vision, because we are all encumbered by short-termism. The politicians are thinking of the next election cycle, so you are trying to preach a 30 year vision of a true transition to low carbon economies, but they’re focused on contesting elections in four years and want a quick fix that they can sell.

Yet,at the same time, we the citizens are also not willing to pay a little more today so that we create those renewable energy markets, so that we can have guarantees of cheaper sustainable energy maybe ten years down the road. So I see it in both ways – the leadership being scared

to take those difficult long term decisions and the citizens not being ready to pay a little bit more now.

Is that something that’s surmountable?

I believe it is surmountable. I am an optimist. Because I see leaders like Angela Merkel wishing to challenge the orthodoxy and put the vision across for an energy revolution in Germany. I see leaders like the Prime Minister of Denmark and the leadership in Norway saying, look we are rich, we are well off, but we are driving renewable energy. It’s not just because we have it, it is because we know we can do it and because it is good for humanity and guess what, it is profitable for business too. They recognise that they have the means, the wherewithal and the knowledge system to begin to lead this transition.

Yet, I also see the same in some developing countries. I see the Kenyan leadership pushing renewable energy, I see the Brazilian leadership pushing

electrification for all there, not as a climate initiative, but as a poverty reduction initiative. In South Africa, there have been huge electrification rates over the last five years pushed by the leadership, and now they are getting private investment in their renewable energy initiative. In Vietnam too, there is a government policy driving electrification. Of course, we must also give credit to China. China connected 400m people in ten years who did not have electricity before. Now, the newest one is Prime Minister Modi of India, who is pushing for 350m Indians currently without electricity to have it within five years.

So that will be part of the solution. When you see that new leadership coming on to the stage I say, “Voilà !” I have a critical mass of leaders that can create markets, and if these leaders I mention create renewable energy markets, it will become cheaper for everybody.

“My

background

really

helped me

get the

narrative

right and

gave me the

passion to

drive it.”

Dr. Yumkella, pictured left, following interview with Dominic Hale for Global Island News, London.

————— 56

$0.04–$0.10 per kWh, geothermal can be installed for $0.07 – 0.15 per kWh, and rooftop solar can be installed for $0.15 – 0.21 per kWh — all without subsidies. Energy efficiency, where applicable, is even cheaper than all of these supply-side options, with many options available at less than $0.05 per kWh. Tourism is a key industry driving significant GDP for most islands, and a typical hotel may spend as much as 30 percent of its operating costs on energy. Imagine the economic benefit of cutting that cost by two-thirds.

Distributed solutions like efficiency paired with solar can even ensure greater resiliency by helping to harden the grid against failure during hurricanes. And, as islands shift to these more economic sources, they find that a greater proportion of their income will remain within the islands, along with jobs to build and operate the new infrastructure.

Islands are on the front line of the global climate challenge. With economies that are disproportionately

linked to imported diesel and shorelines susceptible to the early impacts of sea level rise, islands are the first to face the consequences of our global fossil addiction. This truth was brought into sharp focus for the Carteret Islanders of Papua New Guinea, who earlier this year left their homes to become the first international refugees of climate change.

But what if rather than being victims of climate change, islands could instead help pioneer the solutions the world needs to avoid its most severe consequences? The Ten Island Challenge is seeking to do just that.

In the Ten Island Challenge, island leaders commit to an

aggressive course toward an efficient and renewable energy future. In return, Rocky Mountain Institute, Carbon War Room, and other international partners commit to provide access to the counsel, financing, and capabilities to help shift the island economies to that future in short order. Aruba, for instance, is targeting a transition to 100 percent renewables by 2020. Others in the group hope to get there faster.

Why the race? The fact is, the economics of shifting to efficiency and renewables are compelling.

Based on current prices in the Caribbean, a typical diesel generator costs $0.24 – 0.36 per kWh produced. In comparison, many renewable generation options are significantly more economic today. Today, large-scale wind can be installed for

ISLANDS IN THE LEAD TOWARD A CLEAN ENERGY FUTURE By Dr. Jon Creyts

Managing Director, Rocky Mountain Institute.

