Step 2. Obtaining Financial Support

Step 2. Obtaining Financial Support

“Money isn’t everything, as long as you have enough.”
–Malcolm Forbes, 1919-1990, American Entrepreneur

 

What outputs should be delivered from this step?

A financial plan that:

  • Estimates the costs of each if your MSP activities; and
  • Identifies alternative means to finance those MSP activities.

Introduction

Marine spatial planning (MSP) is not possible without adequate financial resources. Although MSP is inherently a governmental responsibility, a common problem occurs when funding, which may be available for research, is not available for other MSP activities such as planning.
Most governments that undertake MSP have to rely on direct allocations to their budgets from general tax revenues. Agencies are often given responsibilities to undertake MSP activities without receiving additional funds, so-called “unfunded mandates”. Reprogramming of resources within agencies or across government agencies will sometimes be required, but often with difficulty at best.
There are, however, other financing mechanisms available that can generate substantial increases in funding for MSP. Alternative financing can include, for example, grants and donations from international and multinational organizations, grants from foundations, partnerships with non-governmental organizations, funds from the private sector, and user fees, among others.
Each of these alternative financial mechanisms has its pros and cons. In some cases, it might not always be effective to choose a particular financial mechanism for a number of reasons. For this reason, obtaining financial support will entail two tasks:

  • Identifying possible alternative financing mechanisms for MSP tasks; and
  • Defining the feasibility of alternative funding mechanisms.
TASK 1. IDENTIFYING ALTERNATIVE FINANCING MECHANISMS

The task of identifying alternative financing mechanisms is closely related to selecting goals and objectives for MSP. How to select goals and objectives is described in Step 3, Organising the process through pre-planning of this website. It is good to keep in mind that identifying your financing mechanisms will most likely be done in conjunction with the task of setting goals and objectives.
When government revenues are not sufficient to develop MSP, various alternative ways to attract financial resources exist. The table below provides a list of potential alternative financing mechanisms.
A sustainable financing strategy for MSP should be tailored to the specific financial, legal, administrative, social and political conditions in a particular place or country. Many financing mechanisms listed in the table require users of marine resources to pay for their use, whether they are consumptive or not. This challenges traditional ideas that marine resources are free public commodities, and instead requires users of marine goods and services to pay for those benefits. In its new MSP legislation, for example, China introduced the concept of a user fee system (See Box below).

Examples of Mechanisms for Financing MSP Activities

FINANCING MECHANISM SOURCE OF REVENUE
Government Revenue Allocations
Direct allocations from government budgetsGovernment budget revenues; taxpayers
Government bonds and taxes earmarked for MSPTax payers; investors that purchase bonds
Grants and Donations
Bilateral and Multilateral DonationsDonor agencies
Charitable FoundationsIndividuals; corporations
Non-governmental Organisations (NGOs)NGO members and supporters
Private SectorInvestors
Conservation Trust FundsMulti-source
Tourism Revenues
Diving FeesDivers
Yachting FeesYachting community
Tourism-related operations of protected area agenciesTourism operators; tourists
Voluntary contributions by tourists or tourism operatorsTourism operators; tourists
Energy Revenues
Royalties and fees from offshore oil and gas, windfarms, waveparksEnergy companies
Right-of-way fees for oil & gas pipelinesEnergy companies
Oil Spill Fines and FundsEnergy companies
Voluntary contributions by energy companiesEnergy companies
Mining Revenues
Royalties and fees from offshore mining companiesMining companies
Voluntary contributions by energy companiesMining companies
Fishing Revenues
Tradable fishing quotasCommercial fishers
Fish catch and services leviesCommercial fishers
Eco-labeling and product certificationSeafood producers; wholesale, retail and end-use purchasers
Fishing access paymentsGovernments; associations of and/or individual fishers
Recreational fishing license fees and excise feesRecreational fishers
Aquaculture permit feesAquaculture industry
Telecommunications Revenues
Right-of-way fees for telecommunications cablesTelecommunications Industry
Marine Transportation Revenues
Oil spill fines and fundsMarine
Voluntary contributions by marine transportation industryMarine

Adapted from:  Spergel and Moye, 2004.
 
The scope and design of each financing mechanism should be based on the MSP activities and management actions being implemented in each case. Certain financing mechanisms may be appropriate to achieve one type of goal, but less effective in achieving others. For example, revenues levied on the fishing industry may work well to finance direct resource management of specific species, while park entry and user fees may be more appropriate for financing marine protected areas. Because of the interrelated nature of a marine ecosystem, a financing program should draw from a variety of sources to cover a range of MSP activities.

The user fee system in China’s MSP legislation

China’s Law on the Management of Sea Use, which entered into force in 2002, identifies three principles, including: (a) the right to the sea use authorization system; (b) a marine functional zoning system; and (c) a user-fee system. The user-fee system requires any entity or individual using the sea to pay a fee in accordance with the regulations of the State Council.  The legislation stipulates that the sea is a State-owned asset, and all entities and individuals that intend to use the sea to carry out production and other economic activities must pay for its use.  According to the law, seventy per cent of the fees collected from sea use will return to the provincial government, and thirty per cent will go directly to the State as revenue toward marine development, protection, and management.  China collected over RMB 67.1 billion (about US$10.4 billion) in user fees in the ten years between 2005-2014.
Adapted from Li, 2006; user fee numbers for the Bulletin of Sea  Use Management, Chinese Government.

