The economic theory that won a Nobel and now helps save corals

Coral bleaching, caused by rising sea temperatures, is the main threat to corals.

In 1952, the American economist Harry Markowitz, aged 24, developed the modern portfolio theory, known today as Markowitz’s theory, in which he stated that, to obtain a higher return on investments, it is necessary to incur a higher risk . Despite the fact that it was raised more than 50 years ago and that it won the Nobel Prize in 1990, it has now gained relevance again. The reason? It is being used to rescue coral reefs. (Read: Only 2% of the Great Barrier Reef is safe from bleaching)

The theory is being used by researchers at the University of Queensland, in Australia, who seek to identify the 50 reefs or coral sanctuaries in the world that are most likely to survive the climate crisis. In addition, to be able to repopulate other reefs.

How have they done it? Ove Hoegh-Guldberg, professor and climate scientist at the University of Queensland, told Blue Earth Consultants that “modern portfolio theory is a framework that aims to reduce risk and maximize returns. He is treating conservation as an investment opportunity. “

Therefore, for the research group it is essential to propose a strategy to help us make decisions about what to protect so that the corals survive until the end of the century. The most recent study by the Intergovernmental Panel on Climate Change (IPCC) shows that although greenhouse gas emission reductions are reduced to 1.5 ° Celsius above pre-industrial levels, close to 70% to 90% of corals current could disappear.

This strategy began to be used after a meeting with several scientists from the Hawaii Institute of Marine Biology that took place in 2017. At that meeting, the experts chose a “balanced” portfolio of coral reefs. The first thing was to divide the world’s coral reefs into “bioclimatic units”, separated them by 500 square kilometers (190 square miles). (You can read: Global coral coverage has been cut in half in the last 50 years)

Then, they used 174 metrics that were divided into five categories, among which were temperature, ocean acidification, invasive species and connectivity with other reefs. Once they were separated, they produced estimates for each of the units.

Using the data collected, the researchers used the theory to be able to quantify threats and identify the reefs that offer the best options for conservation. This project identified reefs in the Middle East, North and East Africa, Australia, the Caribbean, Pacific Islands, South America, Southeast and South Asia.

So far, nearly $ 93 million has been invested in the project, which is funded by Bloomberg Philanthropies’ Vibrant Oceans initiative. For Hoegh-Guldberg, the benefits are also social, economic, health and nutritional for the communities that live near these ecosystems. (Also read: An hour to save the corals of the Colombian Caribbean)

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The economic theory that won a Nobel and now helps save corals