The economics of shifting to efficiency and renewables are compelling.


57 —————

A typical hotel may spend as much as 30 percent of its operating costs on energy. Imagine the economic benefit of cutting that cost by two-thirds.

Aruba is targeting a transition to 100% renewables by 2020.

If the economics are so compelling, though, why is this path not already being pursued? Yes, we are starting to see progress, but not as quickly as the economics might suggest. A number of potent barriers persist. First, capturing efficiency and renewables opportunities requires investing upfront capital for long-term benefit. With most island economies suffering from lower credit ratings and lagging behind the rest of the world in recovery from the recent recession, financing even compelling investments can be challenging. Luckily the Overseas Private Investment Corporation (OPIC) and others have stepped in with the Ten Island Challenge to help blaze a trail.

Even if capital is available, though, the shift may be limited by long-term agreements with diesel providers, utilities, or both. These deals were often cut without foresight into the trends of modern renewables, and lock islands into unsustainable long-term costs. The island of Bermuda recently repealed its monopoly guarantee to the local utility because its rates were out of line with available resources. Expect further turmoil elsewhere as islands wrestle with this conflict.

As we enter an age of cheaper natural gas, there is the temptation for islands to potentially shift toward that direction, too. But while promises of financing, infrastructure and cheaper commodity prices from supplier companies abound, this solution both repeats the financial stranglehold of the past and does little to address the existential threat that climate change poses for island economies.

As of now nine island-nations have committed to partner in the ambitious goals of the Ten Island Challenge. With lots of economical sun, wind, and often geothermal sources nearby, there is good reason to believe islands will lead the world on the path to a highly renewable future.

Dr. Jon Creyts is a managing director at RMI, where he leads international research and collaboration activities. He brings over 20 years of strategy, operations, and design experience to resource issues at the interface of markets and technology.

For more information, visit www.rmi.org.

Photo CC

by Phil Com

eau

————— 58

TOURISMT

ourism has long been the economic backbone for many island states and territories. Yet, with sustainable growth now at the

forefront of the agenda, how best to reconcile tourism development with environmental preservation?

In drawing the spotlight on to some of the most inspired and informed partnerships, projects and new developments, we learn that to drive meaningful change, all stakeholders, including the tourists themselves, must factor in environmental considerations into their decision-making.

There are many out there doing just that: forward thinking governments and elements of the travel industry proving that sustainable strategies make sound business sense, host communities leading by example and tourists voting with their feet.

Global Island News TourismPhoto C

C by C

orey Leopold

59 —————

The tides are turning for the travel industry’s approach to sustainability and

nowhere is this more evident than in island destinations. There is growing recognition from senior business leaders that sustainability is not just a matter for governments to deal with, but it also makes good business sense and mitigates risk. This high-level recognition has led in recent times to exciting new partnerships between business, communities and government to build new and more effective ways to protect fragile environments, build resilience to the impacts of climate change and give back to the communities themselves.

So what has encouraged travel companies to start factoring in the environmental bottom line and consider the impact of climate change on island nations?

From the idyllic beaches of the Maldives, to the tropical shores of the Caribbean, islands have long quenched tourists’ thirst for paradise and this makes them big business for the global travel industry. This economic opportunity is exceptional for business, governments and communities; in an era characterised by the global financial crisis, the tourism

industry has nonetheless shown virtually uninterrupted growth. International tourist arrivals grew from 25 million in 1950 to 1087 million in 2013. Due to the expanding middle class in Brazil, Russia, India and particularly China, this trend is expected to continue, increasing by 3.3% a year, according to the United Nations World Tourism Organisation’s long-term forecast.