Charging vessels to transit the Great Barrier Reef Marine Park

    The Great Barrier Reef Foundation funds research that protects and preserves the Great Barrier Reef, particularly in the face of climate change. The Foundation, in alliance with industry partners, has teamed with investment groups to develop a revenue stream that is based on direct and indirect users of the Reef. This model, in part, would allow the federal government to charge commercial vessels that travel through the Reef. Between 7,500 and 10,000 vessels travel through the Reef annually; to circumvent it adds two days of travel time. The proposed charge for passing through the Reef is AU$1,000.


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TASK 2. DEFINING THE FEASIBILITY OF ALTERNATIVE FUNDING MECHANISMS

Depending on your context, not all types of alternative financing mechanisms will be equally feasible. The choice of which financing mechanism(s) to use should be based on a number of considerations, including:

Financial considerations:

  • How much money will actually be needed each year (for the time frame of the plan) to support the MSP activities that are envisaged?
  • How much revenue is likely to be generated each year by the new financing mechanisms, e.g., user charges or permit fees?
  • Will the revenues generated be worth the cost of setting up the new system of user fees?
  • How might a highly variable revenue flow affect the MSP activities that the financial mechanism(s) is intended to support?
  • What other sources of funds might be available, either on a long- term or a one-time basis?

Legal considerations:

  • Can the proposed financing mechanisms be established under the current legal system? Some legal systems do not recognise concepts such as development rights. In other legal systems, there may be a constitutional prohibition against earmarking tax revenues or fees for specific purposes such as MSP.
  • Will new legislation be required to establish the proposed financing mechanism? How difficult and time-consuming will it be to pass such legislation?
  • Could the new financing mechanism be established under current legislation by simply issuing an administrative or executive order?

Administrative considerations:

  • How much money will actually be needed each year (for the time frame of the plan) to support the MSP activities that are envisaged?
  • How difficult will it be to design, administer, enforce, collect, or implement a particular type of user fee or quota and trading system?
  • Will it be too complicated or costly to administer?
  • Are there enough trained people to administer and enforce the system? (If not, how difficult will it be to train enough people?)
  • Will implementing the particular user fee or quota system depend too much on the discretion of individual officials and possibly present too many opportunities for corruption?
  • Can safeguards be devised to limit potential problems?
  • How difficult will it be to collect, verify and maintain the data upon which a particular user fee or trading system is based? For example, how difficult will it be to keep track of the amount of fish caught each day or month by particular individuals, communities, or commercial fishing vessels?

Social considerations:

  • What will be the social impacts of implementing a particular system of generating revenues for MSP?
  • Who will pay, and is there a willingness and capacity to pay?
  • Will the new financing mechanism be perceived as equitable and legitimate?

Political considerations:

  • Is there government support for introducing a new financing mechanism?
  • Can the government be relied upon to spend the new revenues only for the purposes intended, or is there a strong likelihood that the money may be used instead for purposes other than MSP?
  • Can the financing mechanism and management of funds be monitored and ensured by the courts, the media, NGO ‘watch-dog’ groups, particular user groups, an independent board of directors or an international agency?

Environmental considerations:

  • What will be the environmental impact of implementing any new financing mechanism? For example, for tourism-based mechanisms, will the desire to increase revenues from tourism compromise other objectives or exceed the carrying capacity of the marine area?

For more information see Spergel and Moye, 2004.

REMEMBER!

    The key to success is to have multiple revenue sources and not rely on just one particular financing mechanism to provide all of the funding needed to support MSP activities in a particular area. It’s always possible that unforeseen events or changes in circumstances could cause a particular funding source to diminish or dry up for a period of time.

 
 

TIP!

    Making financial mechanisms mandatory through legislation is beneficial. It allows you to enforce the funding and ensures the MSP process is not jeopardised because of a lack of funding. For example, in the USA marine spatial planning is authorised through a Presidential Executive Order, not legislation passed by the US Congress. As a result, federal funding for MSP has not authorised by the US Congress. MSP in the Northeast and Mid-Atlantic regions has moved forward only through non-federal funding by the Gordon and Betty Moore Foundation.

Useful References:

Li, H., 2006. The impacts and implications of the legal framework for sea use planning and management in China.  Ocean and Coastal Management. 49. 717-726. Available at:
https://www.researchgate.net/publication/222749000_The_impacts_and_implications_of_the_legal_framework_for_sea_use_planning_and_management_in_China 

Spergel, B. and Moye, M. 2004. Financing Marine Conservation: a menu of options. Washington, DC: World Wildlife Fund/Centre for Conservation Finance. 74 p. Available at:
http://www.panda.org/downloads/marine/fmcnewfinal.pdf

Yang, L., Ping, W., Linglong, C., Yongjian, L., and Lei, C., 2016. Studies on charges for sea area utilisation management and its effect on the sustainable development of marine economy in Guangdong province, China.  Sustainability. 8, 116. Available at:
http://www.mdpi.com/2071-1050/8/2/116

UNESCO's Step-by-step Approach for Marine Spatial Planning toward Ecosystem-based Management" offers a 10-step guide on how to get a marine spatial plan started in your region. Explore the guide by choosing steps here.

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