The Tribune

• Study values country's seagrass beds at $156bn annually

• Ex-BNT director says numbers signal the 'huge potential'

• $54bn carbon value from asset Gov't trying to monetise

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas yesterday received a "huge" multi-billion boost to efforts to monetise its 'blue economy' assets after a study pegged the environmental value of its seagrass beds at greater than 15 times' the country's COVID-era GDP.

Research led by the University of Michigan found that The Bahamas has the majority share of Caribbean seagrass, the very asset that the Davis administration is seeking to convert into carbon credits and a vital new revenue stream for this nation, at 61 percent.

The study, which was published yesterday in the Biology Letters journal, calculated that The Bahamas' seagrass meadows provide "total ecosystem services" worth $156bn annually, with $54bn of this value derived from their ability to attract and store carbon from the earth's atmosphere.

Eric Carey, the former Bahamas National Trust (BNT) executive director, told Tribune Business that while he was not familiar with the study the numbers "bode well" for the Government's blue carbon credit ambitions, the environment and the development of desperately-needed new revenue streams to enable The Bahamas to escape its fiscal crisis.

He added that the figures also "bear out" the Davis administration's statements about the potential value, and earnings, to The Bahamas from monetising its ocean-based carbon 'sinks' into securities (credits) that can be bought and traded, adding that the economic potential for this nation "could be huge".

"I don't know enough about the study, but if the numbers are accurate it certainly bears out what the Government has been saying, and some of the scientists, that our greatest opportunity for carbon credits is going to be based more on seagrass ecosystems," Mr Carey told this newspaper.

The size and value of The Bahamas' blue carbon sinks, which remove carbon dioxide from the world's atmosphere, have to be verified by independent bodies before they can be monetised and converted into carbon credits. The Prime Minister, during the 2023-2024 Budget communication, said the necessary seagrass mapping is underway and indicated that the process may be completed by the 2024 first quarter.

"That is an important part of determining what our potential earning is from carbon credits," Mr Carey added of this process, "what stocks we have; how intact they are and how expansive they are in terms of the ecosystem services we are providing. This study, if the numbers are accurate, says our potential for selling carbon credits lies with the seagrass meadows.

"We have to actively investigate how much stocks we have which contribute to carbon shrinkage, and that's what we can trade with buyers looking to trade-off or offset the carbon they are creating and exporting in their country or industry. Once that's [verification] done, we know what stocks we have to trade.

"The fact this study's been done certainly shows there's a lot of potential, and once all the verification's been done this likely bodes well for our carbon trading future and the environment." The University of Michigan-led study used satellite mapping and data to determine that the Caribbean region as a whole is home to around half the world's total seagrass meadows by surface area. It also found these contained one-third of all carbon stored in seagrasses.

From this data, the researchers calculated that Caribbean seagrass meadows collectively provide some $255bn in annual environmental and ecosystem services, which includes $88.3bn in carbon storage value. The majority share of these numbers was generated by The Bahamas.

"In the Bahamas alone, the ecosystem services provided by seagrasses are valued at more than 15 times' the country’s 2020 gross domestic product (GDP)," a report on the study asserted. The Bahamas' GDP, or economic output, would have been extraordinarily low that year due to it being the peak of the COVID-19 pandemic, with all its lockdowns and other restrictions.

However, the study also found that "The Bahamas has the largest share of Caribbean seagrass (61 percent), providing total ecosystem services valued at $156bn annually, including $54bn in carbon storage". The findings will provide a boost, and further encouragement, to the Government in its efforts to unlock the monetary benefits from its ocean-based environmental assets and generate a valuable new revenue stream for the country.

Mr Carey said the Government was likely providing no further details on its blue carbon trading ambitions until the mapping and verification exercise to determine the size and quality of The Bahamas' seagrass beds as a carbon sink, and their potential monetary value, was complete.

However, he added that Anthony Ferguson, the CFAL principal playing a key role in this process on the Government's behalf, has constantly assured him progress is being made. "Tony assures me the work is continuing and they're moving towards getting everything verified so they can make a determination on what tradable carbon assets we have to offer to the international market," Mr Carey told this newspaper.

"All of us will be watching what happens over the next six months. It could be huge, whether one is talking about providing habitats for the number one thing that Bahamians love to eat. Seagrass beds are critically important for sustaining a healthy Queen Conch population and sustaining a sea turtle population.

"The seagrass meadows are also important as part of our fisheries on the Great Bahama Bank, where Bahamian fishermen put down lobster traps. We are getting significant economic benefits and significant ecosystem benefits, and it will be interesting to see how that plays out in the carbon mix. We'll have to see what gets determined by the mechanism the Government, and the scientists advising the Government, establish. We'll have to wait and see what they come up with."

CFAL's Mr Ferguson recently told a panel discussion hosted by the Chartered Financial Analyst (CFA) Society of The Bahamas that this nation is poised to be the first country to list a “natural asset” on the New York Stock Exchange (NYSE), with "conservative" forecasts that it could generate between $300m-$400m in new revenues from monetising blue carbon credits.

He said: “We are working on a number of financial products that we hope to bring out once we would have had all of the relevant verification, etc. But I think it's going to be a new asset class. Natural assets would be a new asset class. Just how with derivatives, you have fixed income equities, I am prepared to bet that within five years on your financial statement or your investment statement, you will have a section called natural assets.

“The Bahamas hopes to be the first country to list a natural asset company on the NYSE. We are well on our way to doing some of the work on that. Hopefully next year we can do that. Again, in the carbon space we, as a country, for the first time, I would say, are leading the world with respect to seagrass blue carbon. We are pretty close to the verification process.”

Mr Ferguson, together with Antoine Bastian, Genesis Fund Services’ chief, were previously named by Philip Davis KC as two principals who will help lead efforts to “financially engineer and structure the carbon credits, and to create a network to effectively market, sell and monetise carbon credits” on The Bahamas' behalf.

Mr Davis last year revealed that Carbon Management Ltd, a Bahamas-domiciled entity, would be charged with raising the $50m-$60m required to map all The Bahamas’ blue carbon assets such as seagrass. "The Bahamas has about 97,000 square kilometres of sequence that we need to map," Mr Ferguson said. "We have broken it down into 5,000 square kilometres. For any number of reasons we have mapped 15,0000 square kilometres so far.

"We’re planning another mapping of 10,000 [square kilometres] in September, which would bring us up to about 25,000 square kilometres we would have mapped. Each square kilometre is, based on our initial finding, about 500,000 carbon credits.”

The Bahamas is “not interested in selling carbon credits” but, rather, selling “carbon certificates”, which will include carbon credits and biodiversity. Mr Ferguson’s group in conjunction with Hexagon, which is doing all of the mapping, is also using new equipment that can test biodiversity over the seagrass and the ocean.

He added: “We think that once we are fully operational that we will produce anywhere from 14m to 18m tonnes of carbon a year. That's using today's HIS Market price of around $50, so on the low end conservatively we can see anywhere from $300m to $400m of new revenues. On the high end, we could probably see over $2bn."

The University of Michigan study authors are Bridget Shayka; Jacob Allgeier; Maximilian Hesselbarth; Steven Schill; and William Currie. Their paper is called 'The natural capital of seagrass beds in the Caribbean: Evaluating their ecosystem services and blue carbon trade potential'.