As a whole, the tourism industry may not have felt the effects of the financial crisis quite as keenly as some other sectors, but it has not escaped from the impacts of our greatest global challenges. In fact, islands are some of the most vulnerable areas to climate change. What’s more, climate change is compounding and exacerbating some of the social and environmental problems that their popularity with tourists had already caused. On small islands, with beautiful but fragile eco-systems, changes can be keenly felt. This will have significant knock-on effects for travel businesses, as well as the communities who rely on tourism as a major source of income.

In the heavily tourism-dependent region of the Caribbean, climate change impacts are starting to be experienced through increased storm surges, beach erosion

and unpredictable rainfall, while natural defences such as forest and coral reef, which prevent soil and beach erosion respectively, have been destroyed or degraded, often as a result of overdevelopment or pollution linked to tourism. A 2014 study by the International Union for Conservation of Nature (IUCN) reported that the Caribbean has lost around 50% of its coral reefs in the past 20 years, a rate of decline the researchers describe as ‘truly alarming’. The travel

industry cannot afford to bury its head in the pristine sand, ignoring the problems for the islands they put in their brochures.

For some, this has long been part of the company ethos. TUI AG, who own big name travel brands such as Thompson, First Choice, TUI Germany, Hayes & Jarvis and Sunsail, send 30 million customers from 31 key source markets on holiday each year. They have long invested in making their operations more

Rachel McCaffrey Head of Sustainable Tourism, INTASAVE-CARIBSAVE Group.

TRAVEL INDUSTRY DEVELOPS NEW PARTNERSHIPS WITH COMMUNITIES TO SECURE SMALL ISLANDS FROM THE THREAT OF CLIMATE CHANGE

Global Island News Tourism

In the heavily tourism

dependent region of the

Caribbean, climate change

impacts are starting to

be experienced through

increased storm surges,

beach erosion and

unpredictable rainfall.

————— 60

sustainable. As Jane Ashton, Sustainability Director at TUI says, “Being more sustainable supports the long-term success of our business. It’s as simple as that. The potential benefits include the opportunity to be recognised as a leader by investors, better risk management and being ready for forthcoming legislation, meeting growing customer demand and the related potential competitive advantages, reducing costs, protecting destinations and improving our product”.

Other businesses have started building sustainability into their bottom line. According to James Hnat, JetBlue’s Executive Vice President Corporate Affairs, “A large part of JetBlue’s business is transporting customers from cold cities to warm, beautiful beaches. The health and appearance of a destination has a direct impact on our revenue. By putting actual dollar numbers to the importance of ocean conservation, we will strengthen interest in protecting the destinations and ecosystems we depend on both financially and ecologically.”

The airline partnered with the Ocean Foundation in 2013 to develop a plan to protect the region’s natural resources, show the value of clean beaches and directly tie ecology and the importance of nature to the airline’s base measurement - revenue per available seat mile.

Although projects like this are building the economic case for action, there are remaining barriers, which prevent other tourism operators from actively engaging in sustainability. The tourism industry works on tight margins and customer surveys show that when choosing a holiday destination, sustainability credentials are not priority factors. However, on closer inspection, all is not as it seems. Tourists do overwhelmingly want attractive natural environments and a friendly welcome from

the local people. So, preserving these environments and the communities that depend on them is integral to maintaining business. Tour operators that have recognised that this is at the heart of sustainability and integrated this into their business models are ahead of the game. In the last ten years the ‘responsible tourism’ movement has mushroomed, with more and more businesses appreciating the benefits of investing in the destinations they send tourists to.

Tour operators are increasingly recognising that a more traditional philanthropic approach to destination stewardship is not innovative enough to effect real change in island destinations. Instead, companies are beginning to see the need to work with local NGOs and community groups to develop public-private partnerships, rather than simply developing standalone initiatives. Virgin Holidays, cruise specialist Royal Caribbean International and Jamaican-owned Sandals

In the last

ten years the

‘responsible

tourism’

movement

has

mushroomed,

with more

and more

businesses

appreciating

the benefits

of investing

in the

destinations

they send

tourists to.

Global Island News TourismPhoto by tali de pablos

61 —————

Resorts have all demonstrated a commitment to community support and innovation in sustainability. It therefore seemed a natural fit for these tourism businesses to come together in Jamaica to support the Caribbean Fish Sanctuaries Partnership Initiative (C-FISH). Managed by CARIBSAVE, with funding from the UK Department for International Development, this project is a practical example of how to respond to the impacts and risks of climate change by supporting community management of a network of marine protected areas. These fish sanctuaries are 'no take' zones, allowing fish stocks to recover and spread outside the protected area, which is delineated with marker buoys and patrolled by wardens from the local community.

Sandals hotels are supporting a craft development programme and will stock the products produced under the C-FISH brand in their gift shops. Meanwhile, Royal Caribbean are providing funding for the set up of two 'coral nurseries'. The coral nurseries programme will train local spear fishers (who are typically extremely poor) as 'coral gardeners' to nurture and grow

fragments of climate resilient corals before transplanting them on to damaged reef, to rebuild it and protect the shoreline and beaches from the storms and sea level rise likely to result from climate change.

To reduce the reliance on fishing and associated vulnerability, CARIBSAVE and Virgin Holidays are also implementing an alternative livelihoods development programme, working with the local community to establish a programme of tourist excursions at Bluefields Bay

fish sanctuary on the west coast of Jamaica. This will provide employment for locals and bring money into the community as well as enhancing the programme of excursions that Virgin is able to offer its customers.

These public-private partnerships benefit everyone. For CARIBSAVE and C-FISH project funder, DFID, they have helped ensure this important development project has real world relevance and so should remain sustainable once the funding ends. The tourism industry recognises the opportunities provided; Virgin Holidays pride themselves in the UK market as knowing the Caribbean better than anyone else. So, by being able to offer their customers an exclusive excursion focused on the culture and heritage of Jamaica, they underpin this difference while contributing to the environmental restoration and economic growth of the island. Likewise, it is in the interest of Sandals hotels to help preserve Jamaica's coral reefs and build community relations. While Royal Caribbean recognise that destination sustainability is ‘good for our guests, as well as being the right thing to do’.

Ultimately, making tourism sustainable is just taking care of business, and the more tour operators that recognise this, the better for business, communities, environments and island nations themselves.

Rachel McCaffrey is the Head of Sustainable Tourism for the INTASAVE-CARIBSAVE Group. INTASAVE specialise in innovative climate change solutions and sustainable international development; supporting and enhancing livelihoods, economies and environments around the world. INTASAVE and their regional entity in the Caribbean, CARIBSAVE, are committed to working with all relevant sectors to ensure the effectiveness, relevance and sustainability of the development solutions we implement. The organisation has offices in China, Malaysia, East Africa, South Africa, Europe and the Caribbean and work on climate change at policy and project level in over 40 countries.

For more information, visitwww.intasave-caribsave.org.

Businesses

have started

building

sustainability

into their

bottom line.

Photo CC

by Nattu

http://www.intasave-caribsave.org

————— 62

Responsible Tourism is an inspiration and a challenge to the industry, communities

and travellers to enhance the positive impacts of tourism and to reduce the negative impacts. Tourism is a social activity, it is what we – the industry, destinations and travellers – make it. We are individually and collectively responsible for what tourism is, it is what we do. The positive and negative impacts are a consequence of our behaviour. We can change tourism.

Responsible Tourism is about making better places for people to live in and better places for people to visit, in that order. Interesting and enjoyable places to live in are great places to visit. The challenge of Responsible Tourism is to use tourism for sustainable development. The key question to ask is whether the place is being used by tourism, or whether the local community is using tourism? Responsible Tourism starts from the assumption that the place, and its natural and cultural heritage, has value for local people and the visitors. The aspiration is for forms of tourism which can best be characterised by the language of host and guest, where the relationships between locals and tourists, between visitors and visited, embody respect, accountably, transparently and responsibly.

Responsible Tourism values and celebrates diversity, it recognises that places are different, that they have particular natural and cultural heritage, a product of their geography and history and the way in which people have lived in different places over hundreds of years. Responsible Tourism and sustainable tourism are not the same thing. Responsible Tourism places the emphasis on identifying the particular local issues of sustainability, the things which matter locally and which tourism can do something about. It is about businesses, in the destination and the source markets, local communities and their local authorities tackling those issues, agreeing priorities

and then each stakeholder shouldering their responsibility to make tourism better.

So, Responsible Tourism is about what you do to make better places – better for people and wildlife. Sustainable tourism is the aspiration, whereas the exercise of responsibility is about how the rather vague aspiration of sustainability is achieved. Sustainable tourism, like sustainability, defies definition. Transparency is a key part of a Responsible Tourism approach, which starts with an analysis of the local situation, identifying the issues, the problems, which affect local communities and their environment. It is about identifying the local priorities

RESPONSIBLE TOURISM

The key

question

to ask is

whether

the place is

being used

by tourism,

or whether

the local

community

is using

tourism?

By Dr. Harold Goodwin, Professor of Tourism at Manchester Metropolitan University.


Islands are vulnerable to commercial pressure

from airlines.

63 —————

where tourism can make a contribution to improving the situation, by reducing negative impacts or increasing positive ones, for example through creating quality employment opportunities, or making a larger contribution to natural or cultural heritage conservation.

All issues are local; priorities vary from place to place. Water is a global issue - the problem of fresh water scarcity occurs in many places around the world - but it is not an issue everywhere. It makes no sense to prioritise reducing water consumption if it is not a local issue. The only global issues are those which cause air pollution – particularly greenhouse gas emissions – and the pollution of the seas with solid wastes and effluents. We need to take responsibility for tackling those issues which matter locally – we can only act locally, responsibility can only be exercised locally in particular places and circumstances.

Transparency is important for two reasons. If I am travelling to an arid area and I care about water consumption in local hotels, to inform my choice of where to stay I need to be able to identify those hotels with the lowest water consumption per guest night. Green certification is an opaque

process. I cannot know from the certificates which hotel has the best performance on water conservation. Transparency matters too because we need to educate and engage travellers in demanding better sustainability performance from tourism businesses – we need to create knowledgeable critical consumers, and encourage them to complain and demand better.

Tourism can create employment, generate greater local economic benefits and enhance the wellbeing of local communities, contribute to the conservation of natural and cultural heritage, empower local communities, provide more enjoyable experiences for tourists through more meaningful connections with local people, and a greater understanding of local

cultural, social and environmental issues. These objectives are at the heart of Responsible Tourism and its core values are respect, transparency and social inclusion – “holidays for all”. It is culturally sensitive, engendering respect between tourists and hosts, and building local pride and confidence.

One of the major challenges for small island states is the differentiation of their destination from the others. There is an oversupply of sun, sand and sea tourism and islands are vulnerable to commercial pressure from airlines, cruise companies and the large retailers who are able to push down prices. There would be considerable benefit in more cooperation between destinations in

dealing with parts of the industry, avoiding large buyers playing one island against another. Without this there is a real danger of a race to the bottom.

Identify the particular local issues where tourism can make a difference, and take responsibility for making change. Tourism is what we make it.

Harold Goodwin is Professor of Responsible Tourism at Manchester Metropolitan University and Founding Director of the International Centre for Responsible Tourism. For the last fifteen year he has been at the forefront of efforts to make tourism more responsible, working with tour operators in the UK, as an originating market, and with communities and governments in destinations around the world. He wrote the original paper on tourism and poverty elimination for Britain’s Department for International Development and has worked in The Gambia on the implementation of pro-poor tourism initiatives, undertaken evaluations for the government of the Netherlands pro-poor tourism programmes and provided training and consultancy studies for UNWTO and the World Bank. He drafted the Cape Town Declaration and co-chaired the conference in 2002. He advises ABTA and chairs the judges of World Responsible Tourism Awards and the advisory panel of the International Tourism Partnership of leading international hotels.

For more information, visit www.haroldgoodwin.info and www.crtmmu.org

One of the major

challenges for Small Island

states is the differentiation

of their destination from

the others.

It makes no sense to prioritise reducing water consumption if it is not a local issue.

Photo by Jurvetson (flickr)

————— 64

In your view, what are the most inspired and informed sustainable partnerships, projects and

new developments across the Caribbean, which are marked by regional cooperation?

Three of the most important regional sustainable tourism initiatives in which the Caribbean Tourism Organisation have partnered with organisations to implement are:

1) The establishment of the Sustainable Destinations Alliance for the Americas (SDAA) - the first-ever large-scale multi-sector initiative for sustainable tourism destinations in the Caribbean and Latin American regions. The initiative was launched in March 2014 and aims to improve the way tourism is managed and to enhance the global competitiveness of the region by embedding sustainability into the day-to-day management and marketing of destinations throughout the region. Under the programme, various tools for measuring and monitoring destination sustainability will be provided, multi-stakeholder destination management will be encouraged and the local capacity to do so will be built. The other partner organisations are the Organisation of American States, the US Permanent Mission to the OAS,

Royal Caribbean Cruises Ltd., Sustainable Travel International and the Central American Tourism Integration Secretariat. The first seven pilot destinations are Antigua and Barbuda, The Bahamas, Barbados, Dominica, Honduras, Jamaica, and Nicaragua, but the goal is to expand the initiative to the other Caribbean and Central American countries.

2) The establishment of the Greater Caribbean region as the world’s first-ever “Sustainable Tourism Zone” in November 2013, following ratification of the Convention establishing the Zone by member states of the Association of Caribbean States (ACS). According to the ACS, “protecting and guaranteeing tourism as a long-term activity was the main consideration in seeking to establish the Caribbean region as a Sustainable Tourism Zone” (STZC). The ACS also sees the zone as a “geographically determined cultural, socioeconomic and biologically rich and diverse unit, in which tourism development will depend on the sustainability and the principles of integration, cooperation and consensus, aimed at facilitating the integrated development of the Greater Caribbean.” The CTO has been supporting the STZC since its inception.

3) The implementation of the Caribbean Hotel Energy Efficiency and Renewable Energy Action Programme in partnership with the Caribbean Hotel and Tourism Association. This programme is part of an ongoing effort to encourage energy efficient practices and the use of renewable energy technologies in the Caribbean hotel sector. It also seeks to encourage hoteliers in the region to adopt practices that could significantly reduce hotels’ carbon emissions. The programme will also provide policy recommendations, establish demonstration projects and develop a mechanism for accessing financing for acquiring renewable energy technologies. The main pilot countries thus far are Barbados, The Bahamas and Jamaica, but it is anticipated that the programme will evolve to include several other countries. This is one example of regional level public-private sector partnerships in the Caribbean tourism industry.

What more needs to be done across the Caribbean to achieve the right balance between economic development, the existing environment and its resources?

Economic development requires the use of natural and/or human

SUSTAINABLE TOURISM IN THE CARIBBEAN

“The key lies in embracing the principles of sustainable and responsible tourism at both the macro level.”

Interview with Gail Henry Sustainable Tourism Product Specialist, Caribbean Tourism Organisation (CTO).


65 —————

resources and in many instances, the former impacts the natural environment, but to varying degrees. Specifically for the tourism industry, the key lies in embracing the principles of sustainable and responsible tourism at both the macro level – tourism policies, strategies and plans - and also at the micro level – by getting businesses and social enterprises to buy into and put into practice, initiatives that have minimal negative environmental and social impact, and in which employees and communities also see for themselves a role in engendering and benefitting from sustainability.

Do you see anything inconsistent between promoting sustainable tourism development and the increase in air travel that often comes with this?

The majority of visitors to the Caribbean and between Caribbean destinations have to arrive by either air or sea. An increase in air travel implies that a greater number of visitors are arriving, but that does not always translate into mass tourism. Many Caribbean destinations offer experiences that are very much aligned to having a responsible holiday, but they are not always marketed as aggressively as the typical sun, sea and sand product. Through the CTO’s ‘Caribbean Excellence in Sustainable Tourism Awards’ competition we are attempting to highlight Caribbean destinations’ sustainability initiatives and products, including accommodation facilities and attractions that are reducing their carbon footprint, and how these have been benefitting communities. We are also enhancing our database of these experiences so that we can better market them at a regional level, as well as encouraging our Members to tap into the growing market for them. Then, we need to tell our sustainability stories to the world.

“Many Caribbean destinations offer experiences that are very much aligned to having a responsible holiday, but they are not always marketed as aggressively as the typical sun, sea and sand product.”

Are you satisfied Caribbean destinations are sufficiently benefiting from their tourism sectors to the tune of revenues positively impacting their own citizens’ lives on the ground?

There will always be scope for improvement in spreading the benefits of tourism to a greater number of communities and citizens. I see several ways in which this can be done, such as embracing sustainable and responsible tourism principles and

practices, encouraging the social enterprise concept, empowering communities to drive tourism and have a greater input into tourism planning and management, and building their capacity to create more experiential tourism experiences, which can provide more opportunities for better community-visitor engagement. The latter can provide more business and employment opportunities within communities and assist in enhancing the quality of their lives.

How can major tour operators - many of whom wield great influence in small island states and territories – be persuaded that sustainable strategies make sound business sense?

From the trends that we are seeing, many major tour operators that have clients within the Caribbean are already pursuing more sustainable strategies, and others will follow. The onus is now on tourism authorities and operators in Caribbean

Photo CC

by Berit W

atkin

————— 66

destinations to meet their requirements, as well as those of the Global Sustainable Tourism Criteria for destinations and businesses. As the tourism development agency for the Caribbean, initiatives such as the ones mentioned earlier are designed to facilitate tourism sustainability in our Member countries at a very practical level. However, there is still some work to do in persuading some private sector entities that sustainability makes good business sense. Using private sector champions who are already walking the sustainability road successfully is one mechanism that we plan to use increasingly through various channels, including our conferences, as well as print, electronic and social media portals. There are many successful examples around the Caribbean that we have been giving exposure to and many more that we should.

Where in particular has the growth of tourism led to, and been informed by, capacity building and institutional reform, thereby leading to optimum sustainable development of the sector?

Sustainable development and sustainable tourism are journeys, not destinations – the process is ongoing. Many Caribbean destinations have already taken several steps along this journey. However, capacity building regarding tourism sustainability is an expressed ongoing need in this region, especially given evolving global sustainability trends. The CTO facilitates capacity building through our sustainable tourism conferences, webinars, workshops and sharing of appropriate tools. The regional universities also offer training in sustainable tourism and we are developing online sustainable tourism courses. We have seen the development of an increasing number of tourism policies, strategic plans and initiatives that incorporate sustainability

principles in countries that are vastly different, including more mature destinations, such as Barbados, Jamaica and Puerto Rico, primarily eco-tourism destinations, such as Belize and Guyana, and even in destinations with a significant focus on high-end tourism products, such as Anguilla, The Cayman Islands and the Turks and Caicos Islands. This means that the sustainability messages are getting through.

As part of the tourism planning process, institutional reform has been taking place at the level of the tourism institutional framework, with a trend towards establishing separate national entities for tourism development, marketing, product development, investment and so on. This will require greater inter-agency coordination. But what is even more interesting is that we are also seeing the creation of new positions within Ministries of Tourism specifically to address sustainability, community, climate change and environmental management issues, and that’s a very good signal for the future of Caribbean tourism.

“Sustainable

development

and

sustainable

tourism

are

journeys,

not

destinations.”


Photo CC

by Tobias Lindman